One of the most important tasks of a CEO is to regulate the accelerator. In the early stages of a business, while the product is under development and the sales movement is still being developed to make it repeatable and scalable, the pedal needs to be adjusted very easily to save money. It doesn`t make sense to hire a lot of sales and marketing staff if the company is still finishing the product to the point where it really meets the needs of the market, or if the sales movement is not repeatable. This is a very common mistake and only leads to quick burning and a lot of frustration. Check out our starter solutions for more information on how a RingCentral MVP/video package can be exactly what your startup needs right now. High-Tech, Small Business, SME Employee Experience, SME Productivity The company has built its business model on online food delivery in India. But he ran into problems when he had to deal with the reality of the country`s infrastructure. But instead of the route taken by its competitors, it even chose to serve Tier 2 and Tier 3 cities. Today, small businesses face labor shortages, which have forced some to reduce their hours or settle for fewer team members to complete important aspects of the business. These challenges will undoubtedly lead to patterns of error that could last for a long time, especially for some brands that were already struggling before the pandemic. There are, of course, other reasons why startups fail – solving a problem that no one needs to solve or that no one is willing to spend money on, or rushing into a market you don`t understand. But as long as you have a good idea, know your industry, and surround yourself with the right people, avoiding these points of failure should set you up for success. Since many startups have given multiple reasons for their failure, you`ll see that the chart highlighting the main reasons doesn`t add up 100% (it far exceeds it).

A great example of startup failures due to strong competition is Digg. Perseverance is very important for startups, but unless adjustments to a better course of action also take place, a startup can exit business right out of business. Perseverance only works if the business model is strong and the right decisions are made. Bad marketing: You could say that a business comes down to two aspects: marketing and accounting. If you excel at both, it doesn`t matter what you sell or offer, because someone will buy it. The sad truth is that most entrepreneurs understand their business and nothing else. Instead of scrolling through your marketing campaign, praise this aspect of your business. It costs money, but if done right, it will yield much more than you spent. As described in the introduction to the Business Models section, after hundreds of startups, I realized that one of the most common causes of failure in the startup world is that entrepreneurs are overly optimistic about how easy it will be to acquire customers. They assume that because customers create an interesting website, product, or service, they will go to their door.

This can happen with early customers, but after that, it quickly becomes expensive to attract and win customers, and in many cases, the cost of customer acquisition (CAC) is actually higher than that customer`s lifetime value (LTV). A fourth major reason for the failure of startups is that they are short of money. A key task for the CEO is to understand how much cash is left and whether this will lead the company to an important milestone that can lead to successful funding or positive cash flow. A common problem is when investors try to interfere too much in the day-to-day operations of the business. This can be frustrating for entrepreneurs who want to maintain creative control over their products. It can be difficult for CEOs to know how to react when they reach this point. So far, they have madly kept every penny of the company`s money and withheld expenses. Suddenly, they have to flip a switch and start investing aggressively before sales.

This can include hiring multiple sales representatives per month or significant SEM expenses. This change can be very counterintuitive. Another mistake that fast-growing companies often make when they start to evolve is saying yes to every (feature) request from their customers. In this case, you run the risk of promising too much and delivering too little. The co-founder of GreenPal (a company dubbed “Uber for lawn care”), Gene Caballero, also experienced this: “One mistake we made in scaling was giving our customers too much power when it came to dictating their schedule.