Reasons for Failures of Startups at an Early Stage

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The Indian Startups are escalating since decades but survival rate is very low as it has witnessed a series of end-ups or closure due to various reasons. There are several internal issues which may cause the shutdown of newly started ventures. There could be many reasons for the failures of startups but the following are the key major reasons which led to end of most of startups at an early stages:

  1. Disagreements between Co-founders and Lack of Common Consensus:

In many cases, it is found that conflict of thought among promoters on various issues, like raising of funds, management related issues etc. are the reasons. Hence, in order to taste success, there must be co-operation and a common consensus or vision over the key issues of the venture. Lack of common vision and constant differences and incapability to sustain in rough times may lead to end of startups.

  1. Not having the rightful resources:

After selection of perfect product, managing funds and perfect working module, there are lack of efficient staff or members who implement those ideas, there might be another cause for failure of the startups. To get desired results, entrepreneurs must hire efficient/talented staff rather taking all the managing responsibility over themselves in order to save expenses or budget of hiring staff members. But sometimes, situation may be different that the firm was desiring to hire talented staff but was not able to find the requisite talented staff or team members or hires inexperienced or fresher staff to avoid expensive remuneration of experience staff, this might be fatal to their venture. It is obvious for every firm to have expertise or experienced team member who would be able to take recourse in tough time which young mind wont’ be able to.

  1. Lack of Innovative technologies and Ideas:

Almost 70% of Indian startups are facing with the shortage of modern technologies or unique business models as per the IBM survey. Lack of innovative ideas & repetition of old plans would result into failure of the Indian Start-ups. Entrepreneurs need to adapt rising technologies to keep pace with the race of digitalization and modernization.

  1. Failing to choose the product as per markets demand:

Sometimes the entrepreneur’s miserably fail to select the product or service to meet the demand of the market or to convince the customers about the benefits of their product or services. Product or service selection as per the demand of the market or customers is must for successful venture. One another drawback is lack of knowledge of founding members as to where to launch their product or provides services or which industry will welcome their services. It is advisable to entrepreneurs to study market first, competitors of his product in market and demands of the customer and then choose their product or services as per demands. While selecting some innovative or new product one should keep in view the markets rating or demand for the products.

  1. Raisings of funding at early stage of business:

Many startups having less knowledge or experience have raised funds at the beginning of the business or at an early stage without waiting for the outcome of the business. This might be risky as the investors or one who sponsors venture may sometimes tighten their grip over the new entrepreneurs. Hence one should initially start their business with the funds in hand and then work on it to grow it further or to ensure clientage for future stability then only move towards raising of funding that too after studying the strategy of the investors. Even the burden of interest of the borrowed funds become a problem at initial stage of the startup business.

Many startups could not bloom due to insufficiency of capital or lack of funding from investors.

Though, some startup shutdowns even after getting or raising decent funding from investors like Prophesee, Cardback etc. These startups raised funding but still could not get desired success.

It is therefore advisable to take care of the above mentioned problems and keep in mind the solution to such problems while implementing startups.

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