Why startup companies fail

Many startups are turning to content marketing to fuel growth , due to its relative affordability compared with traditional marketing and PR tactics. Better yet, this approach is highly effective. A well-executed, comprehensive content marketing strategy can attract press coverage, improve SEO, and drive traffic to your site — all of which can help startups gain traction. We chose startups for this study based on those with founders who publicly wrote about their failure, or had sufficient media coverage detailing the shutdown.

From there, we read each postmortem essay or article about the startup and identified the top one through four primary reasons for failure. At Fractl, creating content marketing campaigns paired with strategic Toggle the Widgetbar.

Why Do Startups Fail? That being said, the following issues were the most common among the failed startups we analyzed: Good Idea, Bad Business. More than a quarter of startups pointed to a weak business model as a reason they failed. Not Enough Money. The more narrowly defined your niche is, the easier it will be to market to the right audience. Lack of Research : You have to know what your customers want.

Too many would-be entrepreneurs go into the market thinking they have a great service or product to offer, but they fail to realize that nobody wants that service or product. The Small Business Administration considers a business a startup when it hires at least one employee.

Bad Partnership : Often, when starting a business, a partner is needed. One of you is an expert in one area, and the other is an expert in another one.

Your ideas for the company will conflict, and without a clear resolution, it starts internal strife. You work harder and your partner works less, but your partner thinks they are working harder than you. By having a clear business plan that lays out the duties of each partner, you can avoid most conflicts before they even arise. Bad Marketing : It could be said that a business boils down to two aspects: marketing and bookkeeping.

The sad truth is that most entrepreneurs know their craft and little else. Instead of fumbling through your marketing campaign, hire out that aspect of your business.

It costs money, but if done right, it will bring in much more than what you spent. Not an Expert : Too many entrepreneurs start their business because they need a job.

The sad truth is that without business skills and real expertise, these entrepreneurs are destined to struggle. It seems that most businesses are destined for failure. Set Goals : Know exactly where you need to be and where you want to be. Research : Know everything about your market.

Know what customers want. Know their incomes , their desires, and what makes them tick. The more you know, the more you can pitch to them.

You must be passionate about your business, or it will just be a job. But startup failures are far more common. A founder of GameLayers blamed its failure on this. If only the start-up founders had listened to the customers they were trying to serve.

You have to pay attention to your customers and adapt to their needs. Sometimes failure was the result of not having the right people on board. That was a mistake.

The lack of focus or passion or both doomed other upstarts. Of note, only two of the top 20 reasons that startups failed was due to money, or lack thereof. A majority of founders pivoted by updating or improving their business plan. As noted earlier, a bad business plan is the third most common cause of failure and is linked to running out of money, the most frequently reported reason for failure. Few startups launch with a bulletproof, immutable plan.

Rather, successful founders create a plan and improve it continuously as market conditions and customer feedback demand.

Changing the business plan can lead to the second and third most popular strategies: improving the existing product or launching a new one. This is a rarer pivot but an important one given how commonly startups fail by running out of money or by failing to secure more funding. While capital-intensive businesses e. The odds are stacked against startups.

With this in mind, Wilbur Labs asked startup founders to indicate the advice they would give to other entrepreneurs. The leading suggestions are fundamental rules of startup survival: learn from mistakes, listen to customers, and ensure that there is a market for your product. Despite the stereotype, successful founders are not rugged individualists living off Walden Pond.

They surround themselves with experts and mentors who have encountered and solved the challenges endemic to building any startup. Founders who learn from these advisors can focus on their own vision rather than on reinventing the wheel. Although failure is disappointing, two-thirds of the founders who faced potential failure would be willing to launch another venture. Having examined why startups fail, how founders pivot, and what they advise in retrospect, what conclusion can we draw for aspiring entrepreneurs?

Research, plan, and prepare better. In retrospect, No wonder so many advised better planning. To that we offer an addendum: turn all that research into a business plan. Do not leave money to chance.

Businesses are well-equipped to solve big problems because they are supposed to be self-sustaining. Revenue from solving problems enables the business to operate long-term without external support. The surest way to avoid financial failure is to develop a business model with a predictable path to revenue and profitability. P ivots raise the odds of success.