A Lesson in Failure

Date: June 19, 2015
Author: admin
Posted in: News


We’ve all heard the success stories in the start-up world, but what about those who don’t quite make it?  Unfortunately, the vast majority of start-ups fail, and it is these failures that can teach us valuable lessons.

A new website, Autopsy.io, has recently launched which keeps track of many of these failures together in one place and even includes a summary of why each idea flopped, in the hopes of providing a lesson to others to learn from.  Although there are a multitude of reasons, we decided to analyse three of the most commonly reoccurring reasons why start-ups fail.

1. Insufficient Funds

Running out of money is probably the most common reason start-ups fail and can be the result of inadequate pre-planning or expanding too soon.  Having sufficient cash flow to meet the day-to-day operations of your start-up is essential, but so too is the foresight to understand and obtain the capital requirements of the business.

Similarly, any success early on doesn’t mean that you should immediately expand to a new office, factory, warehouse or location.   Any expansion requires infrastructure and should be fully costed and adequately funded, and ideally should be part of your business plan (see below).

2. Management Issues

Many entrepreneurs are people who are gifted in many areas (especially “tecchies”) and have decided to make a move to create their own business.  However, quite often they have no actual experience in actually running a business.  A solid business plan is indispensable to a start-up.  As Benjamin Franklin said, “if you fail to plan, you plan to fail”.

Although it goes without saying that every business is different and running a business involves some level of learning by trial and error, it is also important to understand your limitations (particularly if you are new to running your own business) and seek professional advice where necessary.  This may mean an accountant, a lawyer or strategy advice.

3. Lack of understanding of your market

Finally, a failure to understand who your market is and what they want (or even what they don’t know they want yet) is sure to set you on your way to failing.  A good product/market fit essentially means being in a good market with a product that can satisfy it.  Many failed start-ups attribute their lack of success to “not making something that enough people wanted” or “wrong target market”.

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