What Percentage of Startups Fail?

The harsh reality is Nine out of ten startups end up failing, startup failure rate is almost 90%. This is a hard and bleak truth, but Entrepreneurs need to acknowledge and reflect on this post. Some even suggest that entrepreneurs should consider their failure post-mortem before they launch their business.

Nearly 90% of startups survive their first year. However, approximately 70% of them fail in five years. One of the most common reasons for startup Failure is the misjudgment of market demand. 

Providing these statics doesn't mean crushing the spirit of entrepreneurs, but just introducing them to reality. It is essential to maintain optimum in entrepreneurship, but equally important to balance it with a realistic mindset. Acknowledge the challenges and risks and make a strategy according to them.

The most common reasons why startups fail

If you talk with former business owners, you will get a diverse range of explanations for why their businesses didn't succeed. 

1. Money Ran Out

It is one of the main reasons why startups fail, the real reasons behind it are spending too much, not making good sales, or not getting enough money from loans. It is very challenging for any business, especially in the beginning.

2. Wrong Market

Lots of people when starting a business appeal to everyone as their target audience, but it doesn’t work very well.  Again, too broad. The more narrowly defined your niche is, the easier it will be to market to the right audience.

3. Lack of Research

Understand your customer's needs. There are lots of entrepreneurs who enter the market believing they have a fantastic service or product to offer, only to discover that there's no demand for it. Conducting through market research is essential, by doing your homework and researching into your market, you gain valuable insights into your potential customers’ needs.

4. Bad Partnership

There are lots of entrepreneurs who need a partner to start their business. Suppose you are an expert in one area, and the other one is an expert in another one. When both partners give their ideas to the company sometimes it will cause conflict, and without a clear resolution, there are lots of internal conflicts. Think that you are contributing more and your partner contributing less, but your partner thinks he is contributing more than you. So, having a clear business plan and proper distribution of duties of each partner can avoid conflicts.

5. Bad Marketing

In business people believe two things matter which are marketing and financial management. If you are good at both, it doesn’t matter what you are selling people will buy it. It is a sad truth but most of the business owners are great and little else. Instead of trying to figure it all out on your own and possibly messing up, It might be smart to hire someone to handle marketing, it costs money but it will down well.

6. Not an Expert

Many entrepreneurs start their businesses because they need a job. They might have no clear idea but they think that they’re better than their peers, so they should do it. But the truth is, without business skills and real expertise, you get lots of challenges.

Conclusion

In a nation known for its entrepreneurial spirit, only one in ten startups in the world survive but also achieve fast growth over the long term. This statistic may be shocking. These statistics can be discouraging for aspiring entrepreneurs.