5 Reasons Most Business Start-ups are Doomed to Failure

by Staff Writer

Start-ups like Facebook and Apple have experienced unprecedented success. But this isn't always the case; the truth is there are many risks entrepreneurs face in opening a new business venture. Aside from highlighting gloomy numbers that say 50% of all small businesses fail in the first five years, statistics also point toward the reasons why a business might fail, which are usually a combination of critical factors. Though you really can't predict the outcome of your new business, you can avoid some obvious and not-so-obvious pitfalls that contribute to start-up disasters. Here are five reasons most business start-ups fail.

  1. Lack of experience

    According to the U.S. Small Business Administration, one of the main reasons businesses flop is due to lack of experience of how a business operates. Everything from knowing the market you're getting yourself into, to reaching your customer, to concentrating on the crisp execution of viable business models.

  2. You're too in love with your idea

    If you build your entire business from one single, unchanging idea or plan that you had in the previous planning stages, your business cannot evolve and adapt to the current market. You need to pivot your idea according to the wants and needs of the consumer, and according to what's most efficient and practical at the time.

  3. No viable market

    Sometimes the "build it and they will come" mentality doesn't apply to all facets of business start-ups. Investing your time and money into a "cool" or "innovative" idea simply isn't enough to attract customers. There needs to be a balance between developing your product and coming up with a plan to establish demand for your product. Before you launch your business, find out what prospective customers want and need. Timing is also critical.

  4. Too many chefs in the kitchen

    While it's nearly impossible or very difficult to run your business as the only founder, having too many founders is also a mistake. Every start-up needs to operate cohesively, and when there are too many people making important decisions, things tend to get cluttered. In fact, decisions that are analyzed by more than three founders could yield counter-productive results.

  5. A lack of proper funding

    A funding plan for start-ups is like a blueprint to ensure that your business grows and improves. Without the necessary start-up capital, and enough funds to employ qualified staff, you can't take your business to the next level. Money problems ultimately break a business, so make sure you launch your new business on sufficient investments and funding.

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