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Top 5 Reasons Why Most of Internet Startups Fail

Profile photo of Pat Fredshow Submitted by Pat Fredshow April 28, 2017

Startup Fail

It’s the age of the internet startup. There are so many people trying their hands at making it online that it can be dizzying at times. Of course, when there are so many new ideas being tried out all the time that means there have to be failures as well as successes. In fact, the common wisdom has it that there are nine that don’t make it for every 1 success.

Naturally, you want to belong to the latter, not the former. The first step towards doing exactly that is understanding the ways that you can fail. There are a lot of them. Here we’re going to explore the biggest problems that you very well might run into. In that way, you can be prepared. For – as Louis Pasteur said – opportunity favors the prepared mind.

1. You don’t have enough experience

There is a common misconception in the world that information is knowledge. If you just read enough, then you’ll become wise. That isn’t true. Some things can be understood perfectly well intellectually and then still go horribly wrong because you don’t get them on an emotional level. And that means that you make mistakes that other people, who know more, might well have avoided.

There is really only one thing you can do to prevent this and that is to get that experience. Yes, that does mean you might very well fail in your first attempt. That’s okay, though. Failing is not the same as being a failure. In fact, most people fail their way to success, by using their failures to learn, calibrate and advance.

2. You don’t know enough people

The quote ‘it’s not what you know but who you know’ might be very cynical, but that doesn’t make it any less true. Often, knowing the right person will allow you to learn a lesson before it takes you down, get you access to resources that you otherwise might not have access to, or warn you about a problem before it becomes insurmountable.

In truth, to be successful as a business, you’ll need to know a lot of people. The thing is, often the only way you can get to know them is by running a business.

Of course, you can add fuel to the fire by going to functions and events where there are other people you can get to know. That’s always a good idea. For the rest, it’s just a matter of meeting and greeting.

The solution here is a lot like what I mentioned above. You have to wade in, try your luck and keep in touch with the people that you meet along the way. You never know when somebody is going to be useful to you, so make sure you stay connected and remember who they are.

3. You aren’t as exceptional as you think

We see the world from our own perspective and not other people’s. For that reason, we often believe that the ideas we have are better and more unique than what other people are trying. Unfortunately, that’s rarely true. It is truly rare to come up with an idea that is truly unique.

For example, you’d think something like writing essays for students would be a rare thing, but if you check out some reviews on the Internet, you’ll see there is a lot of competition already.

And when an idea isn’t unique, then you’ve got a lot of competition to deal with. Some of that competition might have a better idea than you. Some won’t be, but will be more established and will, therefore, have advantages as we prefer what we know, which is something referred to as the ‘mere exposure effect’ in psychology.

And that can mean that despite your passion and your best efforts, your business can still fail.

The way to counteract this is to do the right market research before you actually launch your idea. Know who your competition is. Know what edge they’ve got and how established they are. Only then can you make the moves to stand out.

Businessman Failed Startup

4. You’re too passionate

A lot of people believe they should do what they’re passionate about. That’s not actually always the case. Passion can be a real problem, as it means that you lead with your heart instead of with your head. That can mean that you don’t have the right business plan, that you take on far more than you can possibly handle and that you leap before you look.

Nobody ever says ‘my business failed before I knew too much’. So be sure that you do the research and make sure that just because you’re passionate about it, you’re doing something.

And remember, if you’re incredibly passionate about something, then chances are other people will be passionate about it as well. Like food. Everybody is always starting restaurants, when the return on them isn’t actually that good.

So check your head with your heart and choose something that might not make you as passionate, but will give you much better chances of success.

5. Not taking enough risk

When you’re small you’ve got a lot of disadvantages. For example, you don’t have as much financial depth. Bad luck will hit you harder as you generally don’t have as many streams of income. And if a competitor decides you’re getting too uppity, they can move in and crush you by running at a loss for a time – something they can afford but you can’t.

To avoid that, you often need to push and push hard. That means taking well-considered risks.

A lot of new businesses are afraid of that. And with good reason. They are inexperienced and don’t know what risks to take. That means they might well turn down the good opportunities and take up the bad ones. And yet, you have to take that risk in order to get out of the early day danger zone.

The best way to do so is to find other people with more experience and ask them for advice. If that’s not possible, do a rigid risk-reward analysis (how many percent chance does this have to succeed, how much money am I investing and how much are the returns).

When you’re making an analysis of how like a venture is to succeed, by incredibly cynical. This is important as you’ve got a lot of natural biases to overcome. Only if the risk still has positive returns then, should you take it.

Last words

That does make for some depressing reading, doesn’t it? Relax, take a breath. It isn’t as bad as you think. The red line here is that even though your first attempt might fail, that doesn’t mean that you’ve failed. You’ll have learned a lot of valuable lessons that will make you far more likely to succeed on the second run through.

That’s what you focus on. Don’t invest everything in your first venture. Have a fallback plan in case the project fails. And try to learn as much as you can. Then, if you are one of those 9 that don’t make it, you can try again. The second time, those odds are going to be a whole lot better.

