We recently found an interesting CBinsights dossier on the most common reasons startups fail. Although we begin analyzing the dossier with this graph, let us run through all the reasons set out in the study, in ascending order of importance. There are 20, but sometimes several can occur simultaneously.
We want to convey all our encouragement to all these champions of failure, since nothing helps to reach success more than a past failure.
20. Failure to abandon projects in time. If something doesn’t work, change it, or abandon it. 7% of startups lose time (and money) on projects that will never work out.
19. Burning out before throwing in the towel, because one becomes obsessed with something impossible or doesn’t know how to share responsibilities. The ‘burn-out syndrome’is, in fact, behind 8% of startup failures.
18. Relying on external funding rather than contacts. Use your people to make your business grow. 8% of startups die before they are known beyond the garage doors where they were born.
17. Those “small legal mishaps”.Sometimes a business model built on a simple idea has an entire legal maze behind it that you must work your way through. 8% of startups are suffocated because they don’t understand the environment they have to work in.
16. No money or support from investors!A categorical and self-explanatory phrase cited by 8% of failed startups.
15. Location.Although technology seems to have eroded geographical barriers, they are still there. Evaluate how they could affect your business, something that 9% of the startups cited by CBinsights did not do.
14. Passion, that secret ingredient.When an idea is born without the passion of its creators, or with a lack of knowledge of the terrain in which it must grow, it’s hard for the business to take off. 9% of failed startups found this out the hard way.
13. Simply trying and trying. Changes in direction without a specific course. Trying things without gauging the effects of your actions, and lacking strategic objectives, is behind 10% of startups that go under.
12. Bad karma with partners and investors.A time bomb that ends up exploding for 13% of startups.
11. Losing focus (if it was ever there). Goes hand-in-hand with point 13. Action without direction, professional or personal distractions… Reasons behind 13% of startup casualties.
10. Launching before a product is mature, or when it is too mature.An MVP that really isn’t one, or a product its creators feel is perfect, but has actually been obsolete for a long time in the market. Accounts for 13% of startup mortality.
9. The client is wrong.Maybe. But he or she is the one who buys your product. A lack of flexibility or interest in gathering opinions from clients has meant the end of 14% of startups.
8. Poor marketing.Building a product is not enough, you also have to sell it. 14% of startups have closed because of their lack of interest in this area.
7. Product or business model first?The answer might seem obvious but 17% of startups still become entangled in debates on chicken and eggs.
6. “User un-friendly” products.Products that don’t take user needs into account, or are difficult to use. 17% of startups are ‘misunderstood’ all the way to the grave.
5. Harmonizing the complicated whirl of prices and costs, without ending in disaster like 18% of startups.
4. Losing out to the competition.Becoming obsessed with competitors is just as unsound as ignoring them altogether. Competitors are behind the failure of 19% of startups.
3. A bus carrying the wrong passengers (including the driver) is doomed to crash (23% of startup wrecks). Building a great team, diverse and with a wide range of expertise and skills is behind many success stories.
2. Running out of money.And when you had that money, not thinking about how to spend it. This is behind the end of 29% of startups.
1. Thinking about a problem, not a market. Wanting to solve a specific problem rather that solving a real need in the market. Utopian formulations are behind the end of 42% (!) of startups, soon after they take off. Not much of a history.
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