Why startups fail and succeed?

December 3, 2020

Getting a startup to succeed isn’t easy at all. Anyone who’s been down that journey can vouch for that. Many reasons can lead to startup failure. Yet, the plus is how many mistakes immediately become avoidable to get a startup to succeed. Rather than being discouraged by the high number of failing startups per day worldwide, learn from other entrepreneurs and their mistakes; your own especially, to pave a better business road for your business. To stir your thoughts in the right direction, here’s a full read on why startups fail (and only some succeed.) 

Top reasons why startups fail

A lack of startup funding

You might have guessed one of the top reasons why startups fail is a lack of funding. That’s undoubtedly why excellent tools nowadays can help find the right kind of investors for your company. It’s a driving issue that keeps companies from accessing investors, let alone give them a return on their investment. 

No market need for our idea

Another main reason for startup failure is a lack of a market need for a particular product or service. Fantastic ideas are great! Yet, it takes more than that to reach startup success. 

A great team and marketing strategy for insertion can all fail, too. And this happens if there’s no real market need for what we put out there in the world. To counter this failure, make sure a sizable portion of the market needs or wants your product or service. And do so way before you even begin calling meetings to get a startup off the ground.

The most ideal team for your business

A wrong team can also lead to startup failure. Excellent and innovative leadership does beautifully in business, but that’s not a startup’s only driving force. Get the perfect team all around. 

Everyone you bring onboard your company should be essential in what they do, especially at a business’s starting stages. Get people who are committed and know very well what they’re doing. See it as getting experts in each driving field of your business, if you can. 

You might otherwise end up losing all your hard work because the people working with you were not up for the task. Rather than deliver, get those leaders in a particular field who can make a company excel. 

Check your pricing and be mindful of competitors

Faulty pricing and your competitors can also affect your startup to the point of going bust. 

To mitigate that, do extensive research on products or services like yours. Offer the best set of pricing to stay competitive yet also stand out. Bear in mind consumers aren’t likely to spend more than necessary on something they can get from a similar competitor. 

Getting pricing right can be so hard you might come and go on the fees you set. You’ll undoubtedly come up with different plans or schemes and tweak this as you go. Yet, for that, your startup needs to start off on an operating ground. Make sure pricing is a non-issue for a certain period, at least. And this is necessary so you can scale on the side. 

The best piece of advice we can give you here is to truly analyze, study, follow, and even be a consumer of your competitors’ offers. And doing so should help on different levels, including developing a differentiating factor for what you insert in the market. 

Try to set this at a price that’s right to keep you running as you move on to diverse funding stages as a business. Funnily enough, many accelerator programs and incubators can help with this aspect of the price tuning for a starting company concerning its competition.

Image contains a person using a laptop

What percentage of startups fail?

According to Review42’s data, 90% of new startups fail. Yes, we know that can be discouraging. But it’s essential to take on our tasks with clarity in these numbers. Know what we’re up against. More importantly, set a goal as to where you want your business to go.

Focusing on the 10% who don’t fail, 30% of startups break even, and only 40% turn a profit. 

For your company to be a part of that 10% who make it and get to profitability, work strenuously, and be smart about how you run your business. Seek to avoid those mistakes we know can bring you down, and turn them around to help your business succeed.

Also, having a co-founder increases your chances of success. Think about that if you haven’t up to now. Co-founders, such as a triad or a business partner, can help you scale at the right time - and not do so prematurely, for example.

We don’t want to leave you with only reasons why it’s tough out there for startups. On the contrary, we want to give you a bit of the plus sides to doing business. Let’s talk about startup success, then.  

Why do startups succeed?

Expertise certainly helps

About 18% of all first-time entrepreneurs make it in business. Yet, according to that same source we just linked, the odds of succeeding increase to about 20% for those who give it a second try. And what’s even better about those figures is how chances of succeeding increase. Over the subsequent attempt after you’ve made it in business, these go up to an impressive 30%. Nice thought at scaling even as expertise is accrued, no? Consider this for the kind of partnerships you establish to improve your chances of succeeding, too. That includes co-founding partners and team members in different areas.

Listen to what experts have to say to help you succeed. Experienced mentors are part of a startup’s success rate. Surround yourself with people who can give you savvy business advice. Speak to those who’ve been through what you are and listen to what allowed them to succeed.

Draft a solid plan

Having a plan is vital to making it as a startup. This doesn’t erase eventual setbacks and changes of direction at all. Yet, creating a plan and committing to it is part of much-needed success in business. 

Believe in what you do with passion.

Being motivated and passionate about what you do should be a given. But beyond just that, don’t spend a minute of your time or waste that of your business contacts trying to make something work in which you don’t honestly believe. You’ll need to be the leading seller of your business idea. By definition, a much-needed startup business pitch needs to be sold with passion by the CEO or presenter of a business. If your idea doesn’t get that spark going, it’ll be hard to get others to be your supporters or allies. 

Know you can make it

We all know getting a business running is hard. And driving that company to revenue and profitability calls for a lot of long-term and hard work. Yet, rest assured that there are steps to help you succeed. Here are a few tools that have helped us along the way, by the way. 

Create stunning presentations for startup pitches 

Whenever you’re ready to pitch, and once you have the perfect business idea and some guidance, benefit from our startup experts and in-house designers. Improve your chances of fundraising with our founder’s edition plan and our content writing services.

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Angelica A.
Freelance and Remote Web Content Writer is the current hat under which Ang keeps on the global move. Writing blogs, website content and (especially) Facebook ads for diverse small businesses, entrepreneurs and international parties is part of the common work under Ang's belt. Otherwise, you'll see Ang riding a motorcycle on their vegan way out of theater rehearsal.
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