why startups fail

10 Reasons Why Startups Fail

By Harriet
Reading Time: 8 minutes

If you’ve decided to take the leap into entrepreneurship – you’ve got a seriously exciting journey ahead of you.

Choosing to invest your own time and/or money into an idea is no small thing. No matter your reason for getting into it, it’s exciting to be able to be your own boss, control your hours, and build something from scratch.

However, it’s not always easy. In fact, 90% of startups fail. It only takes one small mistake that can be crippling and then you’re back to the drawing board.

So in this article, we’ll share with you 10 common reasons why startups fail. Hopefully, with these tips, you won’t make the same mistakes and will know exactly what to do be a part of that 10% that succeed!

Mistake 1. Doing Everything Yourself

A lot of business owners make the mistake of trying to do too much themselves. When you’re starting out, we get it – your company is your baby, and it’s difficult to entrust some of the tasks to someone else.

The thing is, you can only grow if you delegate and outsource. You can’t do all the everyday tasks yourself.

Cut yourself some slack and outsource where you can. This way, you’re giving yourself the proper headspace you need to focus on growing your business.

One of the main reasons we recommend using Amazon’s FBA service (if you’re planning to sell products online) is because they handle all of the shipping and returns, seamlessly. That’s one less task for you to have to think about!

Here are a few things to consider when outsourcing tasks:

  • Make sure to strike a balance between the quality of work that you need and the rate that works for you. Websites like freelancer.com and upwork.com often give you a huge amount of applications for each job, which means you can send out a brief and review all the applications based on their experience and how much they’re asking for.
  • Provide clear job briefs of the exact outcome you are looking for. This might seem like a bit of a pain, but it is a necessary requirement for outsourced work. It’s setting clear expectations so that everyone’s on the same page.

Outsourcing is like hiring your own employee but without the commitment. These freelancers make a living out of using their expertise to help you achieve your goals – so make use of them so you can focus on other parts of your business.

Mistake 2. Miscalculating Costs

A major reason why startups fail is that they are simply unaware of all the additional costs of doing business.

For example, if you’re an eCommerce seller – you might calculate the prices of each unit of stock based on your supplier’s quote.

But then, you have to consider…

  • Your Shopify monthly fees
  • Amazon monthly fees
  • PayPal transaction fees
  • Shopify transaction fees
  • Import taxes
  • Product Insurances
  • Company Registration
  • Income Taxes
  • …and more!

These are just the basics. Don’t forget things like marketing costs (e.g. Amazon PPC, Facebook ads, Google shopping, etc.) as well as reimbursements for friends and family who might buy your products.

It’s very easy for the monthly costs to creep up and drain your resources. Make sure you are costing right, and adjust your pricing accordingly.

This is why a lot of entrepreneurs recommend having at least a 3x margin. This is a good rule of thumb and allows some buffer to cover any unforeseen costs.

why startups fail numbers

Mistake 3. Your Product Doesn’t Meet Market Needs

People often start businesses because they have an idea that they love.

However, what a lot of new entrepreneurs forget is to do research. Is there a definite need for the product? Is there an audience for your product? And if there is, does your product have a unique selling point that would differentiate it in the market?

For some companies, a few rounds of revisions of its products or services does the trick to meet that market need. For others, if the product is completely off base, then a complete overhaul is required.

That’s why it’s extremely important to do your homework before launching a product to sell online. A good place to start is if you see that there are thousands of people searching for a product and there’s just a handful of companies that provide it.

If you’re launching a product to sell online, then the following tools can be helpful to check demand:

  • Jungle Scout: tells you the monthly search for each product as well as the level of competition and opportunity rating for any product on Amazon
  • Google Trends: tells you if the niche or product is becoming more popular – or if it’s already in decline – on Google

It’s the basic law of supply and demand – make sure whatever you launch has high demand with low competition. Find out what your market wants and give them that.

Besides, it’s much easier to create a product that meets pre-existing demand, than to create something completely new and attempt to create its own demand. That’s why we recommend not trying to reinvent the wheel, but capitalizing on what other people are doing…just doing it better.

Mistake 4. Forgetting Your Audience

Another reason startups often fail is because the business is born out of an idea that’s come from the founder who has a “great idea”. It might be a great idea but make sure your audience thinks so too!

At the end of the day, you are launching a business that provides value to other people. You need to make sure that you’re creating something that has got your audience’s needs at the heart of it.

Conduct market research, check reviews of similar products, read forums, test, and adapt – based on what your audience wants.

why startups fail passion

Mistake 5. Not Being Interested In The Business.

