10 Reasons Why Tech Startups are Failing Today
A startup is a business venture which is a newly emerged business model that aims at meeting market needs by offering innovative services, products or a process. A startup may be technology oriented and has growth potential.
The startup culture is becoming rapidly popular in many parts of the world including India and more youngsters now prefer to be their own boss. But it is a proven fact that 9 out of 10 startups fail within 3 years of initiation which is as high as 80% of the total startups. You will come across stories of success and achievements of many companies but very few will come forward with their reasons of failure. But it is only through failures that one can learn the best.
There are multiple reasons for the failure of tech startups today. Some of them are as under:
1. The Team is not Right
One reason for the failure of startups today is the lack of a diversified team or having on board people who have little or no interest in their business model.
It is important to have the right team which can relate to the vision and mission of the startup and help take it forward. It is also favorable for a startup to have two co-founding partners who can balance out each other and the team and also act as a sounding board for ideas that are not implemented. A diversified team that can cater to the needs of the business and set visions for the startup is essential.
2. Market Needs are not Met
This is probably the biggest reason why any business can fail. When the market needs are either not tapped properly or a startup fails to meet the market needs, it usually runs out of course. For most tech startups, the ideation is of solutions and services that they want to provide and then matching problems are searched for in the market; which is why they fail. Serve the market what it wants.
3. Lack of a Concrete Business Plan
These days it is not so difficult to learn a technology such as coding, programming, software development and provide solutions such as website designing, mobility, automation, digitalization of wallets, and apps for easy access to solutions and services. But more often than not, these startups fail for lack of a proper plan in place.
Tech startups that lack the vision and fail to articulate every aspect of it such as customer segment, cost and revenue models, etc do not go a long way.
4. Running Out of Cash
It is essential that the founders of a startup are vigilant enough to map their cash balance and flow and map the reserves that they have. In case you are running on a cash reserve, you are sure to exhaust it if you do not get a fresh round of funding and which is why most startups fail.
5. Ignoring the Competition
When a tech startup is launched, they are advised to largely focus on their own business and getting their own set of customers and meeting their needs. But in doing so, when competition is ignored, it can lead to dwindling of the startup.
6. Lack of Proper Marketing
One of the major reasons for tech startups to fail today is that they are good at coding and building a service or solution but not good at marketing or promoting their services and hence with time, they fail.
7. Too Early for the Market
Often tech startups launch their ideas in the market when the customers are not ready for the same. And when ideas or technology is ahead of its market, it can lead to failure.
8. Herd Mentality
Knowing a technology is relatively easier than running a business. And not everyone is adept at it. When you follow the herd without mapping your own strengths and weaknesses or abilities to run a business, with time you realize it is something you are not suited at and you shut down. Knowing a technology doesn’t guarantee a successful entrepreneurship.
9. Lack of Constant Improvisation
When a tech startup fails to consider its customers’ feedback and make constant improvisations to suit the market needs and maintain customer satisfaction, it can lead to failure.
10. Lack of Mentorship
With the number of startups all around, it is not easy to find good mentors or advisors. And this is a major reason for their failure. It is always good to have a mentor who can guide and advise you and help you take better decisions.
While it is always favorable to be your own boss, it takes an equal amount of dedication, planning, vision, and execution to be a successful entrepreneur and for that, the above points are necessary to keep in mind. Learn from the failure of others and you will go a long way.
