9 Toughest Situations which Every Start-Up Face that may Leads to Business Failure

startup failure, startup running, startup
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Written by BusinessAlligators Support

Support Staff at BusinessAlligators is a team of business experts led by Shilpi Singh Trusted by over 100K readers worldwide.

August 25, 2016

Everyone starts his/her business in a great motivation to change the scenario of the business to lead the world in a particular field.
But 90% of the Start-up fail in the 1st year itself as the ratio is 9/10 which means 9 out of 10 start-ups always fail.
Have you ever imagined why motivation, desires, and dreams fade away within the 1st year of business that entrepreneurs become induced shut their business down?

This all happens because 85%-90% of entrepreneurs have never faced tough situations in their personal lives, and they have not even imagined about the worst scenarios.
Most of the entrepreneurs start their business with a presentation which has a line- “If We cover only 1% of our market we will be billionaires.”
And as they get the 1st slap of entrepreneurial hardship they start crying.

So now let’s have a quick view on the toughest situations which everyone Entrepreneur faces during the 1st year of business which most of the time leads to business failure:

  1. 1st year Money Backup Vanish Within 6-9 Months

In starting 99% of the Entrepreneur are not good students of Future Analytics, so it is impossible for them to Judge the exact expenses which are going to take place in the future.

Every 1st timer makes 60-70% Right Calculation about the expenses but remaining 30%-40% are those expenses which only an experienced and expert person of the field can tell.

Likewise, there were certain expenses that I didn’t know about

– Cost of each lead

– Cost of each site visit

– Cost of marketing as you are a new brand

– Electricity bill, maintenance of your office etc

  1. Unimaginably, Sales Graph Drops by 40-80%

As I have already mentioned 99% start-ups initiate with a wage presentation i.e. if they cover 1% Market, they will be a billionaire, but in an actual condition, you have to start covering the market city-wise not country-wise directly.

The common follies we all tend to make in the initial stage of business:

  • We don’t plan about the total sales force required,
  • We never plan to increase team productivity,
  • We hardly plan about the total Leaders required to manage them,
  • Without specifying the target market specifically, people start their business and as the result, they fail.
  1. Fight Between Co-Founders

Most of the time we choose a co-founder from our friend circle with whom we have personal trust, but those people are not so much classified and we have never been in a professional career with them. So as the stress builds up we start behaving personally with them not as professionally which is a great loss to the business and sometimes professional dispute leads to change in personal behavior and that leads to the derailment of personal relations and thus break down of partnership too.

Related- Why Startup Fails

  1. Delay of Payment from Client that Stops Money Rotation

When we start our business, 99.9% of people don’t even think about this. Though this point doesn’t apply to all the fields but this fact is very important to those fields where it is applicable.

In real-estate, we completed many sales which were enough to keep us alive in the market but clients were not giving the payments on time, Some of the payments haven’t been received by me till date and it’s been 1 Year that I closed my company and 2 Years when I completed the sales.

  1. Prepare a Prototype Instead of a Business Plan Presentation

We draw the plans on paper but never check them in reality, which leads to many problems on the real ground. It’s very similar to those school days when we revise mathematical calculations in our minds without solving them on paper, and during exams, we get stuck somewhere between the Calculation.

So it’s always better to work on Prototype instead of Business Plan Presentations.

  1. Imbalance of Team

Most of the entrepreneurs build a team of their friend circle, and if I get more specific then it will be from classmates or office mates. That clearly indicates that most of the time their working field is the same, either all from sales, or all from production or all from quality, etc.

Whenever this happens, your business will surely break down very soon because a business requires all the fields to operate properly.

  1. Wrong Location for Your Office

Right Location on Right Time is always needed for better performance. Every business is closely related to the real estate business that is the location of your business.

Initially, I had taken my office into a corporate building just to flaunt in front of the clients but soon I realized that my competitors who are having normal and small offices but on the main road location are getting a decent number of walk-in clients. They were generating good revenue without investing even a penny in the marketing. So I changed my office within 6 months to a good location.

So always finalize Your Office Location after checking all the conditions related to your business.

  1. Loss of Interest in Work After Few Months

This usually happens when you have made at least 4 mistakes from the above 7 mistakes and you get fed up from your decision and start cursing yourself for the decision which you had made in your life to start the business.

  1. Self Control

99% of the people usually scroll down after looking at this word. I know this is a common point but the problem is that we only hear this point and we take it so casually that we never try to understand it.

But it is the most important point which we should focus on.

Ultimately, it is your business and you are not answerable to anyone for anything.

No one will scold you for any trivial reason.

No one will question you on your dress sense.

You are the only one who has to take care of everything and that too yourself. And I would say 99% of the world’s population lack this point.

So work hard at this point and get self-discipline.

Though the 9 points are over but being a good businessman I want to over-deliver than committed

But my Last Point is not applicable to everyone but everyone must look for it before entering into the domain of business

  1. What if Market Condition Goes Against You?

Have a habit of thinking about all the perspectives of each condition; this will help you in making better customer acquisition plans and strategies. When the market goes against you never think of shutting down the business in the first short, you will regret it if you will do so. You can do the following things to get prepared for such situations

  • Keep your treasury saved for such situations.
  • Reduce liabilities to 50%-70% by utilizing your maximum brain.
  • Stop behaving like a founder or CEO, get into the field to help the team.

I hope my points will surely help you in preparing you for your journey. And if you have faced some different situations in your business career then do share in the comments to let the people know. Let’s help each other in the journey of entrepreneurship by sharing our experiences.

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  1. Rishi


    • BusinessAlligators Support

      Glad you find it helpful 🙂


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