11 Factors That Cause Startup Failure

Recently, news emerged about many startups failing and closing their businesses. Of course, behind that there are several factors that cause startup failure that must be avoided. So that something like this doesn’t happen again.

However, there are still many entrepreneurs who do not know why startups fail. Because a lot of them don’t realize it. To help provide information, here are the reasons why many startups fail in Indonesia.

1. Products Not According to Consumers’ Wishes

The first cause of a common startup failure is that the product does not meet consumer wishes. Therefore, you must pay attention to the preferences of the target consumer and make the appropriate product so that it can be sustainably accepted by consumers.

Also read: 7 Ways To Start A Successful Startup Company

2. Unable to Satisfy Customers

Unable to Satisfy Customers (source: Freepik)

The customer satisfaction factor is also quite important. While some business people sometimes forget about this. So when customers feel dissatisfied, this indirectly threatens the continuity of the startup business. Therefore, seeing and ensuring customer satisfaction is quite important to do regularly.

Also read: What is Pivot Strategy and When a Startup Needs to Use It

3. Spending Money on Cheap Promotions

Spending too much money on promotion is not the right strategy. Because if it is not controlled, this can make the startup fail and cannot continue because the startup loses all its capital. Therefore, you have to be wise in managing the capital obtained, including planning the right promotional strategy.

4. One of the Founders Decided to Leave

Often when in the middle of running a business one of the founders suddenly decides to step down. This has more or less an effect on the startup business that is running. When the vision and mission of the startup founders are not in line, the startup development will be hampered. Therefore, startup founders, you must have a long-term and strong commitment to running this business.

Also read: What is Startup Founder, Definition and Roles

5. Hard to Find Investors

Some startups fail because they can’t find investors, so their business can’t grow and stall quickly.

Actually, there are many sources of capital that startups can get, one of which is by choosing venture capital that focuses on the startup business. If you have trouble finding this kind of funding, just try to submit it to Alpha JWC Ventures which is a trusted startup capital provider.

6. Handing Over the Majority of Shares To Angel Investors Who Don’t Understand The Business

There are times when startup companies decide to hand over the majority of their shares to angel investors. It is not wrong, but it will be dangerous if the angel investor does not understand the startup business that is running. Therefore, be careful in choosing what kind of investors to invest in an ongoing startup business. So that one of the causes of startup failure can be avoided, and shares fall into the hands of the right investors.

Also read: 11 Business Presentation Tips That Attract Investors

7. Ignoring Market Competition

Many startups fail because they do not care about the development of the market. Which ultimately ignores the competition in the market. This causes startups to sink with innovations launched by competitors. Therefore, always keep an eye on market developments. Whenever possible, come up with brilliant new ideas to make the product stand out and be liked by more consumers.

8. Ignoring Long-Term Business Models

Ignoring Long-Term Business Models (source: Freepik)

Don’t ignore long-term venture capital if you want to avoid the factors that cause startup failure. Try to have long-term business plans to implement one by one. Also, avoid being too focused on the number of users alone. Because the growth of a startup is not only about increasing the number of consumers, but the most important thing is developing according to market changes. Thus the startup business can continue to run as expected.

9. Not Finding a Suitable Business Model

An important task to avoid the causes of startup failure is to find the right business model. Many startup businesses are on the verge of collapse because they don’t know what the right business model is. So that in the end startups are unable to develop and cannot attract public interest. Therefore, startups must create creative products that provide solutions to problems in society. Thus the startup business can be accepted in the market.

Also read: What is Bootstrapping in Startup? Here’s The Pros and Cons

10. The Market Has Not Yet Formed

Another factor that causes startup failure is that the market and target consumers are not well formed. To avoid this, entrepreneurs should do research before launching a product. So when the product is launched to consumers, the target market is already available.

11. No Operational Experience

Many startups also fail because they do not have experience in running daily business operations. Without experience, it can be difficult to see what is important to do and what to avoid. Entrepreneurs like this will be easily defeated by competitors who have more experience.

Those are some of the factors that cause startup failures that must be avoided to ensure the business survives. Without understanding the factors above, many startups fail when they are just starting their business. Therefore, pay attention to the things above when you want to start a business. So that the business runs smoothly and survives in the market competition.