In Brands, Insight

The Bureau of Labor Statistics claims that about 50 percent of new businesses survive five years or more, with 33 percent surviving 10 years or more. And a Harvard Business School study found that 75 percent of VC-backed start-ups studied eventually failed.

Michael Houlihan and Bonnie Harvey polled 14 of the top international accelerators looking to reveal the top reasons start-ups fail for Entrepreneur, and below are four:

Inadequate Testing

  • Not understanding how to access the market, and not understanding the barriers to entry
  • Failure to test and validate hypotheses and assumptions
  • Premature scaling
  • Not finding product market fit

Team Incompatibility

  • Members of the founding team’s inability to work together
  • Founding team lacking the proper skill sets to overcome challenges
  • Lack of a core vision that aligns with the founders’ values and purpose
  • Inability to recruit, build, and manage a team of people smarter than oneself
  • Misalignment of stakeholders
  • Lack of trust, differences in commitment levels, financial expectations, goals, and culture

Lack of Business Acumen

  • Leadership’s inability to set a clear strategy for the company and stick with it long enough to succeed
  • Lack of creativity and persistence in working through the inevitable challenges
  • Inability or unwillingness to adapt or pivot

Everything Else

  • Greed
  • Lack of proper tools and reports
  • Lack of understanding of how to generate sales, set sales goals, and how to achieve those goals

Read more in Entrepreneur.

Photo: Ehimetalor Unauabona via Unsplash

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