Why 85-90% Start Ups Fail?


reasons for startup failure
Start Up Failure

Starting up is difficult. 90% of startups fail within the first three years which makes it even more frightening. Smart and wise entrepreneurs always try to learn from other’s mistakes and successfully avoid them in their own startup business.Many of them don’t even know the actual reasons for startup failure.

Here we have compiled the top 6 reasons for startup failure. It can help the new entrepreneurs to understand how to avoid them at the initial stage.

Reasons for Startup Failure and Solutions to Avoid them-

1. Poor Analysis of Market Problems

Every startup is market-driven. Therefore, the only goal of a new startup business should be to analyze the market and know the problems and pain points of people.

About 42% of startups fail because most of the businesses focus on their ideas alone without understanding the actual need of the market. In that way, they end up making a product that nobody wants. And when there is no need, there is no demand in the market for such products. And that way startups are at the risk of losing all their efforts and resources into failure.


– Give proper time to market analysis. Do thorough market research. Because at this initial stage it is easier and cost-effective to make changes in the idea.

– Meet and talk to people (your targeted market), identify their real problems.

– Make a business plan that provides real solutions to these real problems.

– Create a product or service that fulfills the actual needs.

2. Great Idea- Badly Implemented

Getting a great innovative idea (that, too, fulfills the needs of people) is good. But if it is not implemented properly it will not provide any fruitful results. Many entrepreneurs assume having a great idea is enough to attract buyers and that their business will reach its milestone in no time. But actually, it never happens that easily. 17% of startups fail every year because of their poor business model.


Always make an effective business model that helps you understand how to run your business efficiently, how to attract customers and retain them for a lifetime. Because it doesn’t matter how great and innovative your idea is, if it is not profitable and achievable in the future, there is a high risk your startup will fail eventually.

3. Less Focus on Customer Retention

You can acquire hundreds or maybe thousands of customers every day. But retaining them is a big challenge, especially for the Startups. Even if you create an interesting website, an attractive product or service, strong marketing strategies, and a perfect business plan. Mostly Startups focus more on acquiring customers and believe that they will remain their loyal customers for lifetime. But without making proper customer retention strategies it is unachievable.


– Focus more on making customer retention strategies.

– Give priority to them and try to give something extra every time they make a purchase.

4. Weak Management Team

A common problem that every startup faces is building a strong team. 23% of startups fail because they have a weak management team. Weak team means a lack of technical expertise, weak strategic decisions, poor communication, and less sincerity.


– Find at least one person from different expertise to join you.

– Reduce the communication gap by having frequent team meetings.

– Have team discussions on product development and marketing strategies.

– Motivation always encourages the team to be more sincere.

5. Improper Monetization

No matter how many products you have created, or how many customers you have, you need constant cash flow to keep your business alive. You still need to pay your expenses whether your business performs or not. Around 29% of startups fail because they ran out of cash.


– Keep a proper record of accounts.

– Build strategies focusing on high ROI (Return On Investment).

– Keep records of Customer Acquisition Cost (CAC).

– Explore all the funding options in advance and secure funds.

– Don’t depend on only one investor. Make a list of them so in case one backs out you can still work with other investors. In that way, your funding will not stop.

6. Less Effective Marketing

Even a great product fails due to adopting poor marketing methods. Today marketing is not limited to just the product awareness but it is more about exploring the unexplored areas like affiliate marketing, influencer marketing, retargeting, etc.


– In the digital era, focus on digital marketing methods more.

– Involve the marketing team in product development and building marketing strategies.

– Start marketing your product from the initial stage.


Do you have a startup idea but not sure how to start working on it? Talk to us!!

OFFICESPACEDEAL  provide effective solutions to make your startup journey much easier and achievable.

Leave comment and tell us what can be the other reasons for startup failure.

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