Are you a start-up owner? Or are you thinking about starting your own business, but worried that you might fail?
The fact is, for every startup entrepreneur who succeeds, there are plenty who don’t. Many startups collapse despite great ideas, excellent workers, or even strong investor support. If you’re a budding entrepreneur, it’s just as crucial to study the failed startups as it is to learn from the success stories. At Lance Surety Bonds, we work closely with startups across many industries, so we’re in tune with the challenges you might face. For our recent infographic, featured in Forbes, we dove deep into a recent study by CB Insights, to illustrate The Top 20 Reason Why Startups Fail.
CB Insights’ findings come from their analysis of 156 failed startups. To determine what went wrong, they primarily relied on testimonies from the business owners themselves. In some cases they also interviewed clients, competitors, or investors. Since each startup failed for a number of reasons, the sum percentage of these top 20 reasons is well over 100%.
Taken individually, some of these reasons might sound minor. But even these small factors can compound into much bigger problems, unless your startup is proactive about improvement. Usually, multiple missteps can be traced back to the same major root causes. For instance, team conflicts might seem quite different from poor marketing, but both can be traced back to lack of communication, either within your company, or with your potential customers. Many startup owners simply didn’t adapt fast enough, and their businesses lost traction when they failed to change with their market, or didn’t act fast enough to fix a flawed strategy. Others failed to adapt when competition out-performed them. Plenty of businesses struggled with capital, hitting a wall when their capital ran out faster than they anticipated, or when they failed to present a scalable business model to entice investors.