Reasons to why start ups fail

There are hundreds of millions of start ups out there burning with a fire to deliver and launch a business idea into a tangible, profit generating business, hoping to develop the next Facebook or Google.

Statistics reveal that, more than 80% of the people who have an idea will fail to launch the company. 80% of the people who could actually establish a company will unfortunately go bankrupt in their first five years of operations. Out of the survivors, 20% will go under after the first 5 years of operations. Thus, if you have a business idea now, the probability of you having an established business on your 6^th year of operation is 0.8 percent.. It is a surprising number, right?

So, what are we all doing wrong that only 0.8% of entrepreneurs succeed? Is it a very tough economy out there? Is it the big cartels taking all the big profits? Or maybe it is our own lack of enthusiasm to learn? I came up with a basic Pareto model, based on my own research, to allow me to explain the top %20 reasons why entrepreneurs fail. Please allow me to share the results of my research with you.

1. Lack of ability to run the business operationally. Most entrepreneurs are technical people. They are experts in a technical area and in fact they push themselves to the limit in order to become experts in their own technical fields. However, launching a start-up requires more than that. It requires a thorough understanding of business aspects; finance, operations, technical management, accounting, and even legal.

1. Not having the right strategy in place. Most start up owners who fail don't have the right strategy to penetrate the market. I remember my business strategy professor Gianvito Lanzolla saying "Strategy is not only creating the value but also capturing the value". Most entrepreneurs are actually great in creating value. They deliver unique products that most consumers benefit from. But they lack a strategy to capture the value from the market. They have difficulties distinguishing themselves from others.

1. Unqualified ideas. All of us at some point in our lives probably thought about establishing a business. The fire of entrepreneurship strike us deeply and started talking to people, asking around, searching on the internet. But how many of the entrepreneurs actually really qualified the idea they had? Talked to real experts? Conducted a feasibility analysis pre-launch? Analyzed their financial statement forecasts? Treated it as a "Project"? Conducted risk analysis? Not very much apparently. Basically, the chances of the business becoming sustainable were eliminated from the very beginning.

1. Motivation fades away. Many entrepreneurs have major difficulties sustaining their level of motivation against each road block they encounter over the course of the launch phase. Unfortunately, entrepreneurship is no easy job. It requires a very high level of dedication and constant motivation towards the goal at all times.

To summarize it, if you are a small business owner, the odds are against you. But hey, what is easy in life that is so rewarding anyway? Entrepreneurship is an absolute challenge and test of one's skills, dedication, knowledge, and motivation. If others did it, you can do it too. Just take the right steps.