Four Causes of Startup Failure

[AcademyBridge]

Why Startups Fail

“Study the past if you would define the future”
~ Confucius​

Nine out of ten startups will fail. This is a hard and bleak truth, but one that you’d do well to meditate on. Entrepreneurs may even want to write their failure post-mortem before they launch a business.

Why be so discouraging? Because very optimistic entrepreneurs need a dose of reality now and again. Cold statistics like these (9/10 fail) are not intended to discourage entrepreneurs, but to encourage them to work smarter and harder. Therefore, to succeed one should learn from the admirable others who have failed (success stories are few and far between). By investigating failure, the seeds of success may be uncovered.

Four Causes of Failure?

1. The product is not perfect for the market: The startup makes a product no one wants (42% of startups lack a product the market needs*).
2. The entrepreneur ignores something: Good product ideas and strong technical teams are no guarantee of success, especially if you ignore other critical issues (business processes!).
3. The company does not grow-fast enough: Growth leads to growth, which leads to even more growth. Marginal, single-digit growth rates, do not make for a sustainable business. If the growth doesn’t happen, then the growth will never happen.
4. The team does not know how to recover: Startup teams must master the ability to; change products, adjust compensation plans, develop new marketing approaches, shift industries, re-brand, pivot and even start all over (or quit?). Remember, startups with co-founders have a higher success rate.

Dr. Gerard L. Danford​

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[Sehcill]

Your first post linking to a domain name that's the same as your screen name might cause some issues with the moderators. Search for the forum rules post first and abide by them.

 

[AcademyBridge]

Your first post linking to a domain name that's the same as your screen name might cause some issues with the moderators. Search for the forum rules post first and abide by them.

Thanks for heads up...links removed PAX G

 

[johnp]

Four Causes of Failure?

There is only ONE cause to failure.

That one cause is because someone quit.

The causes that you mention only signals or symptoms that the business is sick and needs some sort of help. Some people recognize the symptoms and change something..

Others quit/move on.

And failure?? I think it's great.

Sometimes you have to pull the plug and let go. Then move onto something else.

**Just my personal opinion.**

 

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[AcademyBridge]

There is only ONE cause to failure.

That one cause is because someone quit.

The causes that you mention only signals or symptoms that the business is sick and needs some sort of help. Some people recognize the symptoms and change something..

Others quit/move on.

And failure?? I think it's great.

Sometimes you have to pull the plug and let go. Then move onto something else.

**Just my personal opinion.**

Agree 100% It's hard letting go sometimes . Thanks G

 

[Kevin Peter]

If it fails, why dont you call it just a project and not startup
The focus is now elarning from other startup mistakes. We find it much insighful.
These are just the top 4 identified, you won't recongize too amny of them at your own company or until you own one that is a failure.

 

[Randy Smith]

What are your thoughts on number 3?

How fast does a company need to grow to survive? (This get's a little tricky when thinking about bootstrapping)

What is the best way to avoid this from happening?

Randy

 

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[AcademyBridge]

What are your thoughts on number 3?

How fast does a company need to grow to survive? (This get's a little tricky when thinking about bootstrapping)

What is the best way to avoid this from happening?

Randy

Good question. Very much depends on the nature of the business and the impact of scale. Sustainable growth never hurts and it's an indicator of potential. When the growth planes off these is a indicator of non-sustainability. Furthermore, growth driven by referrals is a good indicator. In addition there are considerable benefits to retention of customers as retention costs are much lower than obtaining customers. G