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Top 10 Causes of Start-up Business Failure in 2022 – SiteProNews


Launching a start-up can be riskier than managing an inherited or established business. There are chances of making mistakes in the process. Since many new entrepreneurs lack experience, they often find it challenging to scale up their start-up. As a result, their start-ups are unable to overcome hurdles and the business fails within the first year. However, when planned properly, these hurdles can be avoided and entrepreneurs can learn from already made mistakes in this process. Thus, we have compiled a list of 10 common reasons that will tell you why most start-ups fail within the first year.

1. Lack of Planning

Several start-ups do not create long-term strategies for their businesses. They just start with an idea for a product or service and handle situations as they come in their way. Regardless of how great your idea is, creating a plan should be your first step before launching a start-up. With proper planning, you will get an idea of all the factors that are likely to influence your business in the future. It will also help you in taking decisions and will give direction to your idea.

2. Setting Unrealistic Goals

A common mistake that many new start-ups make is setting unrealistic goals. With an aim to scale up quickly they set goals that are not achievable. For instance, getting one or two clients, does not means that you have already marked your presence in the market. Based on the market demand, set small goals that can be easily achieved. As you get to know about the current trends in the market, validate your start-up idea and create small goals to gradually scale up your business.

3. Not Understanding the Market

Whether you are planning to enter into the local market or capture the global market, not understanding the market properly can be a cause for your start-up failure. A sound understanding of the market is needed to drive meaningful innovation. As the market can be extremely complex, first try to get insights into the market by analysing the entrepreneurial journeys of other start-ups. Identify the factors that helped them succeed and the ones that resulted in a failure. Based on the information collected, create a strategy that will prepare you to face challenges and drive sales.

4. Lack of Funds

Running a business needs money. Without money, you cannot expect your business to function efficiently and grow. Good financial planning is essential to keep a start-up running. Many start-ups do not make a profit in the initial months. This can put a lot of pressure on the business owners to pay salaries and fulfil operational expenditures. Thus, make sure that you have enough funds to survive even in a difficult market situation.

5. Feeling Burned Out

Launching a start-up means days of hard work. Many new entrepreneurs complain about a lack of work-life balance. As a result, they feel burned out and are unable to work passionately towards their dream. However, instead of losing traction, new entrepreneurs need to learn to make better decisions under pressure. Staying focused and organised will help you align your work with your goals. It will further prevent you from feeling stressed or burned-out in difficult situations.

6. Impromptu Hiring

Every business needs a team that can contribute towards its growth. However, that does not mean that you need to hire people for multiple positions in your start-up. Ideally, new start-ups can work well with limited manpower. Based on market demand, you can gradually hire more staff. However, before hiring additional staff, conduct a thorough check to see if the existing staff can handle multiple responsibilities. A small team with highly productive employees is more likely to become successful than a big team with little productivity. Thus, treat your employees well and push them to work harder.

7. No Online Presence

Due to the growing use of social media platforms, consumers prefer to buy products from businesses that have a good online presence. People use social media as a search engine to find new brands, products and services. In addition to focussing on offline marketing, create a strategy to have an online presence. By posting regularly and interacting with people on social media, you can build a good customer base. However, to get the attention of more people on social media while interacting with people online, make sure to match your tone with that of your brand’s personality.

8. Over-customising

In an attempt to get more business, new start-ups often try to meet all the demands of their customers. However, this might not prove to be fruitful at all times. Although giving some customisation options is acceptable, do not go out of your way to satisfy your customers. Try to retain the originality of your products and services. Only promise customisation options for the products that you can deliver on time. Additionally, while offering customisation, check if the cost involved in customisation justifies the resources utilised.

9. Wrong Partnership

Several new entrepreneurs need a partner to launch a start-up. A strong partnership can help you achieve your targets and scale your business. However, getting into a wrong partnership might have reverse consequences for your business. Thus, before choosing a business partner, check if the person has adequate knowledge of the products and the market. Additionally, based on the partnership, share your duties, responsibilities and profits. Having a clear business plan with all the terms can be useful for avoiding future conflicts with your business partner.

10. Reluctance to Feedback

Being open to feedback can be a good way to improvise and grow your new business. While many new entrepreneurs take feedback positively, some are reluctant to take feedback due to the fear of being criticised. Instead of feeling disheartened, consider criticism as an opportunity to learn from other’s perspectives. Ask your employees, friends, family members and customers to test your product and give feedback. Understand their opinions and see how you can improve your products. Additionally, getting regular feedback from new customers will tell you about the latest market trends and customers expectations from your brand.



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