Why Software-Based Startups Fail?

If you see the statistics in my first post, the biggest failure rates are in product-based startups compared to service-based startups. Therefore, knowing the failure factors for product-based startups is an important condition to increase the probability of success.

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1. Lack of Extraordinary Ideas (Innovation + Agility)

The first major disadvantage of starting a product-based startup is that it is not very well researched. You should research your software product development ideas well. According to a study, 91% of startups fail due to lack of innovation. Using random ideas and copying other successful startup product ideas is also a serious shortcoming. Not only innovations, but also lack of software product diversity and agility to meet the expectations of a wide audience is a major reason why a startup fails.

Solution:

Wider market researchFluid business development architectureEstablishing sustainability strategies for software developmentDoing a lot of literature review to make your software innovative.

2. The Problem of Poor Optimization of Software

All users expect superior performance and rich features from your software. Poor performance of the software can frustrate users and cause them to switch to competitors' products. Hence, this leads to less business revenue and perhaps in the worst case scenario, failure.

Therefore, to make your software product efficient for your target audience, you should choose an emerging technology that promises better performance, continuous improvement and a bright future.

3. Financing Problems

Every product-based startup needs better funding to run its commercial and marketing campaigns. Not having enough resources means sacrificing some features to be implemented, optimizing the solution for better user experience, opportunities and methods to spread your product awareness and generate quick revenue. Today's internet users want to buy products and services that are popular and provided by well-known vendors. If they don't know your product exists, they won't buy and experience it. This is why one day your product-based startup will face failure.

Solution:

Build robust revenue modelsDecide up front on financial margins for products and services (fees + expenses)

4. Product Market Fit

Product-based startups fail due to lack of market research: Not knowing the right market, fewer market opportunities, not having the right data to target the audience are the main problems. The product does not create value for the audience. Many startups rush into development with the first software development idea they get, without even exploring future opportunities and business stability. Hence, the lack of research and product presentation in the market leaves startups facing failure.

Solution:

Know your marketplaceBuild a comprehensive understanding of your offerDeliver your product with complete confidence and build a trusted relationship with your consumers

5. Lack of Customer Orientation

Startups usually have too much to focus on their own space, including tons of customer and investor meetings, talent hiring, fundraising, product development and maintenance, marketing and sales, etc. Because of this, they sometimes lose focus on their target audience and do everything vaguely. Losing customer centricity often leads startups to end their corporate journey. Remember, for a product-based startup, getting valuable feedback and reviews from customers is the key to improving their product performance and hence growing their business.

Solution:

Design your software product that makes your audience's job easier.Get frequent feedback from users to improve your productAlways answer software users' questionsMaintain a healthy and trusting relationship with your customers.