Mitra Ferdows, a graduate of Business Management from the United States Loyola Marymount University and a consultant in start-ups, replied to our reporters on the captioned subject as below:
Mitra Ferdows stated that studies depict that the failure rate of start-ups is 90%, indicating that many start-ups end in failure rather than success. At first glance, when start-up managers plan to start the business, it might seem a little more optimistic to think the company should go in the right direction it wishes to be. By studying why start-ups fail, one may learn lessons and offer guidance to the potential entrepreneur. This area is not fully accessible compared to the studies that have been done about successful start-ups. There might not be access to data for all start-ups that fail, or they would not provide us with the information due to the confidentiality of their work or their aspiration to reopen the business in the long run. However, many failed start-ups have been studied, and the reasons why they failed are outlined in this article. The question to be answered is why they fail and what lessons can be learned from failure stories. Several reasons include vague ideas with vague business models, failure to build a good team, lack of market demand, leadership and management crisis, poor decision-making, lack of the necessary capital, being out-competed, and contradicting goals and ambitions.
Mitra Ferdows continued that the first and most significant ground that start-ups fail is that they have vague ideas and vague business models. What makes a start-up successful is the idea, which means it needs to be precise and straightforward and studied for a long time to solve a market problem. Vague ideas would end in ambiguous business models, so business continuity would not be ensured. A masterly business model must generate revenue and fortify the business’s survival. Many companies fail to propose efficient plans, ignoring the market demands; thus, every step they take would set the seal on a fail instead of a success. The reason would lie in the hasty decisions and extreme optimism before starting a business that might stem from thwarted ambitions entrepreneurs have had for a long. Failure to build a good team is another disregarded key issue that makes start-ups fail. It seems to be an easy task at first, but when the work starts, problems pop up. Mitra Ferdows added that owners of start-ups need organized, goal-driven, and well-motivated teams in place. Many start-ups fail to put together the right team, which is essential for the business’s success. Some can gather technical experts, but building a top-notch business team is neglected. It is critical to have an assorted team with different skill sets for any start-up to become successful. Businesses that do not give certain amounts of equity to people, the leaders aren’t aware of themselves and are not good at conflict management, would finally sink in. Mitra Ferdows stressed that in addition to the two reasons mentioned above, one of the most controversial and critical issues in start-up failures is the lack of market demand. Start-ups with vague ideas and no philosophy to fulfill a market demand are drones to failure. Studies show that 42% of start-ups fail because they do not tend to answer a market demand. Many start-up entrepreneurs work on the technical aspect of their business while neglecting the most important factor to succeed,whic is the real needs of the market. It is crucial to understand market dynamics and trends before launching a start-up since it provides an in-depth insight into the audience behavior and the nature of available competitors. Start-up owners seem to focus on what interests them instead of what needs to be given to the market. Therefore, they fail to profit, and in the end, they fail. Mitra Ferdows reiterated that the next ignored issue is that start-up specialists are mostly specialists in the area they have worked in so far. They lack the necessary managerial skills, which means managing the market, the team, and so on. They lack leadership qualities, which must be another key factor that causes start-ups to fail. Poor decision-making comes next among factors that fail start-ups. This means many of them fail to balance what needs to be prioritized, which entraps the company’s vulnerability, and failure comes next. The snap, rapid, right, and wrong nature of making decisions will hurt the business’s success or failure if not carefully examined and thought of, which will cause opportunities to slip away.
Mitra Ferdows concluded that the final failure reason for start-ups to be considered here is lack of necessary capital. As the outcome of a start-up is to earn a substantial profit, raising money is one of the most grueling yet problematic issues for many businesses. Entrepreneurs do not start a business to fail; however, sketchy access to working capital and other financing options is a principal contributor to a business’s lack of success and ultimate failure. The fact is that a lack of enough operating money emerges from a low credit source and a lack of strategies to borrow from traditional financing sources, At the same time, many would argue that operational issues affecting cash coming in and out of the business also matter.
Overall, all businesses, be it a start-up or a conventional run business, if employers fail to plan, then they will plan to fail. Learning from business mistakes, taking market the demandst into consideration, and prioritizing what efficient teams will do are the keys tostoppingp a start-up from future failures.
