Why Do Startups Fail?

  • April 5, 2011
  • Scott

Because the founders give up.  Jason Cohen has written a great piece regarding the #1 reason that startups fail.  The founders give up and pack it in.  This isn’t quitting, to me – sometimes there are good reasons to quit your startup:

  • Financial obligations are real – if the startup isn’t producing the income you need to live, you have to find other sources of income (aka a Job)
  • Startups can be hard on family life – the work life balance isn’t…balanced… Sometimes people have to choose family or business – can you blame anyone for choosing family?
  • A better startup idea/opportunity comes along – this might mean your startup pivots or it might mean a completely new business.

Jason relates a tale of how, even 4 years into a startup, the founder(s) can still be slugging it out with purchasing managers or trying to just get paid a reasonable (or regular) salary – all while paying employees and trying to retain them.  It’s tough to get the emotional energy up to keep everyone else motivated when you’re personally feeling defeated.

Although BP3 is not the traditional notion of “startup” – we’re primarily a consulting company – if your goal is to grow your business you will face all of these same issues no matter what the business is.  We’ve been through those lows – and I’ve always been thankful to have a co-founder in Lance, to lean on – but beyond that, to have a team to lean on that I can trust.  Jason’s cautionary tale of his conversations with a purchasing manager are… highly relate-able, let’s just say:

It’s about sticking through the tough parts, whatever your personal foibles or weaknesses.

Living through it, not beating it. I never have, to this day, “beaten” that PM, not emotionally, not if I’m being truly honest.

I’m not saying tenacity is all it takes. Just that without it, you’ll stop. It’s so easy to stop. There’s so many reasons to stop.

Jason persevered and succeeded – even though he never felt like he “won” the encounter with the purchasing manager.  I’ll just say this: Courage is not lack of fear.  Courage is doing what you know is right, even when you fear the outcome.  Courage is doing what you know is right, even when it may not be in your own best interests.  In business, this translates to running your business with integrity even when you fear that it may cost you business, or the opportunity to grow.  Risking the business outcome to know that you’re “living within your means” in an emotional, business ethics sense.  A good co-founder and good partners will help you remember that yardstick when you need reinforcement.

Getting through these tough troughs in a startup isn’t easy.  But it does make you appreciate the rewards on the other side even more.


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