Overcoming the challenges faced by startups

Let’s face it, in the current age when startups are exploding everywhere like never before, the sheer enthusiasm being brought up by motivated entrepreneurs is certainly a force to reckon with. While many of these startups are able to make a significant presence in the world, others unfortunately disappear into oblivion.

A report by IBM Institute for Business Value and Oxford Economics found that 90% Indian startups fail within the first five years due to lack of innovation. (Source: Moneycontrol.com)

In 2019, the failure rate of startups was around 90%. Research concludes 21.5% of startups fail in the first year, 30% in the second year, 50% in the fifth year and 70% in their 10th year. (Source: Investopedia)

India has provided for a nurturing ground to numerous startups in the past few years but they are merely clones of Western ideas. The lack of technical innovation in India has led to venture capitalists restricting funding, resulting in slow decay of entrepreneurship in India.

The study, titled ‘Entrepreneurial India’, states that while the market evaluation of Indian startups has grown in the past few years, 77% of the venture capitalists believe they don’t have unique business models.

This brings us to an important question: Why do startups fail in the first place?

Entrepreneurship challenge

When most of the startups fail due to lack of finances as we know that cash flow is essential for any business, I believe it’s the lack of entrepreneurship behavior-The mindset which is the biggest reason of startup failure.

As an entrepreneur, I should be able to have ideas to generate the funding. One should not just wait for the investors. What if we have investors but the amount of fund they are ready to invest is still not enough? Will you shut down the business? Are you banking on someone else to make you successful?

Straight to action; No Research and planning

Before launching the business, it is important for startups to carry out a thorough research by investigating from suppliers to taxes to competitor prices to thinking through the different strategies. Proper planning with the thorough research is the key for startups to get their businesses off the ground. Jumping directly to action without proper research that is investing less time than required is suicidal.

Lack of a Dedicated Team

Due to the lack of a proper team, any business will suffer immensely. Lack of commitment intensifies frustration in the organization which quickly escalates into an open conflict. If the team members start making under commitments due to the fear of being responsible or blamed for failure, businesses will never achieve their goals.

An engaged team with a diverse skill set is very important for the startups to grow and succeed. There should be a proper synergy, coordination and communication among the members of a team. Diversity and dedication of a team drives innovation.

Fierce Competition

As it is said that “A smooth sea never makes good sailors”, probably the competition is the only inevitable challenge that any start up faces. There are approximately 150 million startups in the world today with 50 million new startups launching every year. On average, there are 1,37,000 startups emerging every day. These are huge numbers by any standards. Challenges are everywhere and businesses – in general and startups in particular – are no exception.

The competitive environment keeps the startups on their toes, as there is no margin of error available. Both B2B and B2C organizations always tend to feel the heat of the fierce competition. In order to survive in this competitive business environment that covers both traditional and online businesses, the startups need to play aggressively and need to gain the much needed recognition.

Unrealistic expectations

Success is short-lived and expectations never end. This is where startups need to translate what the real expectations are!  Startups tend to face challenges when they set “unrealistic expectations” following a booming success.

Sustainability is the name of the game and sustainability requires consistent efforts. Startups need to have high but controlled expectations.

Making Customers Happy

Customer is the king. And that’s absolutely right. Winning a customer’s trust is one of the most important challenges that businesses in general – and startups in particular – face today. With a highly satisfied and loyal customer base, startups can scale and make progress towards excellence.


Himani Doshi, a Chartered Accountant by profession is associated with J.hirani as a Senior Strategic Business Analyst. She has wide range of experience working with different industries like Ceramic, Architecture Hardware, IT, Composite, Banking etc. Tenacious, ever smiling, ever ready to take new challenges and perseverance is something which would define her. She is an avid reader, loves travelling and enjoys meeting different people to understand distinguished cultures around the world.

About J.hirani: J.hirani is a Strategic Transformation team which works as a growth partner for different organisations in various industries by providing services like Agile transformation, Scenario mapping, Strategic alignment, Balance scorecard, Digital transformation, Incubating new ventures, Operation excellence and Aligning human capital.

©J.Hirani, Overcoming the challenges faced by startups, December 2020. All rights reserved.

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