10 Reasons Your Startup Will Fail & How You Can Save it

Why Your Startup Will Fail

95% of the startups fail is not the real problem. The problem lies in the “Why” of it. Why do so many startups fail? I personally failed a lot of times, I can say, more than the years I am living on this earth. But now I am successfully running an Inbound Marketing Agency that took me five and a half years.

Each and every startup you see as a successful one has gone through hundreds and thousands of difficulties. None of them are overnight successes. They must have spend hundreds of wakeful nights and non-stop working hours to reach there.

In case, someone tells you that he/she didn’t fail or haven’t faced difficulties, it means the person is involved in some serious corruption or maybe his/her goal is not big or he/she is misusing the opportunities. Seriously!

If you are a founder or just planning to become, you should always remember that failure is the DNA (Building Blocks) of a Startup and entrepreneurship. And without DNA nothing can be build.

It takes time to learn (Practically, on ground) how to launch a successful company and all too often, that success is learned through the failures of companies before it.

Let’s come back to the point – why will your startup fail?

During last one and a half years, while I have been in Bangalore, I have met more than 50 founders and investors for our marketing services. Last week I was going through our CRM to see any opportunity. I was shocked to see that most of them have either shut down their startups or are about to fizzle soon.

Then I realised this is a very serious issue that I should write upon. Having a business around startup ecosystem, it was a very bad sign if my own client base would start collapsing! So, I decided to write upon this topic, “Why Will Your Startup Fail?”

The purpose of this quick guide is to emphasise upon these:

  • Why will  your startup fail, i.e certain mistakes that kill startups
  • And how you can handle the situation if things are going bad

OK! Let’s go…

Yes! Startup is hard enough to crack the ASS, but it’s not something impossible that most founders make it, including me yet. Mostly startups fail because they don’t see that the fundamental market rules are working against them. Fundamentally, a startup’s own market is ruled and built by these factors:

  • Do people need/want your product? – Before launch.
  • Magnetic approach with snap customer Onboarding. – The Product & Marketing
  • Delighting the existing customer. – Retention of the customers.

By keeping in mind the above three fundamentals, here are 10 very common reasons why your startup will fail soon and how you can save it.

Note: Please remember first 8 reasons are very generic which are under your own control. While, there are some other reasons that is usually not controlled by you, I have also included those as last two points.

1. You Assume You Are The Only One.

You know that most startups fail and even yours can, but you assume that it will not happen to you. “I have a brilliant idea and everybody in the market needs it!”, you’re probably saying this to yourself. Unfortunately it doesn’t happen and you fail.

Don’t worry, I will explain it why. In the early stage, you hide the ideas because someone will steal it and become another Bill Gates. Just remember, there’s no other copy company of Apple, so get rid of this fear of idea-theft.

So, you think your startup is completely different and no one should know except the paying customer.

But, that unfortunate and bluff thinking doesn’t allow you to come out of the box. You spend most of your energy (sometime money too) just to prove whether you should launch. In case if you do finally launch, it takes you years to realise that nobody needs your product or you can’t build it or you need money more than you can get.

Ultimately, you give up and start blaming each other if you have the team yet.

So here is the solution if you are facing such situation:

Solution: Spread The Idea

Let’s assume you spend time with experts and mindful people who can help you come out of the box. Maybe, someone somewhere have also tried and refused the idea. In that case you would be able to eliminate earlier mistakes and unfortunate failure.

Spreading the idea never means that others would copy you. In case someone copy-pastes your idea, it’s better for you to build more quality product and lead the market. Later part is extremely rare and less harmful than the failure of your startup.

Stop whispering your idea. Get others’ input months before you start working on your first code. I am not asking you to share the Admin credential of your dashboard. Just share everything except that.

2. You don’t Market before launch.

You expect that the day you will launch your startup, people will start using it as if they were waiting for it. No. It doesn’t work like that. The best practice is, you should start marketing your product months before you will launch it.

Right after launching the product you start focusing on finding people to test its beta, that leads your focus from the core of building the product. Ultimately, you fizzle out your startup as soon as you complete the beta and motivationally, you reach at the bottom of the ocean.

So, here is the way you can save your startup.

Solution: Market before launch

Today internet is just like boom. It has just two sides, either nobody is going to listen you or everybody is going to listen you. And both parameters are equally achievable. For the first, do nothing and for the second, find your people and hit them at the right time.

