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The One Reason Why Most Businesses And Startups Fail - Business - Nairaland

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The One Reason Why Most Businesses And Startups Fail by FranklineNtah(m): 2:59am On Feb 23, 2022
The Small Business Administration (SBA) defines a "small" business as one with 500 employees or less.
This category basically is where startups fall in.

In 2019, the failure rate of startups was around 90%. Research concludes 21.5% of startups fail in the
first year, 30% in the second year, 50% in the fifth year, and 70% in their 10th year.

One very important question we have never gotten a perfect answer to is “Why these Startups fail”. In a
recent survey with VC’s to provide an answer to this, most venture capitalists summarized the reasons
as to “horses” (that is, the opportunities start-ups are targeting) and “jockeys” (the founders). But is this
all the reason?

For me, I doubt… There is a high need for sustainability because the challenges that they face, are not just significant but weighty. While finances and investments remains the core need for sustainability and growth, I would really not want to focus on the obvious.

Paying close attention to why Startups fail, if we stare at the question quite well, we would definitely find the answers staring back at us. The primary reason for failing should be traced back to the same reason why it was set up. Most startups fail even before they begin operations. This is because they set up the wrong team.

Going by Y-Combinator interview guidelines especially the SAAS startups, there is always an important
question of if any of the founders are Tech Inclined. Most startups ae formed with the right problem and
solution in view but then having the wrong people on board leaves the whole setup totally insignificant.
The high cost of getting talents to build from the scratch then becomes a problem.

For the previous paragraph, we have praised the set of startups having the right problems and solutions
properly checked but then they fail for other reasons. How about those who are too intoxicated about
the solution they have that they fail to understand the product-market fit? Startups fail when they do not solve an existing market problem. Most companies believe that their invention is quite appealing and there will be a huge demand for their products and solutions. If the product fails to create demand due to low market demand, then the company will face a downfall.

This is in fact one of the common reasons why SAAS startups are always beautiful to watch from the
beginning with their amazing products but along the line, they vanish. No proper product-market fit, no proper business model, no proper marketing, no proper understanding of customer needs, no plans for
competition, just great products but then great products alone do not survive a great market. Do they?

Most inevitably, sometimes, a startup might get strangled with legal complexities, Government policies
especially in niches quite fragile and decentralized and this can be the cause of failure. It could be
anything such as the suspension of an affiliate account generating maximum revenue or the inability to
launch on a global scale.

Well, these are the top reasons for the failure of startups. Besides these, there are other reasons
including failure to pivot, cash burnout, lack of use of the network, no investors on board, etc.
However, for whatever reasons, in the end, sometimes, it is not about the most experienced or most
talented or perhaps the most opportuned, it is about who holds their card till the last minute (exit of
IPO) to drop a pick 2.

Keywords: startups, SAAS, product, business, fail, sustainability, market, demand, founders
Re: The One Reason Why Most Businesses And Startups Fail by kennywiz: 3:36am On Feb 23, 2022
Sapa na im be d issue...

How many times spacex fail, abi how much dem squander b4 success?

Even apple failed after success until bill give them money.

Just have enough money to throw in until it works, that is all.
Re: The One Reason Why Most Businesses And Startups Fail by FranklineNtah(m): 3:50am On Feb 23, 2022
In the very detailed and clear article...

I noted that 'money' is a very obvious need for every business. Even Dangote still dey find money

But then, having money alone cannot make an idea prosperous or bloom.

There are other very important factors we must have to pay attention to and not always blame 'money' all the time.
Re: The One Reason Why Most Businesses And Startups Fail by kennywiz: 4:03am On Feb 23, 2022
I understand everything. But I still know that money is first and last. As the purpose of a business is to make money, no matter what the founders say. Na money dem dey fine.

If you down play the role of money, it will teach you a sad lesson;

Borrow money - they will come for your kidney.
Get investors - they will steal the business.
Ask family - they will preach to you.

So if you focus on other factors first, you will have a problem and a solution you can not act upon. But if you have enough money to throw in, you will eventually figure out the rest.

Nice article though. It's for the people that already have the money.

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