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Why Many Startups Fail

Oct 15 2009

Why Many Startups Fail

According recent statistics from the Small Business Administration (SBA) 90% of the small businesses fail within two years of starting due to many entrepreneurs lacking basic knowledge in handling company operations. Let’s explore the reasons why businesses fail and how you can avoid such a failure?

Starting a Business for the Wrong Reasons:

Many times Entrepreneurs start a business on the hope that they can quickly make money or have more free time with their families. A startup created for such a reason will have more chances to fail. Companies based on activities the entrepreneur loves to do and is passionate about often are more successful.

A Lack of Planning:

Most new businesses fail because of deficient planning. Careful planning focused on the industry is quite important for any startup to become successful. At times Entrepreneurs do not have a proper vision for their corporation and disregard the need of a healthy developed business plan. Be sure the product or service you are providing fulfills a need for your customers.

Inadequate Funding:

Another common reason for which startups fall short is underestimating the quantity of money they will need for their operation. Due to which, there is always a hazard to company strength and growth. Entrepreneurs should perform meticulous research on how much money they will need, including a range of expenses and the time it will take to create the business. You need to find unfailing investors who are consistent and can invest swiftly.

Good Location:

A high-quality Location plays a vital role in making a business successful and dreadful location can harm your business without difficulty. Factors like where your customers are located, location of your competitors, ease of access, traffic, etc. are required to consider in finding an appropriate location of your company.

Unreliable Employees:

Dependable employees are extremely important for the success of a business. A company should have employees with precise skills for the given field. A large amount of uncreative employees’ increases expenses whereas fewer employees then the workload requires, can be overpowering and tricky to handle. Hence, an entrepreneur should have appropriate facts to direct the work force.

Poor Marketing Strategy:

You cannot produce revenue when your customers are not aware of your products or services. You should have a successful marketing approach which entirely focuses on your target audience and tells them about your organization. Many startups fail because they do not promote themselves or do not promote to their target audience.


Most business owners get perplexed when it comes to the extension of their business. They want to expand very swiftly which leads them to situations like deficient capital and insolvency. A business should be extended once your company has a rock-solid client foundation.

Gagandeep Singh is working as an Internet Marketing Executive for Fortepromo, which provides high quality promotional products to help companies in promoting their brand.

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