You can do it by giving a quick fix to the problem of your future customers if you are good at something. It doesn’t require to offer the complete product, you just need to solve their problem by guiding them through only one of the following ways:

  1. DIY Videos related to your upcoming product
  2. Launch your blog and write detailed leadership articles
  3. Share your expertise on Medium and Quora
  4. 1+3
  5. 2+3

Build a list of subscribers who will be ready to try your product during beta and will give their feedback as soon as you will need the suggestions. This ultimately will help you build a better product ready to be launched publicly for everyone.

3. People don’t need your product

You have not validated your product. You shouldn’t assume that it has not been built because nobody has thought about it. Logical idea is not good enough to start with . If your friends validate, doesn’t mean it’s validated.

As no one needs or wants your product, no one is going to buy it. That’s why the overwhelming external validation is good.

Here is the simple way to know if market needs your product.

Solution: Conduct a strong PMF

As soon as you coin an idea inside your mind, start thinking about the risks in ideas, in parallel thoughts. For this, you should either ask an expert to do Product Market Fit for you or hire a specialist, if you need.

4. You Put Money (Revenue) Before Customer

Building a startup does not mean becoming a rich and wealthy person; that is the consequence of the successful launch. If you start focusing on revenue more than customer acquisitions, that means you are violating the ethics of startup. And you know what happens if you don’t follow the rule!

Here is the quick solution, before your startup will fail because you want more money than customer.

Solution: Go find customers, forget revenue

Start focusing on customer acquisition along with revenue. In my personal opinion, stop chasing the money and find as much as customers you can, everyday.

Once you will have a certain number of customers, they will definitely pay if your product is able to add value personally or professionally. Wishing revenue from day-one is just like expecting fruits from the sprout that you have planted yesterday.

First thing first, validate your idea, seed it, then raise, expand, hire, grow. Rinse, repeat. Then expect revenue as much it can yield.

5. Your Startup Will Fail, Because You Get Funded!

As far as I know the startup ecosystem of India, the core goal of 99.99% founders is raising funds. Even in the largest events, people refer to getting funded as their success stories.

Just like the whole India is crazy about getting admission in IIT, the whole startup ecosystem is mad for funds.

The fact is, as the IIT students think “O’ wow, now my future is secure as IITs yield crores packages.”, they never take their education seriously, exclusively during the first few years when they need to work hard.

Ultimately after 3rd year, they start blaming the system and looking for just any job that can fill his/her stomach.

And finally, they become as useful as cow dunk, just a IIT tagged labour for some MNCs.

In the same way, in startups, as soon as they get funds, they start dreaming more than working on their products. They assume their startup will automatically build itself, grow and scale because every successful startup got funds.

So, they start wasting their time & money giving lessons to other startups, how they can get funded. Instead of spending the fund on product and marketing, they spend the investors’ money on:

  • Hiking their salaries
  • MacBooks for everyone (That their parent couldn’t buy for them)
  • Luxury Office with English breakfast & 24×7 snacks
  • Ordering pizza and Fraud Online Food orders
  • All time chilled beer cans and weekend office parties
  • Uber Rides – Some Shameless founders buy company car as well.
  • So many useless stuffs that are ultimately digging grave for their startups.

Moreover, I personally know more than a dozen of funded founders who spend $10K on office party but will not shell out $10 for Ads. They just hire someone from Angellist and expect organic growth from the next day.

They religiously believe on lean startup growth, but they implement it in corrupt manner. Finally the day comes when they have to announce officially that they have pooped in startup ecosystem.

So, if you are among such founders, I would request you to please stop doing this and save your ASS. Because your startup will fail soon.

Here is a simple solution if you fall in this trap.

Solution: Work harder after funding & spend money wisely.

Stop dreaming and start working as you have promised during your fund raising pitch. Use other people’s money wisely and remember that they have given you money to build and grow the company not to improve your lifestyle.

Note: Spend on The Product & Acquisition, that’s it!

6. You become The CEO

There is a fashion in startup ecosystem. As soon as a person starts with an idea, first thing he does is: He not only changes his Bio to CEO, but starts behaving like Steve Jobs – The Man With 1000s Orders.

Yes! technically he becomes the CEO but practically he is CEO of nothing. Instead of working hard on the product, he starts coming up with the idea of how they can finger (Poke, I mean!) other people.

Somehow, if such people could build a small team, they just start throwing the expectations instead of working hard with people who have also jumped into the hell of risk.

If you are the CEO of your startup as I explained, please note that your startup will fail as soon as they will start leaving you.

Here is the solution if you don’t want to let your startup die out.

Solution: Work like hell, behave like watchman

The only solution is STOP BEHAVING LIKE THE CEO. Start working like an apartment’s watchman, always alert.

