Why do startups fail?

Nine out of ten startups fail. This is the harsh, cruel reality. But it’s one that you should meditate on. I read dozens of essays from failed founders in which they tell the rest of the community what went wrong. Some of these essays are very honest, enlightening, and brave. Others point fingers or blame everything on a product that was “too perfect” with no market fit. However, there is one thing they all have in common.

If you look at the top reasons, you may spot that many of the issues could have been avoided by properly tracking business performance. For example, if there is no market fit— you can see it from data within the first few weeks. And how can you run out of cash if you really were tracking your finances?

So why do startups really fail?

In the last 5 years I've been involved in all sorts of online projects and startups. I've seen everything from catastrophic failures to great successes. And the truth is that startups which track and follow their KPIs on a daily (or even hourly!) basis very rarely fail. The reason is simple.

Every start-up is like a series of science experiments. You have some hypothesis you want to test, variables to choose from, and usually limited resources at your disposal to prove that hypothesis. And every experiment will provide you with valuable insight. As long as you learn from these experiments and continue improving, you will never end up in the “startup bin.”

The startups that fail usually don't know what the most important KPIs are of their business. Or they simply don't look at any data whatsoever. And truth be told, I do not understand how you can’t track your business performance in real-time in 2015. When you can connect all your online services to a live dashboard in a few minutes.

You care about your business right?

I mean, if I ask you at the end of the day how your day was, you’d be able to provide me with a clear answer. It was either a good day or it was a bad one. But if I ask you how many visitors you had from Facebook or how many calls your sales team made — will you be able to provide me with an answer? And how long will it take for you to find the right data?

I see so many businesses around me performing the same repetitive tasks, day in, day out. This is usually done without questioning their impact on performance. I also see many founders sitting behind their laptop every day clueless on how to move their business forward. I am not saying that following your KPIs in real-time will save your business. But at least it will provide you with answers and insights quickly. You can no longer play the 'blame game' or look for excuses. Because if you really track every single business activity and conduct these small experiments — sooner or later you will find out what works and what doesn't. Of course many of your hypotheses will fail, but at least you are moving forward.

Regardless of how you do it, track your performance data.

Written by Dominik Vacikar.

Astronaut @spaceshyp • Founder @rentomato • Previously CMO @nestpick• Studied @Erasmusuni