A major reason why companies fail, is that they run into the problem of their being little or no market for the product that they have built. There is not a compelling enough value proposition, or compelling event, to cause the buyer to actually commit to purchasing. Good sales reps will tell you that to get an order in today’s tough conditions, you have to find buyers that have their “hair on fire”, or are “in extreme pain”.   You also hear people talking about whether a product is a Vitamin (nice to have), or an Aspirin (must have).

Business Model Failure

As outlined in the introduction to Business Models section, after spending time with hundreds of startups, I realized that one of the most common causes of failure in the startup world is that entrepreneurs are too optimistic about how easy it will be to acquire customers. They assume that because they will build an interesting web site, product, or service, that customers will beat a path to their door. That may happen with the first few customers, but after that, it rapidly becomes an expensive task to attract and win customers, and in many cases the cost of acquiring the customer (CAC) is actually higher than the lifetime value of that customer (LTV). The observation that you have to be able to acquire your customers for less money than they will generate in value of the lifetime of your relationship with them is stunningly obvious. Yet despite that, I see the vast majority of entrepreneurs failing to pay adequate attention to figuring out a realistic cost of customer acquisition. A very large number of the business plans that I see as a venture capitalist have no thought given to this critical number, and as I work through the topic with the entrepreneur, they often begin to realize that their business model may not work because CAC will be greater than LTV. Poor Management Team is another challenge facing women startups, an incredibly common problem that causes startups to fail is poor management.

Running out of Cash, another reason startups fail is because they ran out of cash. A key job of the CEO is to understand how much cash is left and whether that will carry the company to a milestone that can lead to a successful financing, or to cash flow positive. Milestones for Raising Cash. The valuations of a startup don’t change in a linear fashion over time. Simply because it was twelve months since you raised your Series A round, does not mean that you are now worth more money. To reach an increase in valuation, a company must achieve certain key milestones. What frequently goes wrong, and leads to a company running out of cash, and unable to raise more, is that management failed to achieve the next milestone before cash ran out. Many times it is still possible to raise cash, but the valuation will be significantly lower.

Product Problems are challenge facing startups another reason that companies fail is because they fail to develop a product that meets the market need. This can either be due to simple execution. Or it can be a far more strategic problem, which is a failure to achieve Product/Market fit. Most of the time the first product that a startup brings to market won’t meet the market need. In the best cases, it will take a few revisions to get the product/market fit right. In the worst cases, the product will be way off base, and a complete re-think is required. If this happens it is a clear indication of a team that didn’t do the work to get out and validate their ideas with customers before, and during, development.

Challenges in technology can create a lot of challenges even for the largest companies, but placing the right technology your startup can accelerate your business success, keeping up with new technology, keeping up with technology that is constantly changing is such a huge challenge for any business, there is always going to be pressure to over fast and adapt or adopt new technologies but this can also prevent startups from achieving their primary business goals Scaling technology for growth startups tend to think about the immediate impact technology is going to have on their work and productivity but they also need to keep business growth in mind. The technology choices you make early on will affect scaling your business while minimizing costs and allowing for customer adoption, these choices include integration, security, technology migration and numerous other variables that important when starting and growing a business. Cost, one of the obvious challenges for startups when it comes to technology is cost. The cost associated with buying and maintaining new tools can be very expensive especially when your business starts to scale. Adopting a technology is just the beginning of your journey, identification and attracting the right talent is becoming major challenge for startups given the rapid changes in technology the experience or trained talent pool in the market is diminishing and continue to do so

Balancing feedback and focus, Customers have aa hundred ideas for a new features and updates to move products and services better. Companies that listen to every suggestion are pulled into many directions, and the original focus and vision of the software is lost. Although customer feedback is crucial and constantly iterating and pivoting is central and make sure to stay true to the original product vision and get splintered in too many different directions because of customer feature request.