Money For Lunch – Top Reasons Why Startups Fail

Top Reasons Why Startups Fail

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While everyone launches their business with the best of intentions and dreams of making it a success, the unfortunate fact is that many startups fail very quickly after they have been launched. In fact, in the US, around 50 percent go under within five years, and around 70 percent within 10. There are various specific reasons why startups don’t work out the way their founders had intended, but we are going to discuss just a few of the most common ones right here.

No Market Need

The biggest reason for failure is there is simply no need or strong desire for the product or service that has been launched. Perhaps there were already stronger items in the marketplace or the marketing activity wasn’t strong enough. Maybe the founder hadn’t done enough research to find out what people are actually looking for. So, before you launch your business, make sure that you have checked to see if the market need is there in the first place.

Run Out of Money

The next most common reason is simply running out of money. Though there are plenty of ways of obtaining business financing like, you need to make sure that have enough of it to accomplish what you want. Accurate financial forecasting is important, and overestimating your costs is better than underestimating. You need to have enough in the bank to give yourself the best possible chance of making a success of your startup.

Bad Team

If you are going into the business with a partner, you need to be certain that you work well enough together to succeed. Similarly, when you start hiring employees, so do very carefully in your first crucial months. If you have a business partner who is not as committed to making a success of the business as you are, you may well find that your company does not move forward in the way that you want it to.


The business world is ruthless; it really is adapt or die. Maybe you have competitors who are selling products for less money than you or their marketing activity is simply stronger. As well as working out how you are going to make a success of your company, you should research closely what your competitors are doing or at least be in a position that you can differentiate yourself clearly from them.

Lack of Business Model  

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While making a business model may not exactly be the most exciting thing in the world, it is necessary if you are hoping for your startup to succeed. Before you get started, you need to have a clear business plan that acts as a template for your future. This should cover everything from what your business intends on doing to the goals that you aim to achieve and a timeline of when you can do this.

So, now that you know some of the top reasons why startups fail, hopefully, you are in a better position to sidestep these yourself.


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