5 Common Factors Of Startup Failure

Business Success Or Failure

There are a thousand and one factors that may cause a great business to collapse but in this article, we are looking at the most common among them.

Bad Location
It's an interesting question: Why cities become startup hubs, but the reason startups prosper in them is probably the same as it is for any industry: that's where the experts are. Standards are higher; people are more sympathetic to what you're doing; the kind of people you want to hire want to live there; supporting industries are there; the people you run into in chance meetings are in the same business.

Marginal Niches
When you choose a small, obscure niche in the hope of avoiding competition, you are heading for disaster.

If you watch little kids playing sports, you notice that below a certain age they're afraid of the ball. When the ball comes near them their instinct is to avoid it.

So,  the solution may be to think about ideas without involving yourself. What would be a great idea for someone else to do as a startup?

Slowness In Launching
Startups make all kinds of excuses for delaying their launch. Most are equivalent to the ones people use for procrastinating in everyday life. There's something that needs to happen first.

One reason to launch quickly is that it forces you to actually finish some quantum of work. Nothing is truly finished till it's released; you can see that from the rush of work that's always involved in releasing anything, no matter how finished you thought it was. The other reason you need to launch is that it's only by bouncing your idea off users that you fully understand it.

 
Launching Too Early
Launching too slowly has probably killed a hundred times more startups than launching too fast, but it is possible to launch too fast. The danger here is that you ruin your reputation. You launch something, the early adopters try it out, and if it's no good they may never come back.

So what's the minimum you need to launch? We suggest startups think about what they plan to do, identify a core that's both (a) useful on its own and (b) something that can be incrementally expanded into the whole project, and then get that done as soon as possible.

Spending Too Much
It's hard to distinguish spending too much from raising too little cash. If you run out of money, you could say either was the cause. The only way to decide which to call it is by comparison with other startups. If you raised five million and ran out of money, you probably spent too much.

Burning through too much money is not as common as it used to be. Founders seem to have learned that lesson. Plus it keeps getting cheaper to start a startup.
Sacrificing Users To (Supposed) Profit

The companies that win are the ones that put users first. Google, is an excellent example. They made search work, then worried about how to make money from it. And yet some startup founders still think it's irresponsible not to focus on the business model from the beginning. They're often encouraged in this by investors whose experience comes from less malleable industries.
Let these tips guide you to success.

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