8 Dead Giveaways That Your Startup Will Fail

Start-ups seem to always come and go, with some becoming extremely successful, household names like Uber and GrubHub, while hundreds of others fail at the same time.

From lack of funds to years of lackluster performance to a product that’s simply not wanted or needed in an industry, certain signs are a dead giveaway that a startup will fail. However, when companies know what to watch out for and recognize it within their own company, they can rethink their strategy or pull out of an industry completely.

Read on to learn the 7 signs a startup isn’t going to succeed.

No Buyer Persona

Any company worth its salt has a buyer persona.

This tells investors and employees the age, sex, location, behaviors, values, pain points, and interests of the ideal customer. All companies, no matter what they’re selling, have a buyer persona—and they use that persona in everything from developing and manufacturing to marketing new products and services.

Without a buyer persona, many companies are left floundering with no clear vision on who they are trying to sell to and how to make their products or services appeal to their ideal customer.

Products or Services Just Aren’t Needed

Sometimes startups will find there just isn’t market demand for what they’re offering. Usually, this is caused by companies attempting to cash-in on trendy products that aren’t in-demand for more than a short period, or the product or service the startup has come up with is obsolete due to new technology.

Startups can combat these issues by reevaluating what they’re offering.

Usually, it’s as easy as offering new features or services to the preexisting product, but the worst-case scenario may call for a complete retooling of what the company is offering. While this may sound scary, it helps to remember that many successful companies took this strategy, with Tiffany’s originally selling stationery and Avon being a door-to-door book service.


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Lack of Funds

This doesn’t mean that companies need millions of dollars in capital, but they should be able to pay their bills to carry out day-to-day business operations for several months.

While each startup is likely to face some sort of financial issue along the way, many find themselves drowning within months of starting. Sometimes the solution is as simple as looking for ways to cut down on overhead costs, from negotiating lower rent rates to buying less inventory, while others find that their product isn’t worth its manufacturing costs or their service isn’t in demand.

Location, Location, Location

This works for both the physical and digital worlds. For example, if John is trying to sell high-end shoes in a brick-and-mortar store next to a university, it’s unlikely that he’s going to get a lot of foot traffic from people who live in the area. This doesn’t mean college students don’t buy expensive shoes, but he’s more likely to see more customers if his business was located in an affluent area with a focus on boutiques.

In the digital sphere, someone who specializes in collectible books isn’t likely to find their primarily older demographic on Snapchat. Companies need to look at where they are marketing and whether it’s appealing to their target customers.


Years of Lackluster Performance

Far too often, companies will be able to struggle along for years before going under. Companies will be making just enough to cover their expenses and salaries, but not enough to really be successful.

If they face some sort of economic disaster, they have no way to keep their business afloat and sadly find themselves needing to close their doors.

This doesn’t mean that every company needs to have an infinite amount of money in the bank, but if it’s limping along on the brink of bankruptcy every quarter, there’s a definite issue—and it usually stems from a startup that had no foreseeable plan to make a profit within several years of opening.

Competitors Repeatedly Leave the Company in the Dust

Businesses are always going to have competitors, but if a company is not able to compete with their competitors, they’re really not succeeding. Whether the issue lies in price, features, marketing, or another issue, companies need to look at why their competitors are leaving them behind, and what makes their competitors succeed where they’re failing.

Luckily, this is one of the easiest factors for a startup to change due to the accessibility of looking at how competitors’ strategies differ from their own, and what they can do to compete in the industry.

High Turnover Rate

Great companies have the best employees possible, and they want to keep those employees. It takes time, energy, and money to train new employees, and high turnover rates usually cost companies thousands of dollars per hire.

Most employees leave because they do not feel engaged with their company, usually due to a feeling of disinterest in management. Checking in with employees regularly and providing constructive feedback will make employees feel engaged, and lead to a downturn in turnover rates.

Unfortunately, many startups fail within a few years of starting, but when business owners know and recognize their startup is failing (sometimes before it even begins), they can make changes to turn their business around.

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