There are a myriad of reasons why burgeoning startups can fail. Whether it’s marketing, the business model itself, poor management or simply running out of money, there are some pitfalls you can avoid with the right direction and guidance.

Here are 4 reasons startups fails:

Poor Management

An increasingly common problem with entrepreneurs and startups is simply weak management. Startups that have weak management fail in a few areas:

  • Not evaluating the market to determine if the product or service is even viable or needed. If no one will buy a product or service, it’s going to fail.
  • Poor execution. This leads to late delivery, bad implementations and more.
  • Weak management means weak employees. It’s a trickle down effect.

Out Of Money

A major reason why a startup can fail is simply running out of cash. A key role with an executive of even a small business, is to evaluate and understand liquidity and how far you can stretch until your next milestone or deliverable. Otherwise, CEOs of startups need to also investigate seed funding, crowd funding and other types of cash injection.

On the flip side, guarding every penny without logic, and then being forced to aggressively invest ahead of revenue can be counterproductive.


Core Product Issue

Another reason some small startups fail is due to failing to develop of product that meets any kind of market need. Most of the time, the first product (or version of a product) won’t meet market needs when first brought to market. It could take a few revisions, to make the product and market fit right.

However, in worst case scenarios with startups, the product itself might be wrong to the core, and might need a complete rework.

Business Model 

Lastly, a common reason some startups fail is their business model itself. Simply because a product, website or service is interesting doesn’t mean customers will come like moths to a lightbulb. In addition, some businesses don’t take into account the cost of acquiring a customer vs the value of the customer itself over time.