How many startup businesses fail? Why Startups Fail? What are the reasons for startup business failure?
Two words: A Lot!
Yes, 90 percent of business startups fail. According to a survey published in Fortune, nine out of ten ventures for business go obsolete within a few months of their launch. Another study from the Statistic Brain suggests that US companies alone face a massive loss by 50 percent failure rate over the course of five years. After a decade, this percentage tops to 70 percent. These startup failure rate statistics are pretty staggering.
What Are The Top Reasons Businesses Fail?
Now that we know how many startup fail? It is time to know why do 90% startups fail, especially why do businesses fail in the first year.
On deeply identifying the top reasons for startup business failure, we have made a list of major contributing factors.
Some of the top reasons new businesses fail:
- No need in the market
- Lack of passion, motivation, and commitment
- Unwillingness to acknowledge mistakes and correct them
- Not taking expert suggestions and taking advice from inexperienced people
- Lack of leadership qualities and skills
- Performing poorly in marketing, finance, and operations
- Investing too early as well as too much
- Lack of financial freedom
- Getting outcompeted
As you might conclude, investing in the wrong direction and making poor decisions are major factors contributing to the percentage of businesses that fail. The management mistakes that business ventures make during their course of management are also to be blamed.
Issues Related to Leadership
Poor leadership capabilitiesare one of the most common reasons why startups fail. If the oars are given to the wrong mentorship, the boat can easily sink, driving your business to a loss. Some of the reasons are as under:
- No clear focus in the business
- Inability to get the right team
- Issues in generating finance
- Inability to produce a high-quality product that solves the target audience’s problems
- Failure to construct a practical business model
- No focus or poor strategy on handling stakeholders
You will notice that a lot of it has to do with a lack of constructing a team and being deficient in leadership. These issues are gravely rooted to the leader’s inability to make a team visionary and functional enough to steer the business model in the right direction.
Also, this results in a lack of quality processing and discipline that ultimately results in the failure of the business.
Why Startups Fail? How To Avoid Startup Failure?
So, now you know the reasons why businesses fail. Although the statistics concerning the failure rate are disappointing, it is more important to recognize the patterns and glitches in business. These include decision making, priorities as well as leadership qualities.
Focusing on these aspects is highly crucial in terms of setting your business to a successful path of growth. With attention to details, you can start a business and see it flourish as you proceed in making tactical upgrades.