Feb 05, 2021

Reasons For Downfall of Startups

In today's competitive world, a startup seems to be a pretty intriguing word but that’s not how it stands. Startups play a very vital role in a country's economy. India being a developing country creates a market for everything. This facilitates employment opportunities which leads to the perfect environment for any startup. Whenever we think of the word 'Startup', the first thought in our mind is, what if it fails? What if the idea doesn't work? What if someone else steals the idea and executes it? How will the start up so in the future? That's where the problem arises.

To save one's startup from going down such a drastic path one needs to take some steps and the first of them is to study the reasons behind the downfalls of such startups even after they had grown into big companies. Following are some of the reasons :-

1. No Apparent Need for Product or Service in the Market - If one has no use of a product or service they are never going to buy or use it. This might be the biggest reason behind the failure of many start-ups.
Some important points to keep in mind regarding this:
• Mistimed Product- If a person starts selling ice-cream in winter or sells blankets in summer, the sales of that business would never scale up. There are some unstated set of rules which are followed by a startup. One should know what is the correct timing to hit the market or else it can be a drawback for the startup.
• Unfriendly Product - A customer will only love a product if it is user friendly. So, keeping this in mind one should always try to make their product more and more user-friendly which will keep the customers intact.

2. Poor Business Model - If a startup is having a poor business model then we can say it’s not even in business. There is no meaning in doing any work and investing time into something if there are no projected returns and profit. Such conditions can lead to further problems such as:
• Having No Investors - Nobody will ever invest in the startup, which can’t guarantee any proper outcome.
• Running Out of Capital - Running out of funds is a big reason behind the failures of startups. Each startup needs more and more money for research or manufacturing, marketing, and any other purpose but only those startups can stand up which are capable of using the available money efficiently.

3. Wrong and Inefficient Marketing - Marketing plays a very important role in the progress of any project. Appropriate marketing can help a startup reach new goals and ultimately grow its sales. If a customer gets the wrong essence of the particular product, no matter how good the product is no one is going to buy it. The market is surely going to have competition but only those who have an extraordinary selling point.

4. Failed Geographical Expansion - Having a successful customer base in one area doesn’t mean the same is going to happen everywhere else. If an ice-cream seller stops at a single ice-cream parlor, he is going to have a single parlor all his life and in retrospect is not a true entrepreneur. An entrepreneur will open at a second location making it stable and he will grow more, eventually becoming an ice-cream company spread over a city-state-country. One should try to expand and adapt according to the conditions.

5. Conflicts Among the Team - A startup can only stand with strong support from its team. For example, in football a team with no striker or a team with more than needed goalkeepers is not going to win, same goes for a startup. A startup team should have members with the dedicated skill set and willingness to learn according to the situations. It can impact the statistics on a large scale.

6. Lack of Passion - If one lacks passion then he can never withstand all pressure, depression, stress that an entrepreneur needs to face. The journey of growth of a startup is a long trip full of problems and which needs patience. A project can take months or years to show results and all this can break them or make them.

These were some of the most important reasons that can lead to the downfall of a startup. We hope you have a clear perspective as to why so many of the startups can’t reach their end goal. But now as we know about what types of problems can arise and how we can overcome them accordingly. Lastly, the most important thing is to have faith in yourself.

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