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9/10 startups fail. Why do you think there's a 90% failure rate for new ventures?

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Question added by Sidrah Nadeem , Global Marketing Manager , Hill & Knowlton
Date Posted: 2016/06/08
Mahmoud Zaher Tarakji
by Mahmoud Zaher Tarakji , مدير , أوال جاليري

foer me not 9/10 for new venture for me 5/10 . because before start need feasibility syudy 

Duncan Robertson
by Duncan Robertson , Strategy Consultant , Duncan Robertson Consultancy

For successful, established businesses, about 70% of new product launches fail.   A startup is, by definition, a product launch, so you would expect a failure rate of more than 70% since the startup's product has, by definition, no brand loyalty or other attributes.

So, the question really is, what accounts for the extra failure rate? The most common reason is insufficient capital.  Obtaining enough capital to launch a business is difficult, and very few startups have more than the bare minimum of cash resources. Some simply don't have enough, and in retrospect were doomed to failure. Many others have just enough according to their plan, but none to cope with any unforeseen circumstances.

The next issue is innovation.  Startups are more innovative than established businesses, because most startups seek to exploit a 'gap in the market' even if it is only opening a conventional business in a new location.  You would expect higher innovation rates to result in higher failure rates.

Startup management usually have not spent the last several years making and selling their product.  In other words, the people runnng a startup are doing a new job in which they have no direct experience and for which they may not have adequate training.

In other words a startup is attempting something which has a 70% failure rate in the best of circumstances. Moreover, it is selling an unknown product into a non-existent customer base with inexperienced management and marginal resources.  It's a miracle any succeed at all.

Most startups involve a commitment from the owners that far exceeds the seriousness or commitment given by the manangers of an established company.  It is normal for entrepreneurs to risk their home and family relationships.

مها شرف
by مها شرف , معلمة لغة عربية , وزارة التربية السورية

 I agree with Mr Mahmood answer's. .Thanks for the invitation. .

Deleted user
by Deleted user

Lack of seriousness

Lack of good study of the project

Not to put a logical feasibility study for the project.

Ghada Eweda
by Ghada Eweda , Medical sales hospital representative , Pfizer pharmaceutical Plc.

Yes, agreed. Many entrepreneurs know well about failure, they’ve made mistakes at the same time, many have been fortunate enough to succeed a few times, too. Along the way, we’ve been able to understand some of the lesser known reasons that some startups fail, and more importantly know why a few succeed.

Here are some reasons of such failure:

1-The product is not perfect for the market.

2. The company grows slow.

3- the team don't know how to recover or tackle uncertainty.

4-The entrepreneur ignores issues of business process, technical issues and business sustainability.

 

 However,  I assume that If the entrepreneur's startup lasts, he/her is lucky. And surely he/her has been able to do something that 90% of new businesses haven’t. Just an idea!

I leave the answer to experts and specialists in this area this is not the field of my specialty

Tahir Khurshid
by Tahir Khurshid , Marketing Consultant , Saudi Industrial Development Fund

Just take a look over some of the questions in this forum. 90% or more are absolutely inane and irrelevant and have no chance of coming to fruition. Now think about the market in general. Unfortunately too many people think themselves to know more than what is really out there. Going out without a program that can be differentiated, not creating a special niche, overpromising and underdelivering, lack of capital, and inability to convince consumers all help destroy new ventures. Should one stop venturing, of course not. I am sure you have heard the adage, I have not failed 39 times, but discovered 39 ways that do not work! The guy then made WD-40 a most successful product for the past many decades!

shady Nagy
by shady Nagy , Senior Electrical Sales Engineer , Ever Green Energy ( 3- brothers group)

I agree with the sumitted answers

syed muhammad naeem
by syed muhammad naeem , Quality Control Officer , Pakistan Cables

Many established startups are a result of multiple failed startups before from the same venue. So its not about the startup maybe, Its about the person.

Pratap Rawal
by Pratap Rawal , Chief Executive Officer , Natural Spirits Nepal Pvt Ltd

- information gap (product, customer, market, usage, price, distribution... "obsession with ones own idea")

- inadequate cash flows 

- inablity to meet competitive rivalry

ghazi Almahadeen
by ghazi Almahadeen , Project Facilitator , Jordan River Foundation

Thanks for the invite ............................ Leave an answer to the experts

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