why startup fails

5 reasons why your e-commerce start-up isn’t making profits

50% of the e-commerce companies which are being set up are headed towards failure.

The most popular kind of start-up in today’s day is e-commerce as people in India are gradually shifting from in-store shopping to e-commerce shopping. However, 50% of the e-commerce companies which are being set up are headed towards failure because of various reasons.

Listed below are a few probable reasons why your e-commerce start-up isn’t making any profits:

i. Poor quality images

When the customers shop online, they tend to focus more on the visual aspects of the products. If the images of the product seem damaged or unappealing to the viewer, s/he might choose to not buy the product. For more outreach, display the products with a multiple-angle view of the product.

ii. Bad product descriptions

For products which are uncommon, a product description needs to be unique and crisp in order to interest the customer. If you are solely depending on technical descriptions of the products, you won’t really be able to sell your product as the viewer wants more meaty stuff like ratings and more quirky descriptions which help him understand the product better.

iii. Undisclosed shipping rates

You should make the customer aware of the shipping rates for a product before s/he puts it in the cart. Hidden shipping charges make the customer feel like s/he has been deceived and they tend to abandon their cart midway. This results in loss of a sale. You can add features like a pin code zipper which helps the customer calculate the shipping rates.

iv. Poor promotion

Since it is an e-commerce website, you should be promoting it more on social media and via digital marketing. If there isn’t enough hype about your page, you will not garner enough traffic for your site to make sales. Inorganic and organic forms of social media marketing can help you promote your page and products better.

v. Pricing

Since the Indian market is heavily price-sensitive, you need to focus on pricing. If the products are priced too low, then the customers will think that your products are of inferior quality. Hence, you need to strike a balance in terms of pricing to interest more people in your website.

The 7 real reasons why startups fail

The market research firm CB Insights recently did a post-mortem on 135 failed startups. The reasons cited, however, fall into seven categories, each consisting of a specific emotional or intellectual limitation.

The market research firm CB Insights recently did a post-mortem on 135 failed startups. As part of that effort, they asked the people involved in each startup why they thought it had failed.

The study surfaced twenty reasons, with most startups citing multiple reasons. The reasons cited, however, fall into seven categories, each consisting of a specific emotional or intellectual limitation:

1. Arrogance (85%)

Successful entrepreneurs are always overconfident and that’s a good thing. Without overconfidence, nobody would ever buck the odds to start their own business.

Overconfidence turns into arrogance, though, when you’re so sure of the wonderfulness of your ideas that you don’t bother to take the pulse of the market. Arrogance causes startups to fail through:

No Market Need: 47%
Product Mis-Timed: 13%
Need or Lack of Business Model: 17%
Not Using Network/Advisors: 8%

Fix: Temper your overconfidence with the humility to accept criticism without becoming defensive.

2. Shortsightedness (55%)

Startups can’t afford “paralysis by analysis” and it’s simple good sense to realize that can’t anticipate everything in an undertaking that inherently involves the unknown.

That being said, there’s truth in the corny old quote “failing to plan is planning to fail.” Shortsightedness causes startups to fail through:

Running Out of Cash: 29%
Pricing/Cost Issues: 18%
No Financing/Investor Interest: 8%

Fix: Maintain some reserves so that you don’t crash and burn the first time you hit a speed bump.

3. Hubris (47%)

All too many entrepreneurs believe that “if you build a better mousetrap the world will beat a path to your door.” That’s classic engineering hubris that results in treating sales and marketing as if they were of secondary importance.

Sadly, though, the history of business is full of excellent products have failed due to weak marketing or poorly-planned sales efforts. Hubris causes startups to fail through:

Getting Outcompeted: 19%
Poor Marketing: 14%
Ignoring Customers: 14%

Fix: Pay as much attention to hiring marketers and salespeople as you do to hiring your engineers.

4. Egotism (36%)

Startups require talented, experienced and energized employees who have specialized knowledge.

