Why start-up businesses fail

According to a study by cbn insights, 95% of start-up businesses fail. These statistics haven’t changed much over time and have been fairly consistent over the years. There are still many start-up businesses closing down to date. Scribbled down in this article, are seven reasons why start-up businesses fail.

  • Not conducting proper market research
  • Poor business planning
  • Poor management team
  • Poor product
  • Little cash or poor financing
  • Remaining rigid
  • Poor marketing initiatives

Not conducting proper market research.

Start-up failure is caused by improper market research

When a starts up business fails it is not majorly caused by lack of funds but mostly because of improper and inadequate market research. Market research helps business owners understand the nature of their target market, and the need of the customers. It, helps them create a product to satisfy unmet needs or offer a solution to a particular problem. putting out a product without conducting proper market research already makes your start-up a failure from the launch. Instead, find out a problem within the market and provide a solution for it. Understand your industry, and the concept of brand positioning and apply what works for your business.

Tip: it is much easier to offer solutions to a problem than create a product and convince people to spend their money to purchase it.

Poor business planning:

Behind every successful business, there is a solid, well-built written structure called a business plan. In the plan, you will create an outline of realistic and achievable goals for your startup, how you intend to meet those goals, possible problems you might encounter and their solutions.

The plan will entail the cost and inputs needed to launch your start-up and strategies to help achieve business goals. Going outside that plan might be a step forward to failure, unless you have discovered that the business plan is inaccurate. Lack of proper planning for your business is one of the core reasons most start-up businesses fail. The more mistakes you make, the greater your chances of experiencing failure as a start-up.

Poor management team.

There nature of your team as a start-up business affects the success of your company in every way. The importance of having a good team with a proven track record cannot be overemphasized. If you cannot get one, it is best to hire top professionals in that industry to form your management team.

Every start-up needs a good team

The management team is responsible for the execution and brainstorming to make quality business decisions for your start-up. The success of your start-up is produced majorly by your team, which makes it very crucial to have an effective management team.

Poor product:

Product quality affects consumers as a start-up

Offering poor products to customers is one major reason start-up businesses fail. The quality of your product means a lot to the consumers. Bringing poor products to the market results in rapid business failure, especially as a start-up. The quality of your product either attracts and retains potential customers or chases them away. Always ensure top-notch quality of the product or services your startup is offering to the market.

Little cash or Poor financing:

Your Start-up needs enough finance

As aforementioned in this article, your business plan is expected to include the costs and input of your business. If the level of finance available to launch your start-up is less than the estimated cost, there is a possibility that your business will struggle and probably suffer a huge loss and result in debt. This is due to the unavailability of funds to make necessary resources available. It is better to start with enough money to last you until there is constant cash flow and your start-up is up and running.

Remaining rigid

After launching your start-up and gaining your potential customer base, do not be rigid! Monitor your target market constantly and know the right time to make improvements for your business to stand out among competitors. Align with trends, and improve your product features to help your start-up stay successful.

Unsuccessful marketing initiatives

Every Start-up needs a good marketing team

The purpose of marketing is to provide visibility for your brand, generate leads and convert those leads to sales. Your marketing team should not only create visibility but ensure that your product gets to the right set of people. Outline an effective marketing strategy for your start-up and ensure that your product reaches the right people who need your service.


The fact that other start-up businesses are failing doesn’t mean yours will fail too. As long as you avoid poor market research, poor planning, offering bad quality products to the market, and other factors listed in this article, your business success is guaranteed.

Leave a Comment