Statistics show in the USA, every year approximately 6M businesses are registered, 30% can’t even survive for 2 years while 50% shut down their business in 5 years. In the UK, approximately 382K businesses started while 360K businesses shut down in 2017 and 2018 each. In India, approximately 90% of startups failed in the last 5 years.
Now the most important question comes into our mind that why do startups fail? I did some research on the topic and I came across hundreds of reasons for that.
In my way of putting things, I found most of them are around Confidence. Yes, different forms and wrong combination of confidence may lead to disaster for any business.
Over Self Confidence
This is the biggest villain for any entrepreneur. Sometimes we get overwhelmed by our own idea and people around us are sycophant or with the limited knowledge that they can’t do constructive criticism. We start thinking that we have developed something that is perfect and going to rock the market. This may lead to the following setbacks –
1) Poor Planning and Insufficient Analysis –
We believe just having a good product idea is more than sufficient for any venture but
- Improper planning, superficial business model and insufficient market research are enemies for the startup, even in initial days.
- If a product launch is mistimed, that can also take the business to the end.
- Few startups have failed for not considering the legal aspects, Some times they had to pay huge find and ends as the closure of a business.
- There is nothing certain but uncertain – considering this proverb, an effective contingency plan and smart exit plan are one of the most significant parts of panning and their absence may prove catastrophe for business.
2) Unfriendly Product –
This also leads to the production of an unfriendly product. We don’t consider taking user interviews and market surveys.
3) Inefficient Sales/Marketing Strategies –
It really doesn’t matter how good your product is, aggressive marketing/sales strategy is always needed.
Low Self Confidence –
As the first reason, again entrepreneur himself is responsible for this. Not getting the initial traction, we lose our momentum and this may lead to –
- Lack of passion
- Lose focus
- Poor Marketing
- Demotivated Team
- Not ready to Compete to new players
- Poor Management
Low Confidence by Investors
Now investors are not having confidence in our product, we may not receive the funds and it can cause sudden death to the business.
If there are many investors, disharmony among them can also result in failure. We should be choosing our investors diligently if we need more than one.
Low Confidence by Customers
The last and important factor is the Low confidence of the customer. This may result from ignorance of customers, pathetic after-sales service, not meeting their needs, pricing issues of the product. This is true to a way to fail and most difficult to revive.
Now as we see, out of these bad combinations 50% are related to the entrepreneur himself/herself so it is always best to have a matured level of confidence.
What is your opinion??