However, building a business is always a team effort and all it takes is one prima-donna for a team to fall flat on its collective face. Egotism causes startups to fail through:

Not the Right Team: 23%
Disharmony on Team/Investors: 13%

Fix: Read the newly-published book Team Genius, which contains team-building rules based upon actual scientific research.

5. Sloppiness (34%)

When big companies do a slipshod job, they can float on their brand reputation or throw money at the problem.

Entrepreneurs must be meticulous and make certain that nothing falls through the cracks. Remember: “genius is an infinite capacity for taking pains.” Sloppiness causes startups to fail through:

Poor Product: 17%
Bad Location: 9%
Legal Challenges: 8%

Fix: If you tend to be a “big picture” person, partner with somebody who’s detail-oriented.

Related Post: Failure – an inevitable part of success

6. Imbalance (30%)

Thousands of articles and books have been published about the lack of work/life balance creates stress and leads to bad decisions. And yet many startups try to operate in round-the-clock crunch mode. Imbalance causes startups to fail through:

Loss of Focus: 13%
Lack of Passion: 9%
Burning Out: 8%

Fix: Exercise or meditate every day, turn your phone off when you go to bed, eat right, etc. You know the drill; now just go ahead and do it.

7. Inflexibility (17%)

The most important advantage that a startup has over an established firm is freedom to be nimble.

However, there’s a natural human tendency to continue to pursue a course of action after it’s been proven unworkable. Inflexibility causes startups to fail through:

Pivot gone bad: 10%
Failure to Pivot: 7%

Fix: Plan from the start that you’ll need, at some point, to radically change direction. Welcome rather than resist the inevitable change when it comes.

Image credit: Emptyengine

Failure – an inevitable part of success

Taking failure as a learning experience isn’t an easy task, but in order to succeed, you must know what failure is…

You must have heard this a trillion times, “the loftier the goal, the farther you fall.” But this is something that should not stop you from progressing. Taking failure as a learning experience isn’t an easy task, but in order to succeed, you must know what failure is.

Remember Thomas Edison? When asked about his feelings regarding facing failure a 1000 times, he replied that the light bulb was an invention with “a thousand steps.”

Let’s start with the reasons why startups fail:

Arrogance
Shortsightedness
Hubris
Egotism
Inflexibility

None of these words are new to you; remember the last time someone’s arrogance or inflexibility made the situation even worse?

Lack of Capital

In the beginning, insufficient capital might lead to failure of the business. Running day-to-day operations might cost a lot, and if the money you have is a lot less than what you are spending, things end up going wrong.

Expanding without keeping track

Expansion is a difficult step for a start-up, from personnel, to equipment (May it be machinery or establishing plants). All the steps involved in expansion need to be fully funded. Also, if the startup becomes a success, and needs to expand urgently, it should have a plan devised for it.

Debt Financing

Heavy reliance on debt is a dangerous thing for your startup, because if you lose money, all the investment in the form of debt, may it be from your family or your best friend, all would go in vain.

Lack of Strategic Management

No matter how skilled you are, if there is no strategic planning and lack of management, your business might eat you alive. You need to be qualified to run your business in one way or the other. We don’t suggest you to get a Business Degree at this point but manage your team in a way that there are people who know where things are going.

No Business plan

It’s a good thing if you are an optimist but, bear in mind that hope is definitely not a good strategy. From the concept, to the planning, and then execution, you need a business plan. You won’t ever touch the moon if you don’t even know what you need to do in order to reach for it. No matter how good yourconcept is, if you fail to chalk out a plan, someone, somewhere in the world might just use your plan and earn millions because of it.

Regardless of the reasons your startup failed, you need to look at the brighter side of the picture and know that failure is an inevitable part of success. You might fail once, twice, or even a hundred times but think of the experiences you gained because of it. If you had not gone through all those processes, you would not have been what you are today. So, simply get up and do it again.

Image Credit: cbi-blog