Startup Success

Don’t forget about these reasons and your startup will rise one day!

 


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Profile photo of Pat Fredshow
Pat Fredshow is a passionate freelance writer and content editor at https://www.essaysupply.com/. She writes about digital marketing, entrepreneurship, and self-development.

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25 Responses to “ Top 5 Reasons Why Most of Internet Startups Fail” Leave a reply ›

  • Profile photo of Gavin McDonald Profile

    Hi Pat,

    I agree with these reasons you listed for Internet startup failures.

    Your 3rd reason for Internet startup failures is blunt but true. We really often believe our ideas are better and more unique than they really are.

    I also agree with you that the solution to this is to do the right market research before you actually launch your idea. Know who your competition is. Know what edge they’ve got and how established they are.

    I would add another reason why Internet startups fail:

    6- Making products or services that no one wants.

    A survey of failed startups once showed that 42% of the failed startups attributed their failure to “lack of a market need for their product”.

    They even said it was the single biggest reason why they failed.

    No matter how good such product or service is and even how much marketing is done, it’s sure to fail if no one wants it.

    That’s why doing a lot of research to see if people will want a product or service before creating it, is key.

    Thanks for writing and sharing this.

    • Profile photo of digilenz Profile

      I agree with you Gavin. Sometimes the idea is good but it’s too far-fetched. It’s better to do some market research first before launching.

      Or better yet, test the idea as a MVP or minimum variable product. That way the loses are minimum and you can also validate if the idea is feasible or not.

  • Profile photo of Sunday William Profile

    Hi Pat,

    What an awesome post! I couldn’t agree with you more on the reasons you have shared. 9 out of 10 persons do fail after setting up a business – as popular statistics have shown. It takes a lot of courage and focus to be in the 10%.

    Well, for every starter, I support that advise of having back up plan because it is not necessary the first attempt would go as planned.
    Having enough knowledge on the industry trends, the product development, the competition out there, and the desires of the targeted customers would give the starter more chance to succeed. This most be noted.

    I like how you explained the reason 4. You’re too passionate. Indeed, we must use our heads to follow our hearts when it comes to starting an online business. Thanks for sharing this awesome post! Its worth bookmarking!

  • Profile photo of steven Profile

    Hi Pat,

    I don’t think this makes for a depressing reading. What I think is that this makes for motivational reading. Internet startups fail for the reasons shared above. However, taking corrections would help avoid them.

    For anyone who intends to start making money via the Internet, it is important to take the bold steps of investing in the knowledge and the practice of online online success.

    Being proactive is good idea and one must be willing to do all it takes to get there!

  • Profile photo of Amit Sharan Profile

    Hey Pat,

    There are lots of reasons why many Internet startups fail. You have explained 5 of them. Indeed, the journey for online business success is not an easy one but apply its simple steps would definitely make the difference.

    One takeaway from this post is that research and learning are crucial for success. If the right research is made and the right connection made with those who are already doing well then success would be cool and easy.

  • Profile photo of Black Profile

    The failure of most Internet startups hinges on the fact that the entrepreneurs are not open to learning and flexibility. There is nothing constant in life, and what works today may not work tomorrow.

    Internet marketers must understand that learning and adopting to new changes in ideas would help them deal with the challenging changes that would come on their businesses.

    There is need to enforce steps that would make us learn more about ideas, processes, and people for business growth!

  • Profile photo of James Ling Profile

    Hi Pat,

    Most Internet start-ups are failing because the owners are not ‘prepared’ to succeed. They are only prepared to rake in the rewards but are not ready to pay the price of success.

    For those who are succeeding, it would be noted that the owners are committed to give it ‘all’ it takes in planning, strategy, networking, and learning!

    Nevertheless, your top reasons as shared in this post are in order!

  • Profile photo of Paul Profile

    Hi Pat,

    You are right about the 5 top reasons you have shared about the cause of failure for most Internet Startups.

    I want to remark that many startup owners fail because they are passive and reactive with principles and procedures.

    Only those are ready to take the right action would succeed.

    Learning from others is a good thing when it comes to getting the best. At least, with the above reasons, many would have heads up on what to do to avoid failure online!

  • Profile photo of Celine Profile

    Hi Pat,

    At least, from this post, it becomes clear what one is lacking when it comes to running an online business for success.

    There are many reasons for failure for the Internet marketing startups, and the reason(s) apply differently.

    However, one thing is sure, if there goal setting, planning, strategy, evaluation and execution is lacking then success will not be achieved!

  • Profile photo of Carl Profile

    There are so many reasons why Internet startups fail. Some of the commenters have pointed them out. I want to add that if the entrepreneur is not open to learning then it would be difficult to achieve success!

    Learning new things about the product, the competition, and also learning from those who have already succeeded with in the industry is a good sign for ultimate success.

    Failure should not mean giving up but one must use it as a stepping stone. Thanks for sharing these details Pat!

