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10 Major Reasons of Startup Failure


Startup culture is growing rapidly in India with Bangalore, New Delhi, Mumbai, Hyderabad being the cities with highest number of startups being founded every year. Though Bangalore is called as the Silicon Valley of India, Mumbai is emerging as the fastest growing startup hub of India in 2014. 2014 is likely to see more startups being founded in three areas viz. Marketplace Tools, DIY e-commerce & enablers, content discovery and B2C. 

Despite of all these positive vibes about startups, a significant number of startups, more than 80% of the startups fail within their first 3 years of run. Being part of the entrepreneur community, I never wanted startups fail. After searching the web for the reasons, I came up with a list of following 10 major reasons for startup failure.

1.Building wrong product
Building a product without actually validating the product idea through potentials customers. Moreover, building a product that solves a trifle problem in customers life rather than one which is the major pain source for them.

2.Building wrong team
Often in a hurry to launch their product early, startups tend to build teams with people who have little or no interest in the product idea. This leads to product failure as the people working never give their best for the product.
  
3.Lack of unique value propositions
If your product fails to deliver one or more UVP as compared  to similar products available in market already, your product is bound to fail. Before you start building your product, figure out at least 4 UVP which will help you stand out in competition and will give a competitive advantage increasing your profits.

4.Lack of persistence
If the startup founders does not have a strong passion for their product, they will not be able to persist through the bad times, which are always there in startup run, more often than good times. Bad times questions the faith of founders in their product. Lack of faith often leads to discontinuity of the product, which leads to startup failure. 
  
5.Failing to Pivot/change direction
Often due to the love for their initial/first product, startups, despite knowing that they are building a wrong product, do not pivot. This leads to wastage of time, resources and money too , eventually leading to failure. 

6.No Mentors or Advisers
It is always good to have a mentor for your startup. Going alone there are more chances of you making mistakes that might lead you to failure. Mentors can guide you in your day to day decisions to avoid falling of the cliff.  

7.Slowness To Launch
Firstly, every idea dies with the time passing. This is because of the simple fact that we start loosing interest and start under prioritizing as the time passes. Secondly, in today's fast moving business world, everyday thousands of products are solving same problem. In such scenario, delaying launch of your product might actually leave you back in competition, eventually might lead to product failure. 
  
8..CEO / Founder(s) Unable to Make Decisions
A founder must always be clear of what his vision is, for his startup. This helps in making quick and efficient decisions in critical times. Often startup founders are not clear of what they want to achieve with their product, about where they want to go etc. Unclear of their own path, these founders face problem while making decisions, many making wrong decision all along. 

9.No Business plan
You might wonder that why I have put this on ninth number in the list. But it is indeed comparatively less important than the above listed eight reasons. Every startup once sure of their vision, having got a mentor, must create a business plan to articulate every single aspect viz. customer segment, distribution channels,cost and revenue models etc of their business.  Business plan will give you a clear idea of your operations in all together. Failing to create business plan might lead you to loosing one or other important aspect of startup. 

10.Unaware of competitors and changing market conditions 

Few More Reasons-

Out of Control Growth
Poor Accounting Controls
Not Enough Cash Cushion
Operational Ineptitude
Operational Inefficiencies (Spending too much)
Declining Market
Obscure or Marginal Niche
Lack of Succession and/or Exit Planning
Single Founder
Bad Location
Inability to Change Direction Quickly
Making Bad Hires

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