Why Most of the Startups end up in Failure?

Last Updated On: April 24, 2021, 11:24 p.m.


What Is a Startup?

A startup is a young company founded by one or more entrepreneurs to develop a unique product or service and bring it to market. By its nature, the typical startup tends to be a shoestring operation, with initial funding from the founders or their friends and families.

One of the startup's first tasks is raising a substantial amount of money to further develop the product. To do that, they have to make a strong argument, if not a prototype, that supports their claim that their idea is truly new or a great improvement to something on the market.

Though a vast majority of startups fail, some of history's most successful entrepreneurs created startups like Microsoft (founded by Bill Gates), Ford Motors (founded by Henry Ford), and McDonald's (founded by Ray Kroc).


Why Most Start-up Fails?

The reason for failing is very simple. They are not gaining customers because of better quality of products or services. They are gaining customers by offering artificial discounts, which cannot be offered lifelong. The day they remove discounts and start offering at market price, they start losing customers. Their only hope is, your neighbourhood vendor doesn’t survive till that time, so that they can monopolize.

Now the question is, whether this situation will be desirable for customers and investors. Sane Customers and Investors will always look out for businesses that follow a sustainable business model. Other than this, there are few more reasons, why most of these Startups fail?


1. No Customer Service

Many of them don't really bother about serving their customers well. This is because they see new customers coming in every day. This ignorance to customer service deprives them of loyal customers.


2. Backstabbing the Customer

Some of them try to lure customers by offering freebies or low costs. But behind the scenes, they sell the crucial data of the customers which results in fraudulent transactions. This bursts their image overnight. Most of the discount brokerage houses fall in this category.


3. Copy Cats with No Sharp Claws

Most of them just want to copy someone else and try to gain customers by selling at loss. But they do not have any competitive edge, and thus they fail.


4. Doing it Just for Fun

It sounds counterintuitive, but many of them DON’T WANT to build a successful business. 


5. Looking For Shortcuts

 Some of them want to be an overnight success. There are companies that have become successful over 10-15-20 years. But if you look for shortcuts, you are most likely to fail. It is definitely encouraging to see that the youth of India wants to become entrepreneurs. We need more entrepreneurs in the country. But to become a successful entrepreneur, you need some basic skills, a long-term mindset and proper guidance. It could be a good idea to look out for an entrepreneurship mentor who can handhold you in your journey to build a successful business.


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