Wednesday, August 10, 2022
BusinessTop 10 reasons why 90% startups fail in India

Top 10 reasons why 90% startups fail in India

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When you look at the entire startup environment of India, especially over the last few years, everything seems like it is in a major overhaul. Most people are leaving their entrepreneurship work and going back to salaried employment, because the business environment is very tough and competitive.

However, you do not need to be one of these statistics. Starting and maintaining a business involves a lot of hard work and sacrifice, and also knowing the pitfalls that other businesses suffer that leads to their failure. The statistics themselves are grim, painting a picture of 90% failure rate in India alone. Here are some of the reasons why.


Issues with the market

All businesses are in existence because of the market they serve – not just because of a great-sounding business idea. Otherwise, that would mean that all the great-sounding ideas would actually thrive.

Before starting the business, you need to make sure it is solving problems or unaddressed gaps, and this allows you to make money in the process of closing that gap. That is not an easy task though, and it carries high risk of failure, as well as the timing you release it. go out, talk to potential customers in that market, and get to know what they actually need.

Photo by Annie Spratt on Unsplash

Failure of your business model

A business model is the foundation of any business – it even dictates the economic and commercial viability of the business to make money in the future. The Co-Founder of Stylecaret, Nikki Singh, once mentioned it as well, saying in a recent interview, “the problem of many entrepreneurs is focusing on the solution their business offers, instead of thinking about how they can model the business to suit market needs.”

To mark out inefficient models, they can result in problems such as lack of a set way to get customers, lack of scalable ways to expand the business, and an unknown lifetime value of the customer.


Lack of a proper management team

You cannot succeed in managing business alone – but you need to have a proper team. If the team you have is an inefficient or the wrong one, then it leads to communication gaps between the team and management, having poor hiring systems, and little or no work on the product and whether it fits the market.

It is actually better to have over communication in your team, instead of under communication – as well as management taking responsibility over all the decisions it makes for the business.


Running out of capital

It is important to have a set cash flow, as this actually keeps your business thriving. however, it is a mistake assuming that you will get venture capital – most times, your capital will come from your own pocket, as well as family and friends.

Regardless of the greatness of your idea, you need to remember there are tons of financial responsibilities you need to take care of. not only are you handling the financial aspects of the product, but also handling marketing agencies, paying dues to your employees, and clearing any bills that come up in the business.

Therefore, take the time to keep track of your accounts, building your possible financial networks, and working closely with your team to make sure the funds are always secured.


Poor product experience

Taking the example of email preferences, people are used to good interfaces from the big companies – such as Gmail. Even in social media, Twitter and Instagram are very popular, and continue to improve their products for their users.

Take that as a lesson: if your product is poor, then users will not like it anyway because of their negative experiences with it, or they will not differentiate it from other similar products in the market. To stand out and succeed, it is important to make sure that your product stands out from other similar products, as well as the value it gives to them; especially considering that your business is not operating in a vacuum.


Poor marketing strategy

As we mentioned earlier, your business is not operating in a vacuum – so there is bound to be competition. That means you cannot afford to be lazy when it comes to marketing your products, making more people aware of your business and what you offer, and doing other activities such as influencer marketing, and so on.

You should not only do marketing when the product is complete, but instead start it much earlier during the conception stage.


Losing focus

The recurrent altering of your vision and ideas will likely result in making you too selfish, forget the reasons why your business is in existence, in addition to the reason that sparked the product in the first place. You need to maintain your focus throughout.

Photo by Naveed Ahmed on Unsplash

Legal issues

Business operate in a legal environment, and you will have to face the law gives you – and all businesses will have to face issues dealing with data security and customer privacy, especially regarding payments. Every place has different laws, and India is no exception – so you need to be aware of those rules and play by them, in order to succeed.


Bad Debts

In the initial stages of starting a business, many businesses will work on credit basis because of the tough conditions, and that might make things worse for the business if you are not careful. There are things you can do to reduce or eliminate the problem.

For instance, examining the credit reputation before issuing credit, and improving your incentives to encourage your clients to pay dues beforehand.


Personal ego

Just because your idea is the best in terms of originality, do not think people will rush to buy your products or financiers wanting to give funds to your enterprise. Remember to maintain a healthy dose of realism about everyone you come across. 

Having solid networks are always the method of growth, and it is important to maintain that. Having an extremely high sense of self will eventually lead to the downfall of your business, because you will not be ready to listen to anyone.



Owning a business is tough, and many suffer failure because of not knowing how to handle the entire journey. However, knowing these reasons makes it better to manage expectations and lead your business to success – therefore, avoiding these pitfalls as a result.

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