4 Major Reasons Why Your Startups Fails

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A startup is a young company which is just beginning to develop. Startups are usually small and initially financed and operated by an individual or group of people. Many of the startups will fail within their first several years. Some flop right away, others taste success.

Why do so many new companies continue to fail, even with the advanced consumer data and technology available to today's business owners? The top four reasons for startup failures is:

Lack of research and planning

Before launching a startup one have to study the market and understand the target customers for their respective product or service.
Startups without a solid business plan will fail. Moving ahead without having done the requisite market research and planning can kill your startup in the long run. The company's unique value proposition and what differentiates your company from the competitors will decide your revenue.

Financial mismanagement

Running out of money will kill your startup. Whether you burned through your funding too quickly or didn't raise enough in the first place, you can't do much with your business if your finances are not fixed. Poor accounting and lack of a money management are the top reason why startup fails.

Poor hiring

What happens when a startup don't have the right team to make it all happen? It's tough to do quick hiring in startup mode. It is very easy to get people but when you need the right one suited for your role, its is a little bit difficult. It's best to go with recommendations and referrals.

Bad leadership

A leader is the one who knows the way, goes the way,and shows the way. The right employees with the wrong management style will also lead to failure. Leadership is a function which is important at all levels of management.


There are many reasons a startup could flop right away. The fact remains that a startup is more likely to sink than swim. With preparation and knowledge you will be able to make a startup for success.

Story first published: Friday, November 25, 2016, 10:38 [IST]
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