Why do start-ups fail?

Being a person who wants to be an entrepreneur and own a startup in the future, it is high time for me to consider the failures that could happen while working on a startup. Just like cakes, people usually appreciate the icing of successful startups and do not consider what goes into making them. But today, I’ll try my best to explain what could go wrong, leading to the failures of startups.

1. Improper budgeting: This can be caused due to a failure of the management system to categorise finances such as funds, debts, salaries, etc. in an organised manner.
2. Lack of funding: This can mainly be caused due to the failure of products in sales and during launches. If the products fail, fewer people will be convinced to invest in them. Meanwhile, the costs of the startup would incline harshly.
3. Lack of ambition in the team: This can also be one of the reasons that can cause a lack of funding in a company. The causes of this lack of ambition can be due to many reasons, such as improper work-life balance, non-satisfactory salaries, not having proper leadership, etc. However, if the team is ambitious, the startup and the company are bound to succeed. For example, SpaceX, despite its first four launches being failures, Elon Musk had to choose whether to invest in both Tesla and SpaceX and go bankrupt if they failed or invest in one of them and earn profits from it. He invested in both, and SpaceX’s fifth launch was a success, earning a contract worth $1 billion from NASA.
4. The ideas developed by the startups: If, for the majority of times, the ideas developed by the company aren’t solutions for problems that concern a wider perception, then the profits earned won’t be enough to cover the expenses and debts of the company, eventually leading it to sink.

Not having proper knowledge: You have to have some basic firm knowledge before starting a startup, even if it is a small one. You should know what you want with your startup and up to which level you want to take it. According to that plan, you should collect as much knowledge as possible.