Common Start-up Mistakes – A Lesson in Failure

Most start-ups fail due to insufficient funds, poor management, or a lack of understanding of the market.

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We have all heard the success stories in the startup 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,, 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 for 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 does not 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 gifted in a multitude of areas (especially ‘techies’) and have decided to make a move to create their own business. However, quite often they have no 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 advisor.

3. Lack of understanding of your market

Finally, a failure to understand who your market is and what they want (or even what they do not 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 the wrong target market.

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