Top 13 Reasons Your Startup Business Failed

July 14, 2021
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Starting your own business is a great thing! It is rather a step of courage. And as easy as it may sound, it requires constant efforts and daily challenges to keep everything in order and maintain growth. As a matter of fact, many reports (including a 2019 Startup Genome report) showed that around 90% of startups tend to fail in the first few years. And that is OK! “Fail forward!” they say. No one was born ready, and no one is perfect. Failure is a learning opportunity.

However, when it comes to reality and no matter how we face it, failing is dreadful, and we always wish there was a guide on how to avoid failure.

We at FlairDev as a startup and a software company had many bumps and mistakes along the way, and so, we have decided to share some our experiences through the years with you. We want you to avoid any mistakes that we have made or could have made. We want you to have a smoother easier journey when you decide to take the step of courage. That is why we decided to share with you our list of the top reasons that cause a startup business to fail:

1• Expenses, expenses, pricing, and expenses:

Burning money to illustrate how spending too much could cause a startup business to fail.

A lot of businesses start with decent financing that is relatively good, and that itself could be dangerous for a business because owners start throwing money right and left. When you are starting a business, it is crucial that you distinguish between what is considered a necessary investment, and what is considered squandering money. There is a fine line there.

No matter how good your financing is, always expect the worst and save a penny for a rainy day. Furthermore, know your products or service’s worth. Put a price, see how customers react to that, and the result will tell you if you need to lower the price, keep it the same, or maybe raise it. And in the end, we say that keeping balance between pricing and expenses is an answer.

Check out our other article: UI/UX Design: 11 Rules Every Developer Wants You to Follow.

2• Bad plan. Bad research:

A business plan written down with its steps after a research was done. Nt following the plan or bad research is bad for business.

Create a business plan so that you can stay focused on your long-term goals. Make sure you are realistic, make sure that you cover all aspects, and make sure that you know them facts. If you create a business plan without doing your research right, we have bad news for you.

Poor research leads to a poor business plan, and a poor plan is like showing up to a battle unprepared, you might get lucky for some time, but most likely it will end up badly for your business.

3• Choosing the wrong person:

A woman explaining an idea to a man, but the man is clueless because he is the wrong person for the job.

New businesses are usually more vulnerable than old ones, and the damage done from choosing the wrong employee for the job in a fresh business outweighs the damage done in those well-established ones.

Make sure you choose your staff well, choose the right person for the right position, build the team that helps you deliver the vision of the company, and most importantly, correct a mistake as soon as you realize that you have made one. Your team can make-or-break your startup.

4• No market need:

A plate full of apples with many apples fallen out of it and one still being added, illustrating the idea that a business will fail in a saturated market.

According to an analysis by CB Insight, 42% of startups fail due to no market need.

While doing your research, make sure that the product or services you are selling are covering a gap in the market you are selling it in. In addition to that, you have to make sure that the market is not saturated, because trying to enter a saturated market is similar to trying to add a new apple on the top of platter filled up with them. The new apple might fit, but it will most likely fall over.

5• Timing of the project:

A calendar of 2020 to talk about how unfortunate that year was, and many businesses failed during that time.

We are not talking from a marketing perspective. We are talking about being kind of unlucky, like in case of a tsunami happening, or a financial crisis, or an earthquake, or an economy collapsing, or worse of all… a pandemic that changes the world as we know it.

According to a study released recently by economists at the Fed and published by The Wall Street Journal in an article; around 200 thousand businesses closed in the US alone on the course of one year due to the recent COVID-19 pandemic. And as much as it is exceptionally hard to predict most of these things happening, you always must accept that they might do.

6• Marketing and advertising backfiring:

A list of business tasks checked in green except for the marketing process, and that will most likely cause a business to fail because marketing is crucial.

Never forget who you are advertising to, and what you are advertising for. Marketers can sometimes do the impossible, be imaginative, achieve remarkable results, AND… they can forget who they are advertising to.

Many marketing campaigns end up backfiring, lose the real purpose, or even get lost in translation. Most of us remember Unilever’s Dove and their racist Facebook Ad, or Blackberry’s Tweet from an iPhone! These are some big names in the game whose mistakes cost them fortunes. So what do you think will happen to a fresh business when blundering like that? It would probably be the end of it.

Always remember WHO you are advertising to, and WHAT you are advertising for.

