6 Causes of Startup Failure to be Avoided

Establishing a startup company is not always smooth; some succeed while others fail. In Indonesia itself, there are many successful startups that have achieved unicorn status, such as Go-Jek, Bukalapak, and Tokopedia. However, the number of failures, or startups that have to close down, is still significant.

These failures should serve as lessons for existing and aspiring startup companies. Therefore, startup companies need to pay attention to these six things to avoid failure.

  1. Unclear Planning

    Many believe that a good idea is enough for entrepreneurs to build a startup. However, this is a significant misconception. Without a concrete plan, a company will run without a clear direction. Building a startup is similar to establishing a conventional company; a solid business plan, including concepts, target markets, and solutions to market needs, must be carefully planned. Success depends not only on brilliant ideas but also on well-thought-out business plans.

  2. Pricing Market Errors

    Many startups make mistakes in identifying the market, such as setting product prices too high or too low, miscalculating taxes, and more. Incorrect pricing decisions can lead to losses if production costs do not match the revenue generated. It’s crucial to categorize all expenses, especially product prices, to avoid errors in determining production costs.

  3. Insufficient Revenue Since Launch

    Another common mistake is burning money by offering free promotions, massive discounts, and other deals. While this strategy may not be a problem for startups with substantial funding, companies should think about monetization or income-generating strategies from the beginning to ensure stability and survival.

  4. Lack of Understanding of Market Needs

    According to CBInsight, one of the reasons for startup failure in Indonesia is their inability to serve or provide what the market needs. Some startups present fresh and interesting ideas but fail to deliver significant benefits or are not yet needed by the market. To avoid this mistake, in-depth market research is essential.

  5. Failure to Compete

    Many startups fail to observe and understand what their competitors are doing. Similar business models, even with slightly different concepts, can confuse consumers when choosing products. To survive and avoid failure, startups need to offer products with more value than their competitors.

  6. Lack of Funding

    Money is a limited resource that needs to be allocated wisely. According to CBInsight, 29% of startups fail due to unwise spending. Startups need to calculate how much funding is needed, allocate amounts for each need, monitor the remaining funds, and create a financial plan to maximize returns.

Successful startups meet market needs, consider all aspects, grow rapidly, and effectively overcome competition. If you are planning to start or expand a business, you can rely on vOffice’s services for various business needs, including establishing a PT, CV company registration, virtual office rental, office space rental, meeting room rental, and more.

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