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How to Safeguard Your Startup Business from Failure

One of the biggest concerns with starting a small business or startup company is the chance, or possibility, of failure. It’s true that to start a new project, you must have a positive attitude. And startups which are started with a good amount of investment of money, labor, energy, and planning, have to be initiated with a positive attitude and planning. No entrepreneur would ever want the startup to collapse or fail prematurely. That’s why if you know how to save your startup from failing, you may want to build a stronger plan with lesser loopholes for a healthy startup and sustenance.

Statistics reveal the reality of startup success and failure

Here are some very interesting findings for startups, revealed through numbers, which tell how startups rarely make it through the fourth year of their journey and collapse sooner or later.

Startups that started in 2014 were reviewed, and their progress was followed for 4 years, until 2018. The results are as follows:

  • 56% of them continued till 2018, that’s the fourth year of establishment.
  • 62% of them continued till 2017, the third year.
  • 70% made it till the second year, that is 2016.
  • 80% made it through the first year, which is 2015.

This reveals that after 4 years; the failure rate is 44%. Almost half the startups perish by the 4th year of running.

When reasons for failure were reviewed, the following were highlighted:

  • Lack of demand in the market
  • Running out of funds
  • A bad or, incompatible team
  • Rivalry
  • Problems with bad pricing of products
  • Lack of business model
  • Products not friendly for users
  • Insufficient marketing
  • Ignoring customer requirements
  • Bad timing of launch and business

These statistics reveal clearly that startups have some significant reasons to fail.

Among the reasons, if you look carefully, you can see that the combination of right planning, teamwork, and adequate funds can help fight many of the reasons, and save a startup from failure.

Related: 8 Ways Small Business Can Avoid Repeating Mistakes

Lack of demand in the market

This problem has no direct connection with funding. This is a problem with the research and planning in the business ideas area. If you launch a product or service, which has no demand in the market, then the problem is at the root. You didn’t do enough research when planning the product, and hence, you are facing this issue. Fighting this problem can be difficult. Some products can be changed in design and function, a little here and there to suit the needs, while some cannot be changed. Hence, whether you will have to replace the entire setup and business model or business plan, or tweak the products a little, all depends on the market demand, product type, and revival or, survival plan.

Bad team and Incompatibility between team members

Incompatibility between team members and bad team coordination in work together is a serious problem. Counseling team members to improve their attitude while enhancing team bonding with fun and serious projects and ventures is one way to go. This needs funding though, because you cannot plan team outings and projects without a budget. In a case where the team members are not gelling together because of bad skills or unmatched skills, you may have to replace some. This will call for a round of hiring and training to find the right people. If any of the incompatible members are part of the board of directors, then you face a serious challenge. A complete cleanup may not be possible, and some adjustments may be needed to fight this problem.


Rivalry can be fought off with good advertisement, marketing, branding, raising involvement in public by polls, surveys, questions, and answers, etc. Also, it’s important to ensure you have good and competent product pricing. Discounts, offers, free samples, etc. are good ways to combat rivalry. For all of this, you surely need funds though.

Related: 8 Ways To Reduce Small Business Costs

Problems with bad pricing of products

Bad product pricing can be fixed when you give it more effort and research ways to reduce manufacturing costs, operation costs, business running cost, etc. This needs effective cost-cutting. For some time, until the business gets acclimatized to a cost-effective running system, you may have to support certain departments or, areas with extra funds to reduce pressure on employee salaries, etc.

Lack of business model

The lack of a business model is a big problem when starting a business, which is a root cause for failure. Fighting this at an advanced stage in a startup business  is difficult and costly. You will need business strategists to take bold steps with advanced and intricate thinking. This again may demand some investment to enhance some processes and for the overall betterment of the failing startup.

Products not friendly for users and ignoring customer requirements

Unless you mingle with product users and take their opinion through polls, surveys, and feedback, you will never know what they want. That’s why it’s very important to track your customers and record their feedback. Only then, you may improve product quality and make them user-friendly. Funds will be required and must be used in a systematic way to reach customers and get their opinion and improve products as per those.

Related: Starting a Business Using Improved Organization Tips

Insufficient marketing

Improper and insufficient marketing is a huge problem. This can be fought back only with adequate and diverse forms of marketing under the guidance of marketing consultants. However, this is an expensive affair and will demand some investment for a prolonged period.

Bad timing of launch and business

This, again, is a part of market research before you start the business. If you have timed the product release badly, then no one can save you. Entirely remodeling the business is not a feasible option in most cases. That’s why proper initial planning is the only savior for this problem.


The most important thing is good business funding, which helps keep the startup alive. Hence the well-funded entrepreneur will be able to fight back petty to serious issues along the pathway and take the startup through any critical test of time. Business funds often come through borrowing in various ways. Hence, a sound knowledge of debt management, business loans and finance management concerning sources is also necessary.

Related: Business Loan Guide: 7 Essential Tips to Get Your Loan Approved Faster


If you have well studied the reasons for failure then you will be able to build a fool-proof plan to frame and run your startup. Getting ready for the weaker points and times is the best way to build immunity.

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