Reasons Why Start-Ups Fail In India

We all see new establishments coming up every now and then but soon after 1 year of comletion they disappear go into a closure. It’s because 90% of startups fail and only 10% of them succeed in India

Start-Up India was a scheme that was launched by Prime Minister Narendra Modi to help people to start up their own business. These are the people that had ideas and capability to achieve so the Government decided to fund them.q

Let’s start with the basics…

What is a Start-Up?

A start-up is defined as an entity that has opened less than 10 years and has a turnover of fewer than 25 crores. We had 5500 start-ups and it’s expected to rise to 11000 by 2020. We are the third-largest Start-up ecosystem in the world.

Reasons Why start-ups succeed in India

  1. Get a product in the market that’s easy for the customer to understand and easy for the salesman to explain.
  2. The team you build should include all efficient employees who are ready to take up tasks.
  3. Most of the Start-Ups succeed is because if their mindset to ignore haters and carry on with their business. Many businessmen face criticism on a daily business, but that’s a part of being a businessman.
  4. Plan a distribution strategy on how your potential customers are going to acquire the product or service that your company is offering.
  5. Adapt through the changes, many start-ups don’t adapt to the new technology which affects their day to day activities. Basically, scaling your business.
  6. The businessman should willingly modify the product if the market doesn’t accept your product.
  7. India being a populated country its easy for start-ups to grow their customer base in their initial stages.

Reasons Why Start-Ups Fail

  1. Choosing the right market– For example, let’s take E-Commerce websites. Amazon and Flipkart are dominating by capturing largest market share in India. E-bay or Jabong couldn’t compete and eventually were bought by Flipkart. If the businessman has zero knowledge about that particular market it becomes difficult for the organization to achieve its goals.
  2. Modifying your product as per Feedback– Many businesses fail because the particular organization feels the sales are enough for a company’s growth. Well, this isn’t true in many scenarios the customer acquires the product but doesn’t like the taste of it and stops buying the particular product. If a proper feedback system is introduced and all the feedbacks are taken seriously can increase customer loyalty for that organization.
  3. Lack of passion and skill– As we all know the societal pressure or the peer pressure can lead a person to get into the business field or if his family has been doing business for years he might also join in. The main problem arises when the person doesn’t have the knowledge about business and starts taking decisions that negatively impact the company. This makes the person less motivated and incompetent which results in closure of the business.
  4. Hiring the right people– Many businessmen don’t have an HR department in their initial stages. So, they recruit people from their family or friends which might not be skilled in all the departments or might not even be from that field. If the team doesn’t consist of talented employees it wouldn’t be able to stand the competition which will again result in closure.
  5. Pricing of the product– This consists of two parts
    a) Underpricing– While developing the product, if the board decides to set a lower price it will help in establishing a customer base in its initial stage. But if they try to increase the price by the time those customers might start buying your competitor’s products.
    b) Overpricing– If the company puts a high price tag on its initial stages, the consumer develops a negative image of the company. If you have an ordinary product with a higher price it doesn’t sustain in the market for a longer time.
  6. Raising of funds– For fundraising, you’ll need a strong business plan, slides to explain your product and how it is making your customer’s life easy. Then you’ll have to talk in-depth about the market and how the funds invested are gonna be allocated. Right plan, efforts, attitude and no arrogance are key to attract potential investors.
  7. GST- This area has affected many Start-ups. The new law states that business needs to have GST registration which blocks their working capital. Manufacturing start-ups used to pay tax if their turnover used to be more than 1.5 crores but GST has dropped it to 20 lakhs.

Reasons Why We Should Promote Start-Ups in India

To Promote Entrepreneurship

To boost up the Banking and Financing Sectors Of India

One of the biggest problems that exists in Unemployment. This can be reduced by introducing more start-ups

By promoting* women entrepreneurs and their workforces,* we can contribute 12 million dollars to the* global economy

To survive in the market and withstand the competion comanies come out with innovative products

Start-Ups That Succeded In India


BYJU is a learning app founded in 2011 by Byju Raveendran at Bangalore. Net worth: Rs. 3,300 crore


Zomato- food delivery app
Zomato is a food delivery app that started in 2008 by Deepinder Goyal and Pankaj Chaddah. Net worth: Rs. 1000 crore

There are many more like Swiggy, Flipkart, Ola, Paytm which also have a billion-dollar valuation.


India has been a developing country for years now. .There’s no doubt that India will grow, but “How fast will it grow?” is the question. …..skills and innovative ideas. If a start-up fails it not only affects the businessman but also affects the country and its economy

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