Why India Can’t Outbeat Constant Startup Failure
India outperformed other countries as the fastest-growing economy in the world. The clear indication of an upward trend is the registration of more than one lakh startups. In FY 2023-24, experts expect it to achieve 6.3% growth.
Constant Failure of Startup Industry
Despite being the largest hub of Startups, India has lost its place to 4th position in Global Ranking on Most funded Countries in 2023, after securing the 3rd position in 2021 and 2022. Many industry enthusiasts attribute this fall to the infamous Funding winter of 2022. However, industry experts argue that Funding winter is just one of the reasons; they believe lack of Mentorship and Guidance is the main cause of Startup failure in India.
Let's check in detail the cause of Startup Failure in India.
Startup Business failure statistics shows that 95% Startups fail and most of them won’t survive for five years. Experts claim that only 5% of startups taste success. The reason for this phenomenon is not solely due to scarce funding.
Reasons For Startup Failure In India
1. Knowledge Gap
Many enthusiasts start their businesses out of interest and passion without required knowledge. However, that’s not enough for success. Despite entering the market with a misconception that their product is superior and will undoubtedly succeed, reality hits hard. Unfortunately, the public doesn’t show interest in their product. Consequently, this reason accounts for over 42% of startup failures.
2. Underachieving Crew
Every idea is a sure-shot success in Inception. However, it backfires at the execution stage. This mainly happens due to an inefficient team, which could be a partner, employees, or your friends circle. You can’t master every aspect of the business. Delegating work plays a key role in business. When the proper message is not passed, it can lead to misunderstandings and confusion in the business. Having inappropriate people in key positions harms the business.
3. Steep Price
Everything will be in place; however, your product won’t be picked up by the public. The reason for this could be overpricing. When it is highly priced, the public won’t be interested in buying it. Moreover, they may feel they are being exploited. In such a diverse market, this can ultimately lead to startup failure in India.
4. Cutthroat Competition
This is one of the important reasons for the downfall of startups. However, other reasons can be corrected within the firm. This one, is beyond the reach. Most players in the market fail due to stiff competition. Consequently, unless you create value for your product or service, the chances of survival are slim. The market is saturated with potential competitors. To stay in the field, it requires immense effort and the right strategy.
5. Divert Attention
Most start-up ventures begin with a perfect plan, but they become stuck on the implementation and optimization processes, such as setting up the workplace and handling other administrative tasks. This diversion of attention affects their business. In the budding stage, the manager should focus entirely on developing activities.
6. Wrong Route to Market
Ineffective marketing can render all the efforts of a business in vain. Even if you have everything a consumer needs and your part was done neatly, failure can still occur. At this stage, many startups shatter due to poor marketing channels, as the message fails to reach the public. Most new players adopt or hire ineffective marketing teams for their promotions
7. Void Guidance
In a recent startup summit, IT experts suggested that a lack of proper guidance and mentorship is the main reason for startup failure in India. The new startups couldn’t identify their problems and find solutions for them. They lack the experience and knowledge for it. They enter the market out of enthusiasm and passion, but without proper guidance, they can’t formulate effective plans and follow-up actions to hold up in the market.
8. One Way Communication
Many business enthusiasts neglect collecting feedback from their customers, either out of overconfidence or ignorance. This neglect puts them at a disadvantage in the market, and they realize their mistake too late, by which time the damage becomes irreversible.
9. Resource Disparity
The star always appears at the end. A lack of funds constitutes the first and main reason for the failure of a business. This can result from poor financial management or a lack of cash inflow. Getting into the break-even zone is a significant achievement in the budding stage, requiring a considerable amount of time and patience to yield profit.
Misallocation of Resources
To get into the safe zone, businesses must use resources very strategically. A common mistake they make is spending a large chunk of money to set up a workspace, leading to disparities in the allocation of resources. Instead of focusing on developing activities, they get stuck with these administrative tasks.
Solutions
Comprehensive Business Model
Have a proper business plan. You may have passion, and you may have adequate funds. Still, before entering a business, do in-depth research about the market. Make sure nothing is left unchecked. This will give you a clear idea about the customers, pricing policy, competitors, their strengths and weaknesses. The execution mess can be avoided through this.
Find The Perfect Fit
Handpick the most appropriate and efficient personnel for your business, whether they are partners, employees, or anyone else. Assess their capability for the job and avoid mixing your personal emotions with business decisions. Ensure effective communication of all details about the business and their roles to eliminate unnecessary confusion and ego problems
Efficient Resource Allocation
In the budding stage, avoid having big expenses for your business. A large chunk of money is spent on setting up the workspace and its amenities. Instead of focusing on developing activities, a businessman gets stuck in setting the workspace and other administrative activities. Get smart and Optimise resources.
Choose The Best Alternative
Instead of hiring an office building, plant your business in a coworking space. With readily available workspace and amenities, you can start your business without worrying about administrative tasks. All the support will be provided by the coworking space provider. Get in touch with the Best Coworking Space in your city.
Cutthroat Competition
The downfall of startups results from this being one of the main reasons. However, the firm can correct other reasons internally. Beyond that, stiff competition in the market causes most players to fail. Unless you create value for your product or service, the chances of survival are slim. Potential competitors fill the market. Staying in the field demands immense effort and the right strategy.
Reach Out To The Maximum
Choose the top marketing team. Make sure your message reaches the relevant audience. Have a lengthy talk with the marketing agency before committing. Obtain confirmation of their viability. Since companies are just getting started, the majority of startups believe it is an unnecessary expense. It’s not; marketing has long-term benefits for the company.
Carry Out Interactive Channels
Adopt an effective communication system in the business. Both internal and external communication are essential. Make sure correct feedback is reached to you. Many players ignore this aspect and end up failing their start-ups.·
Seek Expert Advice
Get guidance from an expert from the Field. Before formulating plans, get opinions from him. All you need is guidance to the right side.
In A Nutshell
We have all the resources in India. Money, manpower, infrastructure, innovation, government support—everything. Still, we lack a business success rate. Having passion is not enough for business. Understand the market and plan accordingly. Get proper guidance from experts, and play.
Takeaway
Don’t quit. Be flexible enough to adapt to market uncertainties. The market is full of possibilities. Recognize them and utilise them to break the cycle of continuous startup failure in India
Frequently Asked Questions
