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90% Of Startups Fail: Here Are Some Reasons Why And What To Do About It

90% of startups fail

According to a 2019 research by Startup Genome, 11 out of 12 startup businesses fail. That means that a whopping 90% of startups fail and will eventually close shop without achieving their business objectives.

With so many people interested in starting businesses and excelling in business, why do 90% of startups fail? In this post, I’d be sharing the top reasons why 90% of startups fail and what you can do to avoid becoming a part of that statistics.

Reasons Why Startups Fail

Start Your Business in 30 Days Even If You Don't Have An Idea
Start Your Business in 30 Days Even If You Don’t Have An Idea

Little Or No Research

One of the reasons why 90% of startups fail is because they do not make enough research before venturing into business. For a startup to be successful, it needs to properly research the market and know what to expect before establishing the business. And if you are a startup owner that has not carried out extensive research about the market that you are entering into, you might be doomed for failure. The best way to ensure that you have a fighting chance at surviving as a business is to make sure that you conduct proper market research before starting out.

One of the core questions to ask yourself is if the product you are building is a fit for the market. You need to have a proper understanding of the market outlook, the size of the market that you are entering into, the market trends, the market segments as well as the market share that you are looking to capture.

See More: How To Do Market Research Before Starting A New Business

Lack Of Creativity

Another reason why many startups end up failing is that the management of the startups does not possess a very important characteristic of entrepreneurship– creativity. Creativity is important for startups because new startups need to innovate to create products and solutions that push the envelope. It is not just enough to see that a sector is very profitable and then jump into it. If you don’t innovate with your products and solutions, you might jump into a business and fail woefully.

To make sure that you don’t end up as one of the 90% of startups that fail, you want to make sure that you approach your solution with creativity.

It is also worthy of note that market research will help you become more creative. That’s because when you know what your competitors are doing in the sector, it will help you know how to innovate and stand out from the competition.

See Also: Importance Of Creativity And How To Boost Your Team’s Creativity

Launching At The Wrong Time

A lot of startups make the mistake of thinking that they have to create the perfect product before launching. That can not be further from the truth. The best way to get a good product to the market is by creating a minimum viable product (MVP), launching, and taking feedback from end-users, and improve the product.

There is no perfect product in the market, and you can only improve as you continue to learn more about what your target audience wants. If you look at most startups that grew to become Fortune 500 companies, they all have one thing in common- they launch with an MVP and continually made changes as they study user behaviour. Examples of companies that have evolved from their humble beginnings include Facebook, Twitter, Amazon, and others.

See Also: 10 Ways To Successfully Implement Your Business Ideas

Wrong Passion

Another reason why 90% of startups fail is that the businesses were started for the wrong reasons. The truth is that one of the fundamental reasons why people go into business is to make a profit. But if you make money the only passion your startup is chasing, then you are heading for the failure route.

Many startups that have won in the marketplace won because they were passionate about making a difference in the market. They are often passionate about bringing about a real change in the market. Successful startups are typically those that see a problem and are genuinely interested in finding a solution to the problem. That is the best way to have longevity in the marketplace as a startup. As Gary Vaynerchuk, a serial entrepreneur once put it, “People are chasing cash, not happiness. When you chase money, you’re going to lose. You’re just going to. Even if you get the money, you’re not going to be happy.”

See Also: Starting A Business Without Passion – Only For The Passionless

Go from idea to starting your business in 30 days
Go from idea to starting your business in 30 days

Hiring The Wrong Team

Another major reason why 90% of startups fail is that they hire the wrong team. Your startup is going to eventually become as great as your team is, so when starting out, make sure that you go for the right team. Many startups fail because they put square pegs in round holes thereby making sure that their startups are set up for failure.

To avoid your startup failing, make sure that you hire the right people. It might be tempting to hire one person and put him in charge of two roles, but it might make you fail. Hire right, put people in positions where they can excel, and watch your startup grow.

Underfunding Or Overfunding

Underfunding is another top reason why 90% of startups end up failing. Many startups set out to start their business underestimating the amount of money they will need to spend before the company breaks even. The saying that if you fail to plan, you plan to fail rings true in this instance. The truth is that when your startup begins its journey with a lot less money than they need to become profitable, the startup will ultimately fold.

To avoid losing your startup, the right thing to do is to engage in proper market research to understand the amount of money you will need to keep your startup afloat. If you don’t have the money needed, you should either source for alternative funding, or wait until you have the needed money before starting your business.

Interestingly, a related reason many startups fail is that they are overfunded. Unfortunately, there are some startups that have raised hefty sums of money, and gone on a spending spree- wasting money on many things that they don’t need. With that much mismanagement, the startups eventually lock shop, leaving many investors biting their nails. While it is not a bad idea to raise funds, make sure that you raise funds when you need it, and when your company is ready for it.


There are many reasons that 90% of startups fail and if you know the pitfalls, you will have the knowledge to avoid them. In this post, I share some reasons why startups fail and what to do to avoid failing as a startup.

Are you ready to start your own startup journey? Here are 35 booming business ideas and step-by-step guides to start them. It’s a strategic and financial breakdown of the most lucrative businesses in Nigeria. Get it now and start building the business of your dream.

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