Top 8 Reasons For Startup Failure In India

Startups are among the key revenue builders of India. There are problems to be solved in the world. To solve these problems, startups are built. Some startups either know the problem and are not able to find any solution. Some of them are not able to understand the problem exactly. What exactly are the reasons for so many failed Indian Startups?

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We all have heard about the failure of Businesses or Startups . We all remember our parents reading newspapers shouting about the failure of many businesses. But at the same time, the voices of successful businesses are loud too. What are the pain points of some businesses?

 We would surely get the answer to the questions by the end of this blog. 90% of businesses fail within 5 years because they don’t have a sustainable model. There are a bunch of reasons due to which these businesses are stuck in losses.

The Journey of Startups in India so far:

The journey of startups In India was like a rollercoaster ride. The journey was filled with obstacles. Some of them enjoyed the journey while some of them didn’t.  But We believe they will make a comeback with a better strategy.

Some startups became unicorns while some just went bankrupt. That’s the nature of the economy. It’s unpredictable. Some had funding but still failed while some startups which were bootstrapped became Unicorn.

For some startups, 2020 was a blessed year. They grew their business one year back and Boom! They found their growth hack and prospered.

The online startups have got a boost in Covid-19 Pandemic. The startups which became successful were able to create a market for their services. We would dive deep into various reasons for failed startups in the next section.

What are the Business Failure Reasons? 

In this section, we will know about the key reasons behind the failure of some startups. There can be many reasons for their failure. But we will discuss the controllable reasons.

Either the model would not be scalable or the product wasn’t marketable. We would discuss 8 Points which are the major reasons. Ready! Set! Go!

1) Lack of Creativity and Innovation 

Nowadays, competition is so high that it’s hard to stand out. It’s hard to get that quality of differentiation. People don’t try to innovate. They think they would fail but they don’t feel worth giving it a try. There is a very beautiful quote by Thomas Alva Edison that “I never fail. I just learned about 10000 ways which don’t work”.

In this world, nothing is permanent. Market and Economy are changing rapidly. What works today might not work tomorrow. That’s why Innovation with Creativity is the solution for it. A very good example to understand this is the failure of Nokia. They always believed in hardware. They never focused on what the market wants. In this way, other mobile brands won the game with touch screen phones and emerged as new winners.

2) Lack in Marketing 

Marketing is the secret sauce of any business. Every business has a product to sell. But how will people know about the product? And more importantly, why will they buy the product? These are all possible with marketing tactics and strategies. Marketing your product is very important. Lack of it causes low trust and confidence in the product. Making people know that your product exists and is the best one in the market can only be done through effective marketing.

3) Lack of Adequate Funds 

Now, this is where the interesting part comes. People say that your startup can’t survive without Funding. This is not true. Of course, some startups need adequate funding to start their operations. But as online businesses are booming up, SAAS (Software as a Service) based Startups comparatively need less funding. This is because it requires less expensive compared to Product-based Startups. A great example to justify this fact is Zerodha. Yes, you heard it right. It’s a Unicorn. This means it has achieved 1 Billion Dollars in valuation. It is an Indian Stock Trading Platform. Now you might be wondering about the amount of funding taken by them? Well… It is completely bootstrapped. This means the profit which they gained was again invested and so on. 

4) Not Understanding the Competitors

Your Competitors are the ones who are in the race where they want to win just like you. Don’t be jealous or angry at your competitors. Instead, learn from their mistakes. Learn from the wins they made and try to incorporate them into your Business. If you want to make a tall building, there are two ways. Either break everyone’s building or make your building the tallest. Choose the latter. Your competitors can help you in achieving results if you work smartly. You need to understand that for getting huge success, you need to be either the best in your field or first in your field. If you are first in your field, Best of Luck! You have no competitors yet. But in order to become the best in your field, you need to stand out in front of your competitors.

5) No Focus on Customer Feedbacks 

Customer Feedbacks are the best way to improve your product. Trust Me! If your customers are willing to give you feedback, they don’t hate you. Instead, they are just giving you a suggestion to improve. Many Startups make these mistakes, They don’t focus on Customer Feedbacks. It is always better if we think and take action from our user’s perspective. They give us another view to look at things. Considering Customer Feedbacks can help startups build trust and confidence at the initial stage. Apple, as we know, founded by Steve Jobs focuses heavily on Customer Feedbacks. It helped in making Apple better. It also helped people build trust with Apple. Today, Apple is loved by its customers.

Whenever you consider someone or give importance, they think you care for them. Make that ‘Impact’ on somebody.

6) No Scalable Model/No Large Ecosystem 

Any successful startup you see has a large ecosystem of users or has a scalable model. Business is dependent on Scalability. If you can’t scale your business, there’s no point in running it. What would you choose? Would you make ‘X’ amount of revenue from one office? Or you would make a ‘10X’ amount from 10 different offices? You would choose the latter right?

That’s great. We have the same choices. Scaling up a business is a task. It happens slowly. 1 to 2 to 3, this all takes time.

Amazon has a large ecosystem of users. It has buyers who are willing to spend on something that could help them make a profit. This massive amount of user base helps them to make revenue each day. Thus ‘Scalability’ is a factor that matters in the long term.

7) Not Understanding the Target Market 

Most startups make this mistake. They don’t identify their target market. Whom do you want to offer your services to? Who is interested or might be interested in your product? There is a specific group of people who will be your target market. Everybody might be interested in your services. There would be a group of people looking for your product. Most startups don’t identify it and randomly start marketing products. Now if you are in the Finance sector, school-going children are not your target market. The same way startups need to identify their users.

8) Lack of Adequate Business Model 

Every Successful Business has a business model which contains different funnels of revenue. In simple terms, it contains profit-making strategies. If you don’t know how your business will make a profit, it’s not worth starting it.  

An Adequate Business Model contains strategies and tactics. It is a blueprint or roadmap. If you follow the roadmap and take the right actions accordingly, things will happen smoothly. It’s important to know your way before walking towards your destination. This is why ‘Planning for Profit’ becomes so important. 

Also Read: The Future Of Cryptocurrency Explained 

Final Thoughts

We see startup failures a lot. Of Course, it’s true. It is not that easy to start a Startup. In this blog, we talked about all these negative points. But there is always a positive ray of hope. There is a statistic that 90% of Businesses fail and don’t succeed. There are only 0.001% of startups that make a huge success. The percentage might shock you but this is the truth. We mentioned some startup or business failure reasons in this blog. We want you to consider this and not commit this if you are starting your startup. This is because we don’t have time to commit mistakes that others have already committed. Life is short, so learn from people. We hope this blog was able to add a certain amount of value to your startup journey.