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This article was published on May 5, 2014

7 reasons why your startup will fail (and how to soften the blow)

7 reasons why your startup will fail (and how to soften the blow)
Rahul Varshneya
Story by

Rahul Varshneya

Rahul Varshneya is the co-founder of Arkenea LLC, America's premier mobile app consultancy helping startups in mobile product strategy and d Rahul Varshneya is the co-founder of Arkenea LLC, America's premier mobile app consultancy helping startups in mobile product strategy and development. Subscribe to his free email series on actionable mobile app growth hacking tactics.

Rahul Varshneya is the co-creator of, a platform that helps startups grow their business through social media.

If you’re going to start up, you are bound to fail. This is not a primer to make sure you succeed, as there are many factors that can contribute to failure. But these are the biggest reasons why most startups fail.

When you start up, ensure that you overcome all of these seven reasons which will increase the chances of success by multifold. 

Reason #1: Putting revenues before customers

This is the single biggest reason why most startups fail. Entrepreneurs do start up and get the first few customers, but are unable to sustain their ventures over a period of time simply because their customers see through.

Never put revenues before your customers. I’m not telling you to ignore revenue opportunities, as making money is the easier bit. There will always be enough opportunities to monetize.

Making a product that customers want is hard. So if you’re starting up, don’t put your bet on a revenue model or a business plan, instead get the core offering out to the customers. Verify whether your idea drives sales. Verify whether your product is really changing your customers’ lives. If it truly does change lives and for a huge number of people at that, they will be ready to pay what you ask them to. 

Your business plan is absolutely worthless if the customers will not be willing to pay the price for a product.

One more bit of caution. Do not jeopardize your product experience with crazy ads all over the website or an app. Customers pay for the experience in a tech product.

Reason #2: Thinking too small

Don’t create a product that does not cater to a large audience. Sure you can start local and expand later, but is your product solving the needs of a few hundreds? Is your idea scalable to the next hundred thousand? If not, you’re just selling an item and not building a business.

Validate whether the problem that you are trying to solve is truly the problem of the masses. And not just yours and a few neighbors and friends or network. Think big, think global if you can. 

Base your idea or product on a large audience and you’ve got yourself a product with the potential to grow into a larger and a more successful business.

Reason #3: Being complacent about hiring

Your product or service will only be as good as the people you hire – the people who develop, the people who market, the people who sell. If your core team is mediocre, so will your offering.

Don’t get complacent about hiring and don’t settle for anything less thinking that you’re a startup. There are many excellent professionals who will be willing to invest their careers in your vision if you’re passionate about your business and show them that.

Hire slow, but fire fast. If you feel you’ve made a bad hire, don’t stick with them. Make a quick course correction. You don’t have all the time and money in the world to give people chances after another to prove themselves. Not in a startup. Be ethical, but ruthless

If you succeed, each one of your team will enjoy the fruits and be liberal in offering it to them.

Reason #4: Procrastinating your launch

There is no such thing as a perfect product or service. If you spend all your time just tweaking and supposedly perfecting your product, it will never be. 

Products evolve over a period of time through constant customer feedback and use. Don’t delay your launch for this one reason. In fact, you must build a prototype, beta or a minimum viable product and get it out in the hands of the customer. Let your customer decide whether the product is of value or not.

Most people just don’t get their products out in time and spend a most part of their resources in trying to build that one perfect product. Save yourself some grief, time and most of all, hard cash and build on a product that your customers want.

Reason #5: Failure to adapt

Most entrepreneurs fail in their startups because they fail to adapt to the changing dynamics, customer requirements and the market. One thing is to adapt, the other to adapt fast. 

A startup entrepreneur has got to be quick in making decisions and altering the course when there is a need. Don’t get too attached to the plan that you started with. Most startups end up taking a completely different plan mid-way altering the entire plan with which they started the company. 

Most often, your customers will determine this change. Don’t be foolhardy at that stage and stick with your original plan or vision. Startups don’t work that way. You’ve got to follow your customers’ needs. 

But, this does not mean that you start afresh completely each time. What you essentially need to do is to build on the basic framework of your business as you go along. 

One company I know started as a product company and six months down the line realized its strengths lay in services. They quickly adapted and shifted gears, but the basic framework of their business remained the same: their offering.

Reason #6: Optimizing resources

You’re a startup entrepreneur and you’ve got limited resources. Unless you’re over funded, which in that case as well is no good. But I’ll stick to the problem of the many – a crunch in funds. 

You’ve got limited resources and you don’t want to blow up on the wrong things. Now this will tie-in with much of the reasons above, as you do not want to spend all your time and money on building that one perfect product (which does not exist in any case). 

Chalk out what is important to your business and allocate resources accordingly. If yours is a product company, build a core product offering and get it to customers. If your customers were as excited, they would be even willing to pay at this stage. And bam, you’ve got more bucks to build on further. 

Don’t take the easy way out in spending on advertising blitzkrieg. Instead, build a community of engaged users, which will pay you off more in the long run and will be far more cost effective.

Reason #7: Marketing

One word but holds incredible weight in the success of a product. I am not denying that the product is important, but most good products fail to reach out to the larger mass who can make an incredible difference to your startup.

There are many avenues that are available for startup entrepreneurs who market their startups other than blowing up cash on simply advertising. Most entrepreneurs just do not know how they can best leverage technology to get more user eyeballs.

Harness the power of social media, create and engage with communities, reach out to influencers, start even before your product is launched. Good marketing does not require money, but a lot of time. If you want to reach out to a greater mass, you’ve got to be prepared to invest a good amount of time to reach out to them. 

And once you’ve made a sizeable user-base – say the first thousand customers – leverage on them for a snowball effect. The first thousand customers can turn your startup into a business.

Everybody wants to run a successful startup, so in the end, don’t put too much pressure on yourself to make your first startup a success. Just focus on doing the right things and your customers will make sure your product and your startup stays alive and in the game.