9 Early Warning Signs of Startup Failure

90% of startups fail is a spine-chilling fact for many while for others they may fall in the list of 10%. As a startup, you have to go through various stages of trial and error. Sometimes you feel everything is going smooth, while sometimes you think it is never going to work.

American marketing firm “Factl” in a recent examination of 200 failed startups cited lack of investors interest, running out of finance, poor business model, and poor traction as the major reasons for failed startups.

The American Bureau of Statistics found that 50% of startups survive for the first five years while only 30% survive over a span of 10 years.

From the above statistics, you might get scared and think of putting your hands off from instigating startup or take a quick exit in the early stages of the startup. Will you be able to take the chance and live on paycheck-to-paycheck from 9 to 5 job? The answer will be a no if you are committed and have a strong will to achieve goals.

You have to pursue your dream that sparked you to have financial freedom. For this, you need to know the early warning signs that lead a startup to fail. Have a look at them.

Not Knowing Your Customers

In the early stages of a startup, when the idea is fresh and motivation is high, you just want to start instantly. But you forget to do some homework before diving straight into it. Knowing your customers or target audience is the key to any successful business. How could you start a business where no one feels the urge to have it?

It is your job to determine the target audience, their pain points, the problem they are facing, inner fears and their goals. The problem with a majority of entrepreneurs is that they want to initiate startup quickly and make profits without interacting real people. Knowing your customers and their problems are the key to a successful startup.

Lack of Flexibility

Entrepreneurs are flexible in what they do and how they do. For many reasons, startup entrepreneurs follow the same track and mindset. They are not adaptive to be flexible and avoid taking any risks or embrace innovation.

As a startup, you have to free yourself from the trap and try new things, bring innovation, run tests and connect with your community. No matter, how often you need to change the plan according to situations you have to bring flexibility.

Getting Bored Soon

In the early stages, you are sparked enough to take the action and work on your idea wholeheartedly. As the time passes, your motivation level drops down and excitement of running your own business depreciates.

If the sign appears early in the startup, you might be on the verge to shut down your business. Don’t worry, it is the last option you would ever adopt after struggling day and night. Find the reasons why you are lacking interest in the business.

Failing to Acquire Customers

The success of any startup is dependent on how many customers are willing to buy your product. Soon after your MVP development, you were able to gain massive attention, positive customer response and a list of subscribers.

Soon after you launched your product, you are facing difficulty in acquiring customers. The reason can be many but having no to little customer acquisition after MVP launch is a major concern. It is the early sign of your startup to fail.

Taking Late Action

Startup is all about taking early action. Failing to execute action will never lead to any success. Unless you are not taking the action, you will never be able to recognize the potential of your product/market.

In addition, you have to take quick decisions before anyone takes the lead. For instance, if the technology is changing at a rapid pace and you fail to deploy it, you might face challenges erected by your competitors. Failing to stay ahead of the competition at early stages might result in wrapping up of startup.

Engaging Yourself in Wrong Stuff

Your success is not determined by how long you stay busy. It is also not a sign of productivity. However, keeping yourself engaged in things that matters the most is the key to success. Moreover, you have to prioritize your work according to its importance. Get a clear picture of what you are doing and what you want to achieve. Thereafter take the right actions to make it happen.

Not Focusing on Making Money

The purpose of any business is to solve the problem of masses and generate revenue. What if you fail to achieve your goal due to lack of vision and strategy. The business plan of your startup must determine the ways of generating revenue. There are lots of tough situations and moving parts in the startup process. You need to keep an eye on everything. If you are unable to do so, your startup is near to being wrapped up.

Not Focusing on Core Product

It is important to understand that your startup product is the key to success. However, due to changing situations and unexpected circumstances, you are not able to focus on core product and deviate from core purpose to something else.

The deviation from core product offering to something else would put you in a tough situation. Competitors will become active and offer a better product, resulting in the packing of your startup.

No Exit Strategy

Startup is all about cash. As long as you have cash, you are alive. Once the cash is gone, its time to wrap your business. Keep an eye on the reserve fund you have saved for the rainy days. Don’t let the money run out.

If for some reasons, you have run out of cash, you need to have some backup i.e. asking financial institute, your relative or seed funding companies. You need to have a clear picture in the early stage to know what to do in emergencies or when you are out of funds.


Startup is not everyone’s job that can be handled easily. If you are wise and optimistic enough, you can take action before the signs start to reveal. The early you take actions, the better it will be for long-term growth and success.

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