List of Reasons for Start-up Failures

List of Reasons for Start-up Failures

🔥NEW Many entrepreneurial companies end in a disappointing way. For the founders, employees, investors, and even for the community and society as a whole. According to interesting findings of Harvard Prof. Eisenmann, there are 6 main reasons for / patterns behind that:

1. FAILING TO ENGAGE THE RIGHT STAKEHOLDERS. A spectrum of stakeholders, like employees, strategic partners, and investors, all play a role in a venture's downfall.
2. RUSHING INTO AN OPPORTUNITY WITHOUT TESTING THE WATERS FIRST. Entrepreneurs are sometimes too eager to "get an initial product out there" without doing proper, in-depth customer research.
3. FALSE POSITIVES. Inexperienced entrepreneurs regularly misinterpret early signals about market demand, assuming that the main market reacts in the same way as the earliest adopters.
4. SPEED TRAPS. Start ups sometimes invest too heavily upon initial success using major investors funds. But it is very hard to maintain the initial pace of success.
5. HELP WANTED. Problems with hiring the proper executives, recruiting the wrong ones, or needing more financial help of venture capitalists while the market is not good at that moment in time.
6. CASCADING MIRACLES. Some entrepreneurs have an extraordinary ambitious vision. But changing customer behavior + mastering new technologies + closing strategic partnerships with large firms + securing government support + raising huge amounts of capital is very difficult, whilst all five are needed; failing to accomplish just one "miracle" (even when accomplishing all others) is typically a "show stopper".

⇨ Are you aware of an additional reason for startup failure? Not to scare everyone nor be overly pessimistic, but to avoid as many startup failures as possible... Let's try to make the fantastic list of Eisenmann even more complete!
Source: T. Eisenmann, "Why Start-ups Fail", HBR May-June 2021, pp. 77-85.

		Comments Sort by date Sort by rating Rating
		3 Luckson Mvuu Management Consultant, Zimbabwe
	Why Start-ups Fail? Start-ups can also fail because of lack of enough capital needed to finance the initial business act... Sign up

		1 Helen Strong Business Consultant, South Africa
	Marketing Elements Causing Start-up Failure Agree @Luckson Mvuu. Entrepreneurs are underestimating the amount of working and setup capital requi... Sign up

		0 Anonymous
	Reasons for Business Failures @Helen Strong: With thousands of high-profile business schools around the world and about 80% failur... Sign up

		2 Helen Strong Business Consultant, South Africa
	Is the Right Training Available? @Anonymous: Your comments open up a whole new debate as to the need for professors to have business ... Sign up

		1 Ramadimetja Eva Ramalepe Business Consultant, South Africa
	Start-ups Failing Due to Lack of Sustainable Financial Backup @Luckson Mvuu: Hi, I agree with you on the point of start up requiring sustainable financial backup ... Sign up

		0 Trilok Sindhwani Consultant, India
	Business Schools, Business Start-ups and More than 80% Failures Please forgive me for my language. If you were teaching entrepreneurship and encouraging startups, k... Sign up

		0 Jaap de Jonge Editor, Netherlands
	Start-up Failure Due to Lack of Financial Capital? @Ramadimetja Eva Ramalepe: I agree there are multiple sources of funding for start-ups. For further... Sign up

		1 Maurice Hogarth Consultant, United Kingdom
	The Reasons Why Startups Fail I state the 4 main reasons as: Wishful thinking overriding proper planning. Failing to arran... Sign up