It’s quite easy these days to spot an opportunity to make some quick cash by selling a product online. Hop onto Jungle Scout, see what product has high demand with low competition, and boom – you could launch the next Mosquito Net or Multi-Purpose Travel Pillow in no time.

But are you actually interested in this product?

This isn’t to say you won’t succeed or you can’t make some extra cash by capitalizing on opportunities along the way… but it’s natural that you will be faced with some curveballs. And if you are genuinely interested in your brand, you’ll find it’s easier to overcome all the hurdles as you will have more passion to see it succeed.

For example, your Amazon account might get suspended, your Facebook account might get blocked, or you might get a bad customer review… all at once! But if you believe in your product and love what you’re doing, then it’s much easier to find the strength to overcome the hurdles and find a way to fix it.

And remember, nothing’s ever impossible to fix… it’s just often easier to find a way to make things happen when you genuinely care about your brand so that you don’t give up!

Mistake 6. Not Being Specific Enough To One Niche

The reason why it’s important to target a specific niche is because it makes it much easier to find your customers and market to them.

You can target them on Facebook, Google, and Pinterest through selecting specific demographics, interests, behaviors, and locations. When it’s easier to find your audience, it also costs less too as you’re not wasting money on advertising to the wrong people.

Mistake 7. Lack of Focus

It’s easy to get bogged down by the infinite amount of knowledge on the internet. Visit YouTube for one video, and 2 hours later, you can find yourself trawling videos about How You Can Make X Million Dollars with Dropshopping, or reading an article on how you must use all Twitter, Instagram, Pinterest, and Facebook for your brand.

Yes, all these channels are great and you can see a lot of results from any of them – but if you try to do too many things at once, you won’t get anywhere.

Start with one thing – whether it’s Amazon or eBay – pick up your sales and grow your reviews, and then take it to the next level.

Then you can do the same with marketing; you might like to start with Amazon PPC, and once you’ve mastered it, you can move on to Facebook. Then Pinterest. Then Google. But if you try it all at once, it will be almost impossible to manage and you’ll be destined to fail.

Mistake 8. Not Having A Work-Life Balance

When you’re just starting out, you might find that your to-do list is endless. You’re working for yourself now, and you want to do as much as possible to get you one step closer to your end goal.

However, it’s also important to take time off to give your brain a rest and to have the time to reflect on big decisions.

Many entrepreneurs fail in this area, as they tend to operate round-the-clock. When every hour is crunch time, you run a risk of burning out quickly. This leads to imbalance and lack of focus, and possibly even to health problems.

I was advised the other day “when you’re most stressed, that’s when you should take time off”. While it might sound counter-intuitive, this rest time is so important to recharge the brain and keep you motivated to succeed.

Mistake 9. Not Putting In The Hustle

While work-life balance is important, you should also recognize that the startup life will be at times a bit of a hustle.

Living the 4-hour work week might be the dream, but the early stages of your company is a fragile time. A single mistake could lead to failure.

And don’t forget – if you’ve spotted a gap in the market, someone else may have spotted the same gap in the market and could be developing something similar.

So put in the work, hustle away, and don’t celebrate until you’re sure of the payoff.

why startups fail hustle

Mistake 10. Not Having A Solid Community

Finally, when you choose to go against the grain and carve your own path, it’s super important that you have a community of like-minded people that you can call on for support.

Whether this community is in person or online – it doesn’t matter. It’s just helpful to have a few people who you can share tips with and hold yourself accountable to tick certain things off the list.

That’s why we’ve developed up our ImportXperts community to be an exclusive forum where you can share tips and support with each other as eCommerce sellers. We’ve got over 700 members across the world, we hold multiple meetups, and it’s nice to make some virtual friends and share in each others’ successes as well as offer help when needed.

If you want to join, just make sure you apply by clicking below:

Join now!

why startups fail importxperts community


In summary, we hope we haven’t put you off taking the leap into entrepreneurship by highlighting some of the reasons the majority of startups fail.

Owning your own business is an amazing thing, and I hope this article has given you ideas on a few important steps you need to take in order to succeed.

Remember, make sure you understand your audience, hustle hard, and strike a good work-life balance.

Last tip – remain humble, and hopefully, you’ll end up as part of those startups that succeed and thrive!

  • Damian Powell says:

    I found you comments very insightful – thank you. I am just at the very beginning of my entrepreneurial journey and have the self belief to succeed. Having the benefit of others experience from the outset I feel is an incredible advantage – thank you!


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