Startups are emerging at a rapid pace in India which is also a reason for amplifying the competition. In India, starting a business is not a difficult task but to keep running is what makes it difficult. An entrepreneur who thinks that starting a business could help them generate money and can have leisure in their life rather than doing a 9-5 job then they are wrong.
Only 5-10 per cent startups find the success that they hoped because a person who follows his/her passion and put hard work is the one who reaches its destination. It is analysed that 90 per cent of the startups in fails within the first five years, says a report by Institute for Business Value and Oxford Economics.
There are so many reasons behind a startup failure and those who identify these challenges in advance can change their future as an Entrepreneur. Lets have a look:
7 Reasons for Startup Failure:
Lack of Innovation
This is the biggest reason is that startups lack innovation and unique business idea. If we take an overview of startups in India you will see that they all are based on the existing business ideas. For a startup, the most crucial thing is its innovation and uniqueness. If your startup is lacking in those key areas then already plan an exit strategy because your business will not be able to find the success you are looking for.
Mentorship Decision Making
Not everyone is meant to be an entrepreneur as some lack basic business skill which cost them their business. In India, the major problem is most of the entrepreneurs dont understand the need for a mentor and thinks that what they decide will bring good for business. The need of a mentor can never be replaced for a startup as a new entrepreneur doesnt understand how the industry works. A mentor has an experience and guides a startup in taking the right decisions.
A business plan is the initial step of any business and if there is a flaw in that then everything will go in the opposite direction as planned. An entrepreneur is a sole person that can change the fate of business by preparing a good business plan. It is essential to cover all the key activities that a business will perform in future and work accordingly to meet the targets. If you want to know what you can add to a business plan then read the link below:
Read Now: Business Plan for Startup
Bad Execution and Team Management
The common reasons for a startup failure are bad execution of a business plan, overutilization of resources and entrepreneur inability to manage a team. Sometimes it happens that you have a perfect business plan and innovation in the product but the startup is unable to find the desired success. The major reason to that is either you lack in execution or the team management is not proper.
Social Media Presence
In todays world, the most important task to stay away from failure is having the presence on social media handles. The platforms are like Twitter, Facebook, Google, Instagram, etc have become the most common way of doing business. If you are active on these platforms then you have better chances to stay out of danger and expand your business.
Every startup needs financing to grow and also no entrepreneur would want to bootstrap its startup for a longer period. But this reason is not just about investment as financial issues also include unnecessary usage of capital. Some startups find it difficult to follow a budget plan that they have decided for their business which may hamper their functioning later on. So it is beneficial to do a proper research on how much funds required for running a business.
Difficulty in accepting change
This reason is fully dependant on entrepreneur as some may find it difficult to adopt changes in the market and business environment in their business. It is essential to understand the needs of customers and work hand to hand with new trends. Those who bring changes in their product can only survive in this dynamic environment. The most common examples are fashion and food industry where customer demands keep on changing.