7 Early Warning Signs That Predict Your Startup Will Fail

Getting success at the entrepreneurial setup isn’t easy. It's because the success ratio is far less than the number of those who fail. According to a study, 90% of startups fail in the first five years of the venture. Given the failure ratio, jumping into the entrepreneurial field isn’t everybody’s work.

I consider myself the luckiest to have faced failures twice and survived the aftershocks. But there were reasons I failed. The mistakes took a heavy toll on my financial health, but I somehow started another successful venture.

I am not saying that I am a millionaire or that my business earns me a $10+ figure monthly. However, it generates enough revenue in a staggering fashion that keeps my life afloat. The meager amount even helps me fund my picnic trips and vacations.

Learning from my past failures, now I look at startups from various angles. I still make mistakes as it’s a journey of learning, unlearning, and relearning, but I don't make the same mistake again and again.

The experience gave me insights to look for the signs that predict failure or success in any setup.

Now I look at the entrepreneurial venture in terms of investment. There are two types of investment broadly: money and time. But I would also like to add one more thing; emotional investment.

I also look at various other aspects such as consultation, market trends, planning, decision, execution, and flexibility of the startup to survive the odds.

If you also think about taking your first step towards your startup but don’t know what makes or breaks it, this article is for you. Over the years of experience, I have highlighted these indicators that predict the failure of your startup.

#1 Get out of your mental trap

The biggest challenge for a startup to survive is your mentality. The survival of your business depends on your thinking. We all have different thinking patterns and we follow that.

While doing business, we think about making money, to be honest, quickly. Very few of us think of reaping long-term rewards and don’t bother about immediate money.

We also think our way is the best, and that’s a trap. Maybe, what you think is the best, but it may not be the right best way.

Lacking flexibility in mindset slowly erodes your business. If you want your business to survive, challenge your thoughts by bringing innovations in your ways. The best way is to take the risk and experiment with new things that don’t align with your perspective.

2# Get inside your audience's head

I know you have heard this multiple times, but I need to remind you again. Know your audience.

What does it mean to know your audience? And why is everybody focusing on this?

This is because very few entrepreneurs actually do that. Very few creators know about the people who consume their products. Very few companies understand the needs of their customers.

Very few writers know what the problems of their readers are and how to solve them.

For a successful company, writer, creator, owner, and all those who sell something or provide services, the trick is to delve deep into your audience’s mind.

If you failed to know the aspirations of your audience, you wouldn’t be successful in anything.

If you avoid procrastination and connect with your buyers psychologically, you are less likely to fail.

3# You pivot slowly

Pivot is a business term used to express the change in the direction or explore more alternatives when you find that the current services or products don’t meet the needs of the marker. Taking a pivot improves your revenues and is a survival tactic to keep your business growing.

Pivot is a significant concept in business, and you need to be ready to pivot to avoid failure. They are used to keeping the business afloat. It also depends on how you take the pivot to unleash its potentials fully.

I failed in my studio plus coaching startup because I stick to my ways. I was not ready to pivot and lost my business in the first year. Even I incurred a debt that I, fortunately, paid back in less time.

So, if you pivot faster, the longer you will survive in the market because you will catch up with the ever-changing trends of the market. Otherwise, trends in the market change every day. Being lazy or averse to change kills your business.

4# You are afraid of executing ideas

You are an excellent dreamer, and now and then, a big idea hits your mind. You can entertain the idea from multiple angles but you lack to execute it fast enough.

If you procrastinate in taking action, others will take the lead and will execute your ideas to their benefit.

This happened to me recently. We are a bunch of friends who visit the nearby Bazar every day. We always come up with alternative business plans, but those plans are often too big for us to put into action, so we forget it and dream again.

One day, we were sitting in a hotel and sipping our tea. The tea shop was good to attract a lot of customers at first but gradually it lost its traffic. Being a regular customer, I told them why this happened how they can avoid failure.

Over the insistence of the friends, I gave them an idea of how to start a new teashop and how to make a huge profit from it with lesser investment. One of my friends asked me if I am serious about starting it up and I excused myself given my other engagements.

He quickly executed the idea and earned himself a name that turned out to be a brand in our locality. Not only that, the teashop evolved into a full-fledged hotel that recently opened its second branch.

So, a lack of power to execute your plans robs you of your brighter future. Successful entrepreneurs put their thoughts into action and do not dream about them all the time. Being visionary is essential, but being the doer is the actual thing.

So, if you think you can’t execute your ideas quickly, this is a warning sign that predicts your failure.

5# Understand the difference between productivity and being busy

Many people think they are busy so they will be successful. But they are busy with the wrong thing. Being busy doesn’t count for success or productivity.

It is only productive if you engage with the right thing. If you don’t know what makes you productive, you will end up wasting your time by being busy with the wrong stuff.

Clearly understand what makes you productive. If you are a writer and always get busy reading things while researching for an article that isn’t related to your piece of writing, you will end up burned out. You won’t be able to finish your article on time.

This is the earliest sign of being a failure in your startup.

So, to avoid failure in your business, know where to get busy.

6# Focus on revenue

Many people will advise you to don’t think about revenue. But I disagree. This is the biggest mistake and a warning sign that predicts the failure of your startup.

Money is everything in a business. Yes, they will tell you to do it out of passion and leave the rest. I disagree. Your primary goal is to generate revenue and to keep this goal in your sight all the time.

If you lose sight of money, it is a red warning. Money is what you are doing it for. All your motivation in any startup pivots around money. So, keep your goal in sight, focus on it, and get success.

If you don’t focus on it, manage it, and exploit it properly, you will end up a failure.

7# Have money for runaway

Knowledge is the foundational stone of every business. If you lack the business know-how you are doing, you will end up a failure. There is no in-between.

So, know about your runaway. It means that you must have the cash to keep your startup floating.

Money is the lifeline of every business.

If you cut its lifeline, it will collapse soon. So, runaway is a term used in business that means the time before your startup runs out of money and crash.

Save enough money for your business lifeline. You will need it to fund your business in the time of need, in the runaway time.

You can do only this if you know business rules. Otherwise, losing in runaway time is the warning sign that predicts your failure as an entrepreneur.

Concluding thoughts

Entrepreneurship is really tough. Starting a business is much like gambling. You can quickly lose all you have in one pitch and toss if you don’t know the rules.

Every startup follows a different path of success and failure. But the signs it shows are very similar. We can notice these signs in the early stages of your startup.

If you have seen them, address them. If you haven’t seen them, look for them before you lose sight of them. It doesn’t mean that every business has warning signs, but 90% will experience it.

If you noticed and addressed them on time, you will probably be successful. And if you chose not to see them, this is the most prominent warning of a predictable failure.