When we say sink or swim, we are not asking you to take a dive. Rather we are talking about the situation that can be equally alarming for your business.

People love to hear about startup stories. Especially one that has chronicles mishaps of first-time entrepreneurs and their eccentric founding team members.

There is a reason why some startups fail while other succeeds. Libraries are full of books on “How to become rich?” or some famous and successful Entrepreneur sharing his “Secret”. But at the end of the day the success or failure of the business does not come due to some book but rather the efforts and investment made in the business.

If you think the biggest reason for failure is short of money than BINGO!!! You are right, ultimately a business do fail because it runs out of money. But along with this, there might be magnitude of reasons why this may happen. Management teams, business models, access to markets, finance, ideas, timing and the abilities of the entrepreneur themselves are all factors that can influence the failure of startup.

Many founders tend to build solutions first and find problems to solve for paying customers later. All too often, they operate using unproven business models and ignore important questions about who their ideal customers are, how much it will cost to reach those customers or how much of their initial capital must be used to support their own living expenses. Any one of these mistakes can sink a promising startup.

Just look at TinyOwl, which shut down most of its locations in May because of a faulty business model. The India-based restaurant delivery service had raised more than $27 million in investor funds, but it couldn’t overcome the costly logistics of running the company or the oversaturation of the restaurant delivery service industry.

It’s also easy for first-time founders to get so caught up in their ideas that they dive in before vetting their concepts. That’s how companies end up with solutions that are looking for problems — and often how they fail. Inventory costs alone can consume a startup’s budget as its founders search for a fit.

Businesses that try to reach all demographics end up with generic, boring products. Instead, they should identify who will actually be interested in the offering and whether it fills a want or a need — before they sink serious money into building a product. No matter how excited people are about a product they want, they’ll ultimately prioritize items they need. Responding to urgent demands strengthens the business model and improves the startup’s chances of success.

Successful startups don’t deal in vague assumptions and unsubstantiated business models. Entrepreneurs must rely on fact-based decision-making to ensure their companies have the best chance of succeeding in competitive markets.


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