7. You think Growth Hacking is the complement of Startup

The most frequent myth in startup ecosystem is: Startup is built by growth hacking. But the fact is – Speed is the biggest risk! (Refer Solution)

Founders think people are waiting for their product just like people were waiting for lifeboats after Titanic sank. So, they hire anybody with “Growth Hacker” in resume and start expecting the overnight success, even when  the people don’t need/want  the product or are just unable to use the half-built product.

Unfortunately, this is another biggest mistake that can kill any startup.

Solution: Slow is pleasure

Growth hacking is not for early stage startups. The time will come when you will need speed, first reach that stage.

Spend time in building the version of product that people will love to use with ease. Find first few customers and experiment a lot. Delight the existing customers and keep doing it until you find every customer talking about your product.

Now, build a strong connection (Emotionally) with all new customers so that they become evangelist and bring at least one customer.

Fortunately, if you approach this way, gradually you will see a fire catching growth, that is actually growth hacking. In my words, just like love is not done, it happens- Growth Hacking happens, you don’t have to do anything in extra.

8. You Market your product just like them

Startup marketing does not follow a certain theory. Each startup needs different acquisition approach, even if the products are almost similar. But, founders make a mistake by imitating the strategies of their rivals or most of the time successful startups in any domain.

Founders and investors interfere a lot just to copy any master idea or that they have learnt on Quora, Medium and on their favourite blog. In some cases marketing team itself copy-pastes others’ ideas and finally finds out that nothing happens at the end of the day.

Generally, it becomes too late to find out that the strategy is not working. They waste time and money that leads to the failure of the startup.

If you don’t see any movement in the growth needle, here is the solution of such problems.

Solution: Build trust from the day first

Your startup needs the as unique approach as fresh your idea is! Don’t copy-paste any strategy that works for your rival or in any other domain. Take those strategies as reference to coin your own ways, that will completely match your marketing need.

If you are looking for common approach, then start solving DIY problems related to your product, win their favours and present your product as a better and easy solution. I promise, they will accept your product happily and will also love to pay, if required.

So far we have discussed reasons that you control and can be avoided to save your startup from failure. However, here are two reasons that is out of your control that can kill your startup.

You need to avoid such startups or ideas that will be affected by these reasons.

9. Your Idea is Legally Not allowed

Sometimes, a decent idea is not allowed by the local government. If you are working on such projects, your startup is going to get caught and shut down by the government officials. Sometimes, if they don’t do anything, the system doesn’t allow.

Unfortunately, India comes on No. 1 spot in this case. Here, the government mostly does things that fill their vote bank and never give a shit to innovation and improvement in the system that can take the country to the next level.

For example, in India as per the RBI guidelines, you can’t accept recurring payment or store encrypted bank details. There is no trace when they will even think about this.

Similarly, if your startup is based on cloud telephonic concept, you just can’t.

And the list never ends.

Solution: Check if Your Idea is Legally Allowed

If you’re working on any project please verify if it is allowed by the local government.

Moreover, I would like to stop here to avoid any unnecessary troll.

10. Your Idea is Feasible but Not economical

Sky is the limit for the innovative people like you. Very often you think about an idea that is extremely acceptable by current market. And the best part is everybody is ready to accept the idea, without knowing the actual product.

For example,

• Nano cell – Never charge the device again

• Search inside the video

• AC without emitting Heat

Market is always ready to accept products around such ideas. If you are working on such idea, that’s cool. The whole system is with you.

But, make sure if theoretically it’s possible, will it be economically feasible for you to build and would people be able to afford the product?

Even if you are working on the most innovative idea, still there is high risk of failure due to technical reasons that you can’t eliminate. Here’s the solution you can check with.

Solution is:

Find the economical solutions that you can build and that the customers can afford. There is no need to jump so high that you can’t hit the ground again. Because at the end of the day, you jump to hit the ground. Here The Ground is: The Product + Market + Customer.

Conclusion…

If you have entered into the world of startup with the end goals of fame and money, or you’re here just following the trend of entrepreneurship, like someone is doing it, so you want to do it, just stop right here. These will bring failure, wasted talent that you can use somewhere better, and utter fall in motivation.

If you can identify yourself with any of the reasons of you starting up, as explained throughout this piece, do either of these –

  • Follow the advice given in each solution, as it applies in your case, or
  • Quit this, and do something to use your skills, get a job or anything that actually you can.

Improving yourself is not very tough. Just be aware of the rules and the consequences of breaking them. Yours can be a story worth sharing, if you get on track right now.

Leave a Comment