Why most of the Startups Fail at the early stage?

Why most of the Startups Fail at the early stage

The common misunderstanding with startups is, they only focus on their ideas and keep refining it. This is a completely wrong approach. Rather, the approach should be, identify a real day-to-day problem and develop ideas to fix it. Then, before acting upon those ideas catering to that need, check the feasibility of it. Talk to people around you and take their feedback.  This will give a fair idea whether the product or service can continue to work in that area, maintaining interest in the projects at hand.

Most startups fail because they fail to identify the need base gaps. They develop such products or services in which no one is interested. Identifying the need base gap is very crucial for startups to sustain over time. Need based gaps help to identify holes, which future products or services will need to fill.

As an example, consider the following startup. Layoffspace.com was a social networking site, much like Facebook and LinkedIn. The intention of forming this platform was to connect people on unemployment, so that they might have a platform to share their stories and ideas.  It failed in due course of time, because people don’t want showcase themselves as unemployed via social media.

Identify a cash burn period for your business.

Another major reason many startups die, is referred to as a “Cash Burn Period”. For startups, an initial period of operation requires substantial cash burn to create an established market. To be a successful entrepreneur, you must understand the Cash Burn and Cash Flow period ratio, planning accordingly for your financial resources.  Otherwise it’s very difficult to survive in the market.

Cash Burn Period – the amount of cash required to establish oneself in the market

Cash Flow Period – the period of time estimated for your business to generate revenue

There are many other hidden issues which act like slow poison and can kill business prospects over time. A few such issues include lack of funding, internal team disturbances, HR issues, poor services, bad product, bad marketing, etc.

For startups, it’s crucial to understand each component of the business model and give equal importance to all of it.

Conclusion:

Before launching a final product into the market, develop a prototype and check its potentiality by showcasing it. It helps to understand if the product developed is the right product for target audience. Always validate ideas and measure the depth of the market.

Share this article and let the Startup Owners know about it before its too late.

About The Author

Kallol Parida

My name is Kallol Parida and I am the founder of Kallol360.com. I build this site to help people to setup their online business and get maximum Return on Investments. Exploring Digital Marketing is my Passion. I have got expertise on Analysing the Digital Marketing and Marking Strategies for the Startups.

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