6 reasons your startup will fail

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Startup or any other type of company can fail for various reasons. Today, in this post, you will learn about six I consider as the deadliest. These reasons are also often the ones you will find common between failed startups or bankrupt companies. I hope that outlining those factors will help you avoid repeating mistakes other people did. If you know any other reasons, factors or conditions let me know. Without further ado, let’s begin.

1) Lack of focus

The first reason, and probably most important one, able to destroy entire company is a lack of focus. If there would be a range of the most dangerous things for startups, lack of focus would be number one. No matter how established your startup (company) is, doing too many things at once can kill you very fast. If you are still looking over your shoulder to check what your competitors are doing, so you can catch up with them, you already lost.

The only reason to between your company and your competitors is that your product or service sucks. Let’s face it. If your target customers love and buy your product you have no reason to care about competition. I’m not trying to convince you that good product will sell itself. That’s nonsense and you are insane if you believe it. No, every product needs marketing to get noticed. So, instead of spying on your competition (I know you do it), focus on what you do and do it ten times better than others. That’s the way out, focus and domination.

2) Too many features

Let’s stay close to topic about focusing on what matters for a moment. One big mistake startup entrepreneurs often do is to doing too many things at once. The best example of it can be found in software and app business. Imagine this. You are about to create a new app for whatever reason you want. After this decision you immediately hit the first enemy on your way. What features and functionality will your app offer? Think about it for a minute.

Your app should definitely do what’s necessary to achieve the purpose of its existence. For example, photo sharing app should be able to send your photos to various networks while a health checking app should be able to monitor and store your health information. Note taking app should be able to store your notes and synchronize them. However, adding social sharing to health app or note taking app is not important to achieve the main goal.

You don’t have to add dozens of features to attract the biggest segment of market. When you put together a set of so so working features, the only thing you get is garbage. Forget that. What’s more, most of startup companies are relatively small, at least in the beginning, so your ability to handle AND perfect more features, products or services will not be enough. Every startup CEO should instead, ask himself “What is the core value of our product or service?” and “What is the reason this company exists?”

Find one or two things you can do really well and do them. If you already have established customer base ask your customers what they like and use the most. Then, make sure you are the best at it.

3) Planning over execution

There is a great saying by US army general George S. Patton. It says:”A good plan violently executed now is better than a perfect plan executed next week.” Considering all his successes in battles there is no argument you can make against it. Trying to come up with perfect plan is as well waste of your time and money as trying to create perfect product or service. Focus instead on execution and shipping as soon as possible, but not to soon.

I will repeat that one more time. Focus on execution and shipping instead of planning it. Remember, every minute wasted cost you money, time and energy. Also, you have no assurance your product will succeed. Well, this will not apply for situation when you did the research first and found potential customers. However, even if you did and you are certain about gap on the market, you still need to ship your darling. When? Read more about MVP and MLP here.

4) Lack of vision

Another reason startup companies fail is a lack of vision. Put simply, how do you want to succeed if you have no clue where are you going? Having a plan or vision is necessary for any business. I know I just told you to focus more on execution instead of planning, but this is a bit different. This is all about your long-term view and goals that will serve you as metrics along the way and help you navigate your company.

Don’t worry, you don’t need to write down detailed business plan or something like that. All you need is to know where do you want to get your company and what do you want to achieve. This will also help you unite your employees to focus on one course and strengthen the bonds between them. Only through vision your team will be able to focus on the mission of your company and succeed in achieving your goal.

5) Poor cashflow

If it’s not in the bank it doesn’t count! It is that simple. Promises will not buy you anything and will hardly pay the wages or taxes. No matter how many times your business partners promised you to pay, until the money are in the bank, they don’t exist. If you want to create a successful startup, you have to make sure money are flowing in both directions, not just out but also in.

If you already have problems with cashflow, cut the expenses as much as you can. Forget about buying expansive furniture or accessory for your office and forget about paying yourself, at least in the beginning (punch yourself in a face if you are doing it). Think in longer term and suffer the temporary pains. Only when your company is self-sufficient and your employees are paid you can start to think about yourself, not sooner.

6) Lack of culture

Company culture, team spirit, startup mind … Call it whatever you want, company’s culture is everything. However, culture is not about the decoration of your offices or interior organization (open-space, cubicles, etc. ). It is about the people. It is about establishing strong social relationships through your company on every level. Create environment your people will love to work every day. Create and support relationships between your employees so strong nothing can break them.

No matter how big the disaster or competitor is or seems to be, your company can withstand it. Your startup has to be a fearless juggernaut with purpose, vision and determination. In order to endure the toughest times your team must move like one man with one goal. No one and nothing can stop company with strong culture and solid social foundation on its way.


To summarize it … Focus, execution, vision, resources and culture are the make-it or break-it points for your startup. Do what you are, or can be, the best at so you can dominate the market. Focus on execution rather than endless planning and daydreaming. Create a vision your company and team can follow. Remember that only money in the bank matter. And the last one, always focus on people working for you. Your team is the greatest asset for your startup.

Thank you very much for reading this post and spending some time with me today. I hope it will help you on your journey.

Further reading:

Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel

The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup by Noam Wasserman

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries

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By Alex Devero

I'm Founder/CEO of DEVERO Corporation. Entrepreneur, designer, developer. My mission and MTP is to accelerate the development of humankind through technology.

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