Top Reasons Why Most Startups Fail

failSuppose you have a simple startup, such as a tree service business and you want to steer it to success. How would you go about it? From lack of market research, financial problems to constituting the wrong team, there are many reasons startups fail. This articles examines in summary while most startups run out of business within the first three years of their operations. Any entrepreneur serious on running a successful business should try as much as possible to avoid these key reasons.

Let’s have a look;

Lack of Market

Lack of market is understandably the top reason why most startups go out of business. It is understood that most businesses close shop because of lack of market demand for the products or services they might be offering. This prevents them from gaining traction they need for them to survive. When you are thinking about creating your own products, consider solving a genuine problem that exists in the market. Prepare a product that your market can appreciate as a true solution to the problems they are facing.

Financial Problems

Many startups run into trouble because they lack the cash needed to accelerate and sustain business operations. They run into insufficient funds required to cover operations and this cripples most of them. An equally opposing scenario is where a startup receives too much cash and misappropriated such cash, only for them to suffer in the longer run.

Wrong Team

It is very important to have a cohesive team that is able to understand each other and work together to achieve the goals of a company. Such a team should have diversified skills required to ensure startup success. 23 percent of startups fail because they do not constitute the right team to take care of business operations, innovations, research and other sectors vital for startup success.


Every business faces some form of competition. Competition is one key issues that sinks startups. Even when you build better products than what is available in the market, other large companies or new startups will come to build similar or related products and flood the market. However, having the first mover advantage can be very important in ensuring you can deal with new competitions in a relatively easy manner.

Other reasons why startups fail include pricing issues, poor product, and bad business model, ineffective marketing, not being customer-centric, poor timing among others. It is very important to analyze all these factors keenly before starting a startup, to reduce chances of failure.