3 Reasons Your Startup Will Fail Within The First Year

Startup failures are more common than you think. You might see all sorts of small businesses starting in your local area at different times, leading to the illusion that startups are highly successful. The truth is, unless you’re a big business or an experienced entrepreneur, the chances of your startup succeeding are shockingly low. In fact, research suggests that a whopping 90% of startups fail, and 10% of those failures happen in the first year alone. 

It’s not pretty viewing for a budding entrepreneur, so why do startups struggle to get off the ground? Looking at the data, here are the top three reasons this could happen to you: 

#3 A lousy team

The third-most-common reason small businesses fail is down to a bad team. If you don’t put the right team together, your business will struggle to stay afloat. This could be because of productivity and efficiency issues, meaning you don’t manage to work as effectively as you could. It could also be a hiring issue – you didn’t hire the best people for the job. 

As a result, you have a business that stutters and spends a lot of time trying to catch up. Also, hiring issues can lead to the next biggest problem…

#2 Running out of money

That’s right, startups often struggle with the money needed to fuel a successful business venture. This can happen right in the beginning when you fail to raise enough funds for your company. This includes startup costs such as office space available for lease that most don’t consider. Thus, you don’t have the cash to fuel certain aspects of your business, causing it to fail. 

But, we can also look at the hiring issues mentioned above. If you’re hiring the wrong team, you’re basically wasting money on wages, benefits, the hiring process, etc. It then costs more money to let bad team members go and hire new ones, draining your budget. One simple solution to both problems is to think about outsourcing. The cost of hiring a digital marketing agency or outsourcing your bookkeeping is minor compared to hiring individuals to make a team. Plus, with outsourcing, you know you’re getting a capable team that’s worked together for years. 

#1 No market for your business

The number one reason startups fail is that there’s absolutely no market for your business. You think you have a fantastic idea, but it falls on its face. Why? Because consumers don’t care about it. You’re not filling a void, you’re not offering anything different – why would they come to you over other businesses that offer the same thing? Sometimes, you can create a business that’s almost too niche as you try to find a gap in the market. Other times, you just come out with something that others are doing and doing better. 

This is why it is super important to devote time and effort to market research. Establish an actual demand for your business idea/products/services. If you can find one, your company has a bigger chance of succeeding. 

Keep an eye on these three reasons as they could determine if your business sinks or swims. From the beginning, be aware of ways you can prevent these problems from happening. Hire the right talent, outsource, save money, spend money wisely, and always do a lot of market research!

3 Reasons Your Startup Will Fail Within The First Year