What makes a start-up fail is a very tricky question. It is very much equivalent to asking someone how to make a start-up successful. The best way to answer to such questions is to look at the problems or mistakes that can actually kill your start-up. How wonderful will it be if you have a list of all the things you shouldn't do! It’s like a recipe for succeeding, just by negating. Based on the general human tendency, it's always easier to catch yourself doing something you shouldn't than always to remember to do something you should. The biggest mistake that kills startups is not making something users want. If you make something users want, you'll probably do well and if you don't make something users want, then you're dead for sure. So let’s go through this quick list which will give you some reasons why have startups failed:
Single Founder: Look at all the big and successful startup’s, they usually turn out to have more than one founder. Starting a startup is too hard for one person. Even if you are a super person and could do all the work yourself, you need colleagues to brainstorm with, to talk you about the strategic decisions, and also cheer you up when things go wrong. Moreover, with some many low points in a startup, there are only a few could bear them alone. With multiple business partner, the pride and mutual loyalty shared by the parter makes things easier.
Inflexibility: Starting a startup is a tough call. Sticking to your vision approach works where the problem is well-defined. Startups are more like experiments, and you need to follow the trail wherever it leads. Sometimes original plans do not work well. Most successful startups end up doing something different than they originally intended. So be prepared to see the better idea when it arrives. Openness to new ideas sometimes just turns right. If the idea represents some kind of progression, you're probably on the right path. If you're thinking about turning in some new direction and your users seem excited about it, it's probably a good bet.
Trivial Niche: Sometime we prefer a small and obscure niche in the hope of avoiding competition. Please note that if you do anything well, you're going to have competitors and it is very important to face that. Avoiding good ideas leads to avoid competition. Small ideas seem safer, but playing safe will let your hands off grand ideas.
Not having a specific user in mind: A product cannot be built if you don’t understand your users. It is very surprising to learn that a lot of founders are not sure exactly the audience for whom they're building the product. For a start-up specially, you cannot rely on guess work of what will work! You have to find users and measure their responses. So for example, if you're going to make something for mellenials, you have to be able to take some specific ones into using what you're making. If you can't, you're on the wrong track.
Location: Location sometime proves out to be a big advantage. Why it is that some sites become the startup hubs, but the reason startups prosper in them is probably the same as it is for any industry. These locations have the access to the required expertise, standards are higher; right talent is available, supporting industries are around, a good network is there, etc. While these might not be the only factors that boost startups, but these are the factors that cannot be missed for sure!
Profit over users: In the initial years, the business model is all about making something people want, but sometimes making money from something that people want is so much harder. The facts say that the companies that win are the ones that put users first. It is very irresponsible not to think about what people want and more more irresponsible not to think about the product. If your product is right and what your audience want, the money will follow.
Technology: Having a clever idea and hiring the right team, especially the technology team to implement it makes the startup successful. It seems easy, but is much harder than it sounds. For founders, having complete knowledge of the product and technology is very critical. To find a good technology team, you need to hire the right people. So if you can't recognize good programmers, how would you even do that? That’s why it is always advised to know the technology you are getting into and then hire the right people who can implement it.
Delay in Launching: Startups make all kinds of excuses for delaying their launch. A set launch date actually helps you to finish some quantum of work. While we have several reasons which lead to delays in launching like slow work, fear of having to deal with users, fear of being judged, multi-tasking, etc. Fortunately, you can combat all of them by the simple expedient of forcing yourself to launch something fairly quickly.
Launching Too Early: While launching too slowly has probably killed a lot of startups, so has the launch before time. The brand reputation is at stake. While launch something, the early adopters try it out, and if it's no good they may never come back. So it is suggested that startups think thoroughly about what they plan to do, identify a core area, incrementally expanded into the whole project, and then get it done on a set timeline.
Funding: Startup funding is measured in time. A lot of startups shut down shop before the money runs out. So if you take money from investors, you have to take enough to get to the next step. A good control over both how much you spend and what is the next step is very important. Sometimes a lot of funding makes you spend too much. So even raising too much money is problematic. A VC want their money to go to work. Moreover, raising a large investment takes a lot of time and with every increase in amount, the investors get very cautious.
Poor Investor Management: Managing investors is a very tough task. A lot of our energy gets drained away in disputes with investors, which should be invested in the business. A proper investor management helps the founders to have their attention focused on the product.
In conclusion, this is not a complete list of the causes of failure. There are many reasons which you can’t control. A winner never lets risks paralyze them. Moreover, entrepreneurs are, by definition, risk takers. Risk management is an important source of competitive advantage. Believe in yourself and you can beat the odds and build a thriving and rewarding venture by learning to recognize and mitigate risks.