Why Startups Fail

Why Startups Fail

During our course, is natural to come up with ideas to create a business. Usually, most of the time, these ideas never come to life. On the other hand, there are ideas that go further and culminate with the creation of a company. That’s where Startups are born.


Let’s understand why most startups fail. If you are taking the first steps along this path, this article will identify the biggest pitfalls that can create great disasters and, consequently, enormous frustrations. Here are some of the most common mistakes that lead startups to failure:

No professional management

As a rule, Startup founders have no background in Management and Human Resources, they are driven by passion. In addition, they tend to refrain from receiving support from experienced professionals, either for lack of capital or to safeguard the idea on which they rely. By choosing to walk its own path, the leader will face a journey that will take years to mature and absorb the knowledge needed. The problem lies in the fact that time will certainly turn the idea obsolete.


Lack of capital

Lack of capital makes it impossible for startups to get the support they need to leverage, failing to get the core human resources to reach the goals within the estimated timeframes. In fact, leaders are forced to direct their effort to the financial side, losing focus on what is most important.


Poor planning

Lack of planning is one of the biggest flaws in Startups. There is a bigger concern in conceptualizing than in structuring business growth. On the other hand, there are cases where planning exists, although it is insufficient. The lack of experience of teams ends up channelling excessive effort to the wrong topics.


Bad view of the market

We can confidently say that an idea will never win if there is no knowledge of the market and the final consumer. It is a fact that many Startups die because they bet on the wrong market, are not well received by the consumer or they have not realized that the cost of production is higher than the value that the buyer is willing to pay.



This is one of the reasons that “kills” Startups in their sketch phase, especially when they leverage money from the leader or from his/her family, which induces demotivation when there is no short term return.


Team Breakdown

Startups need a lot of human effort to survive and consolidate their ideas. The problem lies in the fact that most of the time, the teams suffer from very rapid deterioration, either because of lack of financial support or because the ideas of some elements are contrary. There is no clear path. Leadership is lacking. Ideals are lost, and caos takes over. Passion is gone.

Being moved by the heart is not enough to build something, especially when there is immaturity in managing emotions. This is why the seed stage is important. It is an embryonic phase that can attract experienced investors and take advantage of their know how. If you can not catch the attention of any investor, it may be a serious alert that your idea is not as good as you think it is. Be rational. Hope this article will help you avoiding some common mistakes that leads to why start




About the Author

Francisco Cardoso is ZALOX’s CEO. With several decades of experience in business management, digital projects and teams, this blog gathers the know-how acquired, helping managers to overcome current challenges.