5 Common Reasons Startups Fail (Plus Solutions)

If you come across this article that contains reasons startups fail and how you can prevent it, then it is clear you are an aspiring entrepreneur with innovative ideas, great plans, and big dreams.

First, I would love to congratulate you for wanting to pursue your dream since you’re planning on running your own startup. You deserve the good things. You really deserve the best!

But, hold on a bit, future entrepreneur.  Running a startup isn’t as smooth and easy as you may have imagined.

In fact, a report by Small Business Association indicates why a lot of startups barely make it to the top; 30% of startups fail in their first year of operation, 50% within their first five years and 67% finally fade off within ten years of establishment.

By taking those numbers into consideration, it is clear that 90% of startups fail to make their business a success.

Therefore, this brings about the question you would be pondering; why do startups fail? What are the odds that your upcoming business will be among the 10% that can withstand the tests, trials, and hardship and be the next BIG thing out there? And most importantly, what can you do to make your startup remain in the market?

Everything you need to know about why startups fail and how you can make your startup succeed is properly outlined in this article.

Reasons Startups Fail

If you desire to establish your own startup, then it is crucial you know these reasons startups fail and avoid them.

1. Doing it All Alone

No doubt, the idea of being a solo founder sounds exciting, but the struggles, the restlessness, and possible startup failure don’t always make it worth such effort.

It is not always an individual’s efforts that make a company successful, however, effective teamwork and collaboration do wonders.

No matter how you want to look at it, establishing a company is very challenging, and setting it up in a competitive market can be consuming. It demands consistent hard work, persistency, dedication, and often different means to set up a business.

Entrepreneurs who take on this path to establish their startup by themselves often find themselves in a complicated situation.


The solution is quite simple.  Having a business partner, business partners, or a team allows you to gather different points of view, insights, and suggestions, and putting them all together to get the best from it can help make a significant difference.

2. Poor Market Analysis

A lot of entrepreneurs jump into startups hoping to get into the market and start pulling out big numbers.  Most enter with the mindset of selling over 1 million units of their products without a proper market analysis.

The truth is, it is impossible to pull out such figures as a startup without a full concept and understanding of what’s out there.

Everyone wants their products, ideas, and business to be out there in the market, and if they can get a few investors to make it happen it may take only a few months to realize that they can’t make the profits they think they will make.


In as much as I’m compelled to tell you to do in-depth market research before you run your startup, the market is unarguably a complex beast, so it’s not uncommon for many startups to reliably figure out their chances of success accurately.

While there are many models and tools out there that can give you an insight into the possibility of startup success and startup failures, there are many times when the only way to predict success or failure is to get the product into the market and see how it goes.

3. Inaccurate Business Plan

A business plan is unarguably a must-have for every startup, and I’m sure you should already have one planned out already

But just because you have one is a guarantee that it is good and accurate.

An inaccurate business plan doesn’t take into consideration possible upcoming factors that may arise during the developmental stages of the business and can lead to startup failures rather than success

Some of the common flaws in a business plan can include being too vague, taking wrong stats, miscalculated costs, and poor research, amongst others.


You mustn’t be a scholar from Harvard Business School to craft a successful business plan, but it is ideal to seek assistance from entrepreneurs with real-world experience who may be able to help you out with your business plan soon rather than later to avoid your startup failures.

4. Hiring the Wrong People

As emphasized earlier, as an entrepreneur who seek to grow their startups, it is highly recommended that you hiring people to handle take up some roles in the business. However, many atimes, one of the reasons why startups fail is due to the poor choice of workers made by the entrepreneurs.

However, many startups will hire the wrong people who aren’t right for the job.

For example, some startups founder may decide to emou their friends or family members to take on some roles even when they are not ideally qualified for the job.


During the fomenting stages of startups, choice of employees can as well determine whether the startups fail or not. Therefore, it is imperative that the staff you hire are the best candidate for the job.

If you hire the best candidate for your startups, you will notice that your company will function perfectly.

Real Also – 5 Best Places To Get Business Grants In Nigeria

5. Unforeseen Market Crisis

No matter how accurate your business plan is, no matter the number of qualified candidates you have, sometimes, one of the reasons startups fail is due to the unforeseen market crisis.

Take, for instance, the Covid-19 disaster, it was unforeseen and a lot of businesses, especially startups were crushed during the process.

During Covid-19, no business predicted the global shutdown, although while some businesses crashed, few were able to thrive during the crisis.

Check Also – 10 Most Profitable High Income Skills To Learn In 2022


While there are no exact tips for this reason startups fail, it is always advisable to have a backup plan in any business in any case such an unforeseen market crisis comes up.


Running a startup is not as easy as you may imagine it to be in the first place, but as I would always say, there is nothing that is not attainable. If you want to avoid these reasons startups fail, then you should be ready to put in the efforts and follow the 5 tips we outlined in this article to help you in your next startup success.

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