7• Poor quality:

Two apples held next to each other, one is old and wrinkly, and the second is red and shiny and looks tasty, that is to demonstrate how everyone prefers good quality products.

Poor quality has always been a popular reason for people not to deal with a company.

Never have we heard a sane person who prefers poor quality to high quality, and that is why that when you are starting a business, whether it is selling a service or a product, you should know what you are selling, became an expert on everything related to it, and master it in case it is a service. Otherwise you will eventually run out of business.

That is why we at FlairDev try our best to provide the best of quality, and had we not given our daily best that we plan to keep on giving, our clients’ testimonies might have been different.

8• Competition – Ignore, or be obsessed:

A business meeting where they are discussing an analysis, possibly competitors.

Every business will no doubt have competition, some more than others. But how should we react to competition? Should we just ignore it? Or should we worry excessively about it? The answer is: NEITHER.

Ignoring your competition could put an end to your business. Competitors will always monitor and analyze your strategies and results. They will go after your weak points (which every business will have), try to offer an enhanced product or service to your customers, and that might eventually run you out of business. That is why you should always try minimizing your weak points and keep progressing, you should also keep an eye out on what your competitors are offering and try to learn from their successes and avoid their failures. It is a two-way street.

At the same time, do not become obsessed with what they are doing. Startups require much effort as it is, and you should not waste your limited strength on making your competition your only focus. Just lead your business right, be informed of what is happening, maintain a balance between overconcern and ignorance, and hope for the best.

9• Limited funding:

Hand holding an empty wallet that went out of money, and that illustrates how sometime a business could run out of money because of limited funding.

The budget assigned to a project is not always pinpoint accurate, and there is no answer to how much money one needs to spend on their business.

When you decide to start a business, try to limit your costs (as we mentioned earlier), and even after you do, always account for going over the budget. That way, you will not be forced to shut down a business due to having ran out of funds. And always keep in mind that startups need sufficient fundingto operate smoothly.

10• Lack of unity – Disharmony:

A business meeting in which partners are arguing, and that is to show how disharmony could cause a startup business to fail.

It is true that startup teams need to have experienced and wise thinking, but that is not enough. Let us give you an example:

Have you ever tried being a roommate with your best friend? One would think that it is a really nice idea! Why not?! You like hanging out together, and you think alike. But when you move in together, you will realize that it is just not that simple, and most people end up losing their best friend after doing so. It is a bit similar with a business partner. But what we recommend for a business is, that instead of moving out, have a united opinion and compromise, compromise, and compromise.

Furthermore, do not be a lone wolf, always take decisions with the team’s assistance, and do not disregard any opinion. This way you will build more respect, add more harmony to the working team, and might even learn something new.

11• Inflexibility and lack of growth:

A brain locked in a cage restricting it and forbidding it to grow and be flexible.

A flexible mindset is crucial to a startup’s success.

Have you ever tried to swim against the current in a river? You might succeed for a few minutes, but you will eventually either break, or be forced to go with the flow. Owning a business is the same thing. You should always study your market and evolve according to its needs if you do not want to fail.

In addition to that, if you want your business to survive on the long-term, you should always plan your business’s growth as it is really worthwhile. Everyone is growing, your competition is growing. Markets are growing. Expenses are growing. And when you grow, you will be able to face all challenges and even grow a better reputation of your own.

12• Not listening to your customers:

A hand typing the words “Your opinion matters” to show how all customers’ opinions matter.

Many statistics show that 10-20% of startups fail due to not paying attention to customers’ needs. And we agree. Ignoring client’s feedback are fatal errors, especially for tech startups.

Actually, “WE CARE” is a part of our motto at FlairDev. We believe that if we are to care about our clients and help them, we definitely have to listen and comply with their needs.

13• Not being patient:

A small plant growing over time, similarly to a business that cannot succeed immediately, and it needs time.

Concluding the list is one of the most essentials. Rome was not built in a day, and the same goes for every successful project.

If you think that you can build a successful company within a year or two, you are most probably mistaken, and we fear that the disappointment could cause you to reconsider the journey. But do not give up. Be patient and keep giving your best. Most businesses take more than that period to flourish.

There you have it, these were our picks. But that does not mean we have covered everything. Let us know what you think. And if you like what you have read, make sure you share it with others. It would help us be better the same way we want to help our clients.

Also, if you have an inquiry about a project, considering us means you support startups. Contact us here, we promise to answer in the most helpful and clearest way.

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