What Kills Startups? How To Avoid Your Own Business Venture Dying

During the recession, the statistics for business startups failing were abysmal. According to statistics, in 1998 only 44% of startups had survived four years later, and although the worldwide economy has recovered a lot since then, there are still plenty of risks to startups that entrepreneurs should be aware of. In this type of career, the more you know really does ring true. There are lots of ways your startup can be quickly killed off before you’ve even had chance to get it off the ground. But you can avoid your own business venture dying, by being aware of these top startup killers, and the way to survive them:

Drowning In Everything But The Important Stuff

There are endless representations of entrepreneurs in popular culture where they are tired, drinking a lot of coffee and surviving in a small makeshift office space surrounded by stock or paperwork. These are more realistic representations than images of entrepreneurs with a laptop in front of them on a beach in some exotic location looking carefree and fresh-faced that is for sure.


What often causes this kind of exhaustion isn’t necessarily the hard work involved in making a business succeed, but more the fact the founders are literally drowning in every single job that needs doing. This renders them exhausted and takes the focus off the main jobs that do need attention. In the beginning, plenty of attention is paid to the key jobs, and time is allocated well, but before long, time is spread across miniature task after task and the once sharpened tool for business (the founder) is now expected to be a jack of all trades.

Surviving This Risk

To survive this risk, always prioritise the most important tasks above everything else and then any minor jobs that are not getting attention, allocate elsewhere. You could deem them unnecessary by reevaluating their value, outsource the work cheaply if it renders acceptable results, or simply delay the completion of the task if it is acceptable to do so.

Lacking Focus

Entrepreneurs can easily become distracted by what will make them money quickly, above the bigger picture and the long game. This results in a lack of focus that can inevitably quickly burn a business out and kill it off. The reason for this is that entrepreneurs can get cold feet or get a little spooked when their first business plan doesn’t instantly become successful. Sure, flexibility is important in any business in order to survive the quickly changing consumer climate, however, wildly switching tactics and chasing money over a sensible lifelong plan is never a good idea.

Surviving This Risk

Create acceptable timescales for each goal stage so that you can know you are either justified in changing tactics at that time, or that you need to stay on the same path and make tweaks to try and make the current direction work.

Founder Divorce

Not commonly discussed because it isn’t a particularly palettable or ‘sexy’ subject to report on, founder divorce is actually a very common cause of startup death. Founder divorce is where founders fall out with each other to the point where the joint business venture is no longer viable. Being in a startup with another person is like being in a relationship with another person. You spend tons of time with that person so if there are even the smallest cracks in your relationship, they will get bigger and turn into huge, vast crevices very quickly. These issues can quickly cause damage, either directly through conflict, or through a breakdown in trust and communication. Startups are so fragile they don’t do well under this kind of undue pressure, and neglect.

Surviving This Risk

Start a business with someone you have known for a long time. Startups built on people who haven’t known each other for long are less likely to survive. It is also a good idea to work with someone who has complementary skills to yours. Having the same mindset is good but having different perspectives and skills works well when it comes to starting a business. Diversity is never a bad thing. In all cases, communication is key. Being open and honest at all times can only lead to an excellent business culture that should stand strong against founder divorce.

Losing Cash Flow

Even the healthiest looking business can go bankrupt. It only takes one small change in demand, customer drops, marketing need or general unforeseen circumstances and suddenly the cash flow is non-existent and the business can easily flop. Unfortunately, attention to cash flow isn’t a given with startups. Despite it being such a key part of starting a business, it isn’t something that entrepreneurs think about as much as they should. According to recent statistics, 25% of businesses fail because of cash issues.

Surviving This Risk

There are many ways to avoid cash flow issues, but the most important is to be aware of your cash flow at all times. Know your numbers and know where every penny is coming in and out. You can also try your hardest to have a low overhead business to keep costs down, have a selection of cash flow options such as invoice discounting and business loans and consider a financial advisor quite early on. Financial advisors aren’t necessary in all cases, but if you do find your company struggling and you need advice, it could be worth investing a bit of money in order to get your cash flow back on track long term.

Your Business Doesn’t Need To Die

Your new business is not destined to die. There are many ways for you to avoid falling into the pitfalls and traps of many entrepreneurs before you. You’re already ahead of the game by educating yourself on common startup killers, so you can avoid those issues and survive. Stay educated, aware and ahead of the game and there’s every reason your business will not only survive, but thrive.


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