More than 51% of companies fail in their first four years and in the world of startups, statistics are worse: only 1 in 10 startups survive the 3rd year and achieve success.

Therefore, when we set up a startup, it is necessary to accept something: it has a great risk of failure. And we have to ask ourselves, how can we reduce that risk of failure in the startup I’m setting up?

To avoid failure to the maximum, we must learn lessons from the failures of others and shorten the learning curve for our own project. Another nice idea to reduce the percentage of failure is to have experience of a few years in other projects since it takes time to learn how to start up a successful company. In fact, around age 35 is a good age to start.

Now coming back to the failure reasons.  To dig into the topic, CBinsights conducted a study and found 20 main reasons for the failure of startups. Here are these with percentage of companies being target of it.

  1. Our company does not solve any problem or any need. That is, the market does not need it. (42%)
  2. “No cash, no business”, i.e. lack of funding. (29%)
  3. Not having the right team, lack of motivation, expertise or common vision (23%)
  4. Too much competition (19%)
  5. Do not hit on the prices. In addition to solving a need, we need customers who are willing to pay the price we set (18%)
  6. Development of a poor product, which is disappointing for the user (17%)
  7. Not having a clear business model from the beginning. I mean, do not think about how I’m going to make money (17%)
  8. Lack of adequate marketing. Some founders think that a good product is enough and they are wrong. (14%)
  9. Ignore customers, i.e., being so enamored with his idea that we ignore what customers tell us about it (14%)
  10. Do not launch the product at the right time. That is, throw it too early or too late (13%)
  11. Lose focus. Continuous change of vision, encompassing too many ideas… (13%)
  12. Lack of harmony among the founders, in the team or with investors (13%)
  13. Make more or less profound changes  in the business model of a company to continue growing. But do it on incomplete data and therefore take the whole company to a wrong strategy (10%)
  14. Lack of passion and persistence of the founders (9%)
  15. Bad location of the company. You have to be at the right time and in the right place (9%)
  16. Lack of interest on the part of investors in investing in the project (8%)
  17. Changes in legislation that may adversely affect our business. For example, the case of Uber that in some cities it is prohibited (8%)
  18. Lack of contacts, networking or good counselors (8%)
  19. That the founders are burned by the hard life of the entrepreneur (8%)
  20. Lack of flexibility. The arrogance or lack of perspective can be a great disappointment in both customers and employees, resulting in the failure of startups (7%)

So now, you already know what are the main mistakes that make companies fail. When you are going to launch your project, analyze each one of it to avoid committing them and thus you will have more opportunities to make your project a success. Good Luck!

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