8 Core Reasons Why Most of the Startups Fail

Startups are like those unicorns everyone is mesmerized with. Tell anyone in your professional network that, I am a founder of a so and so startup and the person would be like wow. That proud feeling you get, the opportunities the digital era is churning out and living during the best times of the world. People are in a mad rush to start something of their own, execute that idea that has been pinging their subconscious mind for long. Anyone with an idea and the extra zeal to do something with some extra cash and the overconfidence of getting some funding from angel investors executes his polished or half polished idea into a startup. Though people have become all the more courageous and are much thrilled like never before to launch their ideas the harsh reality is 80% of startups fail or are bound to fail.

Startups are a great place to invest in but with a mere 20% success rate it is a risky affair to put your money in it. Startups are quite uncertain though they are bound to fail but if they click, they click big time and give massive returns turning people millionaires and billionaires. Ask google, ask Facebook and how lucky their investors and shareholders would be. As an entrepreneur , as an enthusiast who is excited about his idea, you have all it takes to start something and make it a success but before you start something do take care of all the pros and cons of starting your own business. Since if you are starting a business you must be aware of the pros, so I list the cons for you :-
Here we go,

1. Leadership paralysis

Is the leadership team inspiring or slowing down progress? Are the co-founders driving the vision and pushing the company or are they largely disengaged, distracting and misaligned? Leadership alignment is so important. A healthy startup must be focused and aligned at all times, especially as your company is learning from mistakes, growing, and making adjustments to the business model. If your leadership team is muted, secretive, withdrawn, in disagreement, and unpredictable you’ve got a red flag. Trust your gut. Does your leadership team know what they are doing or are they frozen with paralysis?

2. Lack of respect

Related, respect in the workplace is critical. Leaders respect their team by staying engaged and paying attention to every detail while trusting and empowering the team. Leaders that are mysteriously absent from the office and withdrawn from day-to-day tasks will quickly lose the respect of the core team.

3. Procrastination

Have a big milestone coming up, and team members are madly running errands and avoiding work? Red flag. Procrastination is a something teenagers struggle with, not startups. Startups are fueled by a sense of urgency. Finish it. Today.

4. Lack of communication norms

As Ben Horowitz points out, frequent, well-structured 1:1s can be the backbone of company communication.

“Perhaps the CEO’s most important operational responsibility is designing and implementing the communication architecture for her company. The architecture might include the organizational design, meetings, processes, email, yammer and even one-on-one meetings with managers and employees. Absent a well-designed communication architecture, information and ideas will stagnate, and your company will degenerate into a bad place to work.”

5. Lack of vision

Every startup needs a bold vision, or you’ll just regress into a me-too company, building something that is not much different from current products in the market. Solve a huge problem. Re-invent a huge market. The vision inspires, motivates, and aligns the team as you work on day-to-day tasks. Teams without a memorable, simple, inspiring vision start to forget why they come into work every day, which is uninspiring and emotionally draining.

If your leadership team brushes off the need for a vision and hopes to find it after the next round of closed deals, red flag. Discontent leads to attrition. Life is too short to spin cycles without a clear direction.

6. Don’t hire a sales team too early

The founders and early team need to personally handle sales until they literally can’t keep up with demand. It only makes sense to hire salespeople when your product is clearly defined and well…sellable. Salespeople are most successful when they are set up with 1. A steady stream of qualified leads from the marketing team
2. A clear, short presentation they can give prospects over and over
3. A powerful, visual demonstration that shows the value of the solution
4. A simple and repeatable closing process, i.e. sign contract, provision licenses, and off you go.

This sales process needs to be clear-cut and repeatable. Any squishiness in the process causes friction, delays, confusion, and increases the cost of each sale.

Also, don’t hire the wrong customers. Your early customers need to be a good strategic fit . Their successful implementation needs to support your positioning and marketing message.

Hiring a salesperson too early is a great way to distract the team, waste your money, and bury a company.

7. Micro-managing your unhappy employees only makes it worse

If employees are confused about the company’s direction, the first thing that happens is they don’t show up as regularly. Clamping down on “attendance” in the office is not going to help. If you judge your employees by their ability to be at their desk from 9-5, then you will get exactly that; unhappy employees at their desk from 9-5. Trying to fix your productivity problem by nagging employees to be more punctual is exactly the wrong approach. Jason Fried gives a great perspective on how the best work doesn’t even happen at work.

8. Keep your burn rate in check

Free food, an expensive space, custom furniture and nice art on the walls can be a red flag if your company is pre-revenue. As pointed out in recent debates and tweetstorm involving Marc Andreessen on startup burn-rate, “lots of people, big shiny office, high expense base = Fake “we’ve made it!” feeling. Removes pressure to deliver results.” Your revenue is the most important validation of your business. Free dry cleaning is not.
So as an entrepreneur keep a check on all these factors and don't let any of them kill your brainchild that you want to see it bloom and blossom in the world.
If you want your start-up to succeed, as the leader, you must be naturally passionate about the market you’re in, the ideas you pursue, the people you hire, the way you communicate, the office you design, the plans you execute, and most importantly, the things you do in your business minute to minute.

Here’s why:

For a business to succeed, it must do as many things as possible as well as possible.

And the people who do things because they love to do them – the people who are driven by natural passion – become much better at doing those things than the people who are doing them for the wrong reasons.

The CEO who loves leading, the developer who lives to code, the graphic artist who thinks night and day about design – these folks will kick the asses of people who are in these careers for reasons other than passion. They will kick their asses like Lionel Messi kicks a football.