, Startup

Getting customers on board is a matter of battle for any business, especially startups. With new startups popping up every day all around the world, customers have ample options to choose from. It is therefore vital for new business owners to do something revolutionary to make a mark on their target audience.

As per a recent research from Small Biz Trends, it is estimated that 90% of startups fail. Most of the startups that fail have the following common characteristics:

  • Incompetence
  • Inadequate planning and knowledge
  • Lack of experience

Learning about the challenges and mistakes of other entrepreneurs and building the groundwork with the insights will lead startups to success. So, before you take the plunge, here are the common reasons why startups often fail.

Product-Market Misfit 

Poor synchronization between the startup idea and market need is a common challenge for most startups. According to a survey by entrepreneur.com, 20% of startups fail because the market demand for their product or service is too low. They quite often fail to understand the demands of the target market or lack a focused approach for catering to them. The common causes of poor product-market fit are as follows:

  • Poor market research, which leads to the misunderstanding of the target audience
  • Inadequate demonstrated value of the product or service
  • Launching a product ahead of its market by a few years
  • A solution that does not solve the problem for a large set of people

Identifying the exact market problem and filling the opportunity gap is not easy. Creating a solution that is insignificant to the market problem will lead all your resources and efforts into failure.

The solution: To avoid this issue, entrepreneurs must conduct proper market research and look for a gap where their product can fit in. Also, before launching the product, startups should validate their product by building Minimum Viable Product (MVP), using pilot projects, or conducting beta testing. Build the core features of your product, test them for response and then develop the next version according to the user feedback. This will save you from market rejection and reduce the risk of failure.

Cash Crunch

Cashflow is what keeps a business going. Many startups fail because they run out of cash. While creating the business model, you also need to build a revenue generation model. No matter how great your idea is, you will still need cash to pay for your marketing activities, pay dues to your employees and clear your bills. Startups that do not measure their spends and gains or do not keep a record of their accounts will eventually go down the drain.

The solution: The management and CEO need to work well in advance to secure funds and explore funding options. Have a clear strategy about how you will recoup investments and make money with your startup.

Lack of Focus

Entrepreneurs mostly get carried away with their ideas. Some startups include too many features at once or try to expand their offerings so soon that they deviate from their central idea. Some even lack good competitor research, which results in a disaster.

The solution: The idea people or founders must keep their focus right and solve the most painful problem first. Instead of getting carried away with too many ideas and features, work for one ideal business goal.

Premature Scaling

The goal of every new business is to make it big in their respective market. Startups are often in a hurry to do too much too soon. They hire new people, release new features, enter new markets, and begin to scale up. This leads to things going out of order.

The solution: Avoid acquiring a new market before your business is completely up and running. Follow a step-by-step procedure to take your startup forward:

  • Learn about your audience
  • Chart out the issues that your product will solve
  • Launch an MVP in the market and get feedback
  • Fix issues, add additional features and launch again
  • Promote the product to reach the right people in the right way
  • Find ways to retain customers
  • Scale up your business


While launching your startup, consider these common factors that often lead to failure. Partnering with an experienced technology partner can solve half of these challenges. Gateway Digital is a digital transformation partner fuelling innovative startups with a range of new-age technology services and solutions. With our digital consulting services, we have helped startups across various industries to shape their success curve.

Do you have a great startup vision? Tell us your ideas and our team will help you with the right strategy, tools, and technologies, to make it a success.

Divyang Pandya

Divyang Pandya is the AVP Business Development and a technology enthusiast at Gateway Digital AS. With his rich experience and expertise, he contributes towards establishing Gateway Digital as the ideal partner for Digital Transformation. To know more, connect with him on LinkedIn and Twitter.

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