Why Startups Fail

Why Startups Fail

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I've been asked this question many times and the reality is that it's a combination of factors but here’s four that quickly come to mind. Just remember starting, growing and building a company is tough and most companies fail. Being successful is hard even in the best of times.

  1. Is there even a market for the product or service? Today you see so many startups in areas that make no sense. Do I really need an app for this or that? Some of the ideas out there are so silly and worthless yet people are trying to build a business in areas where this is no market. I like to joke about ideas.. maybe I should start an “on demand” mobile app service that can take out my trash for me or pick up after my dog. I mean to some degree that’s where the level of some “start ups’ have gone. There is a point where some “innovation” is not innovation but simply ideas thrown against a wall hoping something will stick.
  2. The leadership and founders don’t have the fire. Yep that’s right. many startups who receive cash infusions from investors don’t have the true respect for money when it’s not there’s. They don’t have real skin in the game so if the startup fails... Oh well, it will look good on a resume that you were part of a “startup” that tried, pivoted or exited. At least you “failed fast”. Personally I don’t have much respect for that type of entrepreneur. As one who bootstrapped to success, I see it through a different lens. One where your own money, credit, house and everything is on the line. When you have that kind of motivation, you persevere, you bring all you have to make it work. Even then there is no guarantee for success but at least you’re fully committed.
  3. Don’t have the competitive drive. As one who comes from an athletic background and years in competitive sports, I see business as the ultimate sport. Those who lead a startup that don’t have the competitive fire to go after the market and compete will fail. Not everyone has that ability to think with that mindset. If you’re not working hard and putting in the true effort, someone else is and they will beat you when it’s game time. If the top down leadership is not obsessed about beating out the competition and delivering a great product or service to their customers then who will be? That’s right, your competitors.
  4. The team members aren’t fully committed. Yes, it does come down to having a team that can make it happen. Everyone is “excited” during the launch of a company but do the team members have the ability to work together for the common goal? Unfortunately people’s priorities change, some don’t have the fire to keep at it and when you have infighting, this can lead to a disaster. It’s simple.... if there’s no driving force or individual that keeps the eyes and mission on the goal of doing what’s best for the company vs. what’s best for the individual then you can expect an implosion.

There’s countless others reasons and ways a startup can fail and no idea is a sure winner but the mission for any startup should be to set themselves up for success by doing everything possible to be in the best position to succeed.