  • Profile photo of Winford Moore Profile

    Hi Pat,

    This is a post that newbies need before they start venturing into the journey called Internet marketing.

    The road is not smooth but following the right paths and facing the bumps would take the driver to the destination!

    Every Internet marketer must be ready to achieve good success by knowing the price to pay and making the right sacrifices.

    Its never easy to succeed online but it is possible!

  • Profile photo of Sarah John Profile

    Hi Pat,

    Its a good thing you are reminding us of why Internet startups fail. Your points are in order. I am particularly interested in the point that discussed us not taking enough risks. Yes, without enough risk we wont be exposed to enough success when marketing online!

    I pretty much like your conclusion on this point

    The best way to do so is to find other people with more experience and ask them for advice. If that’s not possible, do a rigid risk-reward analysis (how many percent chance does this have to succeed, how much money am I investing and how much are the returns).

  • Profile photo of Judith Chang Profile

    Hi Pat,

    I am surprised “lack of money or capital” is not one of the top causes of Internet startups failure.

    Any reason why not?

    I don’t think the big names like Google, Facebook and others would have succeeded if they didn’t get the right funding at the right time.

  • Profile photo of John A Karnish Profile

    Hi Pat,

    As someone already mentioned this post isn’t depressing but contains valuable information needed to prevent being a failure.

    I truly believe that many internet successes started with good networking. It pays to know the right people.

    It is very easy now with tools like Facebook to befriend some powerful people if you are willing to put in the time.

    I think it also helps to have a mentor if one can afford coaching. This will make sure that you have access to someone who know what they are doing so the actions you take aren’t as risky.

    However, sometimes you just need to take a risk. I think that it is good advice as you mentioned though to have a back up plan and to keep on trying. We can learn a lot from our mistakes.

    Take care Pat and thank you for this article.

    John

  • Profile photo of Salvador Diaz Fau Profile

    Thank you for sharing!

    I would only add “perseverance” to your list.

    It’s really sad to see highly qualified people that can’t keep going after a few set backs.

  • Profile photo of Abigail Chow Profile

    Hello Pat,

    Your 4th point was surprising at first until after I read the point you made. You are right, passion can be a real problem when it makes one lead with the heart instead of head.

    Solid points, all in all.

  • Profile photo of Sherman Smith Profile

    Hey Pat,

    I couldn’t agree with you more on this!

    Based on my experience, I pretty much failed my way up to the point to where I’m at today.

    I took risks, learned what worked and what didn’t worked for me, revamped my goals which took me out of some stagnant points in my journey.

    Also networking with others help a lot. In fact, you want to focus on the right people which are those who reciprocate what you give and will help give you social proof.

    Thanks for the share Pat! Have a great weekend!
    Sherman Smith recently posted…Boost Organic Traffic Through Keyword Placement And Analytic ToolsMy Profile

  • Profile photo of Mark Profile

    Hello Pat

    A new kind of start up that I have noticed are ones with a plan to use block-chain technology and they launch by selling tokens redeamable against Ethereum crypto currency. They are raising millions of dollars worth in just a few days. Looks very similar to the dot com bubble many years ago.

    I know it’s not exactly in line with your post but on the same theme at least :-)

  • Profile photo of Tunde Sanusi (Tuham) Profile

    You don’t have enough experience is sure one of the fastest way to go diwn!

  • Profile photo of Pat Fredshow Profile

    Hi everyone!
    Thanks a lot for your comments and all those kind words! I’m sorry I haven’t responded earlier. I had some problems with signing in…and…as it appeared, I’ve just forgotten my password! By the way, many thanks to the support team who helped me with this problem!

  • Profile photo of John T Canada Profile

    Awesome Pat!

    Number one I can relate to easily. Know your breaking points. Since there might be a technique that you become hopelessly enamored with, and you invest all your time & energy into it. However in the event that this strategy requires (for instance) a specialized/outline aptitudes or time you don’t have, the outcomes will be deferred, as well as you conceivably get disheartened before getting anything accomplished.

    Additionally, it’s hard to outsource what you can’t clarify :)

    Also, I concur totally at the purpose of taking the risk, for me I needed to risk cash to profit. It was difficult for myself to think obviously when I don’t know whether I’m going to be able to make an idea profitable. Mental and passionate solidness comes first!

  • Profile photo of Jonna Cusack Profile

    Awesome points you gave here for sure, Pat.

    I agree with Salvador who added “perseverance” to the list. Those who can’t persevere won’t succeed in any start up because it’s never easy in the beginning.

    It’s the ability to persevere and keep going which helps a lot of start-ups to eventually succeed. Won’t you agree?

  • Profile photo of Abdelrhman Abbady Profile

    Awesome post, Pat

    Also there is another reason for the startup fail is the newbies always looking for the next shinning overnight rich scamming programs
    that burn their money and make their startup fails from the beginning of the journey that’s why they quit fast.

    You came with an adorable points that help to prevent burn money and startup fails , very informative post.

    Thanks
    Abdelrhman

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