Bye-Bye Business: 5 Reasons Startups Fail According to Those Who Have Been There, Done That

“Survivorship bias” in small business literature means that failures often go unpublished, and lessons are extracted from success stories alone.

The less sunny side of the startup grind can provide indispensable insight into survival, for half — if not more — of knowing what to do is knowing what not to do. Here are 10 commons reasons businesses fail as told by shelved startups in post-mortem notes.

  1. Your Product Fails to Solve a Market Problem

Viable products solve pain points. They provide a customer with an easier or novel intervention that delivers a specific end-benefit (quantified value), and are differentiable from substitute products already on the market. Maybe it achieves something no rival good can, or it’s faster and boasts a friendlier user interface.

The founders of Patient Communicator strove to improve primary care by enabling patients to communicate with their physicians online, but what founder Jeff Novich discovered was that “doctors want more patients, not an efficient office.”

2. Your Goal-Setting (and Goal-Tracking) was Off Target

What are your Key Performance Indicators? These could be sales targets, marketing objectives, nurturing leads at networking events, or securing your next round of capital.

Remember the parameters of a SMART goal, and avoid social startup Wishberg’s mistake of basing goals solely around data and failing to adapt to externalities. “Reviewing those goals at the end of the year, we realized that we had trailed behind on a few of them,” the firm reflected in its goodbye note.

3. You Scaled too Fast, or Not Fast Enough

As a small business, you have to accept that your capabilities and human resources are limited. Social music site Serendip couldn’t handle the high costs of processing millions of posts everyday and serving relevant playlists to users across its web service and mobile app. On the other hand, mobile postcard app Blurtt failed to achieve the highly-accelerated growth crucial for securing later-stage venture capital, despite market enthusiasm for their product. Blurtt bid farewell, explaining that it was “Bootstrapped with investor interest but no commitments.” No deals sealed, no future to plan.

4. You Depended Too Much on One Thing

Perhaps you rode the waves of a bestselling product, banked on a loyal customer, or sourced your top clients from one stellar salesperson who bolted for better pastures. When circumstances shifted — be it market saturation of a former cash cow or loss of a customer — you were ill-equipped to adapt.

Social media monitoring app VoterTide got tunnel vision — and suffered. “It’s easy to get tricked into thinking your thing is cool,” co-founder Jimmy Winter admitted in a post-mortem presentation.

5. You Didn’t Think Like an Entrepreneur

Maybe you underestimated the die-hard commitment and labor that is the lifeblood of a startup. Or you spent too much time working in the business versus on the business, a fatality career coaches often spot in their clients. The result is that you invoice late, your cash flow suffers, you don’t manage your staff — or yourself — and you don’t have a reliable customer relations system or vision for growth because you’re too vested in day-to-day operations.

Image board website Canvas Networks “couldn’t quite crack the business side of things” despite steep consumer demand. “Building any business is hard, but building a business with a single app offering and half of your runway is especially hard,” the brand conceded.


Originally published at on February 7, 2017.

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