Reasons-For-Start-Ups-FailUnfortunately there are as many start-up failures as there are start-ups that succeed, perhaps even more of those that don’t make it. As well as looking at the reasons why specific companies manage to hit big, it is also a good idea to look at the most common reasons why some of them fail. Here are five of the most common reasons for start-ups to fail.

1. Losing Perspective

Some entrepreneurs are so passionate and focused on their own business idea that they completely lose perspective. Going about it alone also often means that you don’t have the right people next to you giving feedback.

Therefore you must consider the option of having a business mentor or working with a venture capitalist in order to get investment for your business. The feedback you get from them can help you keep the right perspective on your business.

2. Not Solving A Problem

There are plenty of start-ups that don’t have a product or service that properly solves a problem. The truth is that majority of great ideas and innovations are already out there and some problems are just too small for starting a business.

You really need to do enough market research and properly test if your product has a chance of succeeding in the big world. Competing with businesses that solve the same issue in a different way isn’t always easy and sometimes it is hard to get people using a new idea.

3. Just Producing A Concept

Another related point to the problem above is the fact that some start-ups only produce concepts instead of tangible products or services. It is very hard to get a concept moving as a business idea.

People and businesses want something real to use and not just an idea. For example, a great marketing concept isn’t as good as a concept and a real marketing campaign.

4. Run Out Of Cash

Unfortunately one big reason for start-up failure is running out of cash. There are many reasons why this happens. There is bad financial management, there is often no proper budget in place and sometimes the expenses are just too high.

It is therefore essential that your start-up properly focus on the financial side of the business. It is crucial to make use of effective accounting services and come up with a realistic budget for your business.

5. Inefficient Strategy

Many start-ups have the wrong strategies when they are starting out. They often end up focusing on the wrong things and might even try to do things that have worked in the past. But the crucial truth is that markets move fast and what worked yesterday might not work tomorrow.

Your start-up must always come up with a strategy that has the future in mind. There are some really good tips for coming up with an efficient business strategy in this Harvard Business Review article.

The above five are the reasons why most start-ups end up failing. Take note of these and ensure that your business doesn’t make the same mistakes.

John Turner is passionate about helping businesses to succeed. When others like finding reasons businesses succeed he is more interested in learning about the companies that fail. He is also really interested in card games.