Joel Devidal, CEO and Accomplished Entrepreneur Weighs in on Common Reasons for Startup Failure and How to Avoid Them

Starting a business can be an exciting and rewarding venture. If you do it right, you can become your own boss and build wealth for you and your family. However, over 50% of startups fail in the first year for various reasons. That doesn’t mean every entrepreneur is destined to fail- you have to know the common reasons for startup failure and how to avoid them.

It can come down to funds, your staff or simply bad planning. But these mistakes are easy to avoid if you know what to prevent. Joel Devidal, accomplished entrepreneur and founder of,  details some of the most common reasons for failing startups and what you can do to avoid them.

Lack of Demand

Sometimes startups fail simply because there isn’t enough demand for them. Sometimes entrepreneurs will take a successful idea and execute it all wrong.

You could be in an area where there’s no demand for your business. Maybe you simply aren’t reaching the right demographic. Sometimes your business doesn’t appeal to enough people to be profitable.

This highlights the importance of carrying out extensive market research. Find out how much demand there is for your idea, the kind of people who need it, and where they’re located. Create a strong business plan that lets you market yourself to the right people in the right area. This way, you’ll be less likely to be hit with low demand and low sales.

Poor Cash Management

Creating a business takes a lot of investment. Often, you’ll have to put a lot of money into your company before you see any returns. However, it needs to be used very wisely. If you manage your funds poorly, your business will quickly run into the ground.

There are various financial pitfalls businesses fall into. Maybe you try to start too big too fast. Start off with an affordable location and a small team. Once you start to bring in a profit, then you can focus on expanding and reinvesting in your business.

There are various other ways you can ensure your business finances stay healthy. Sometimes it can help to outsource certain tasks if it works out cheaper than hiring. Don’t spend too much on things like meetings and unnecessary facilities. Hiring the services of an experienced accountant can help you with money management.

Bad Hiring Choices

Sometimes startups fail simply because they have the wrong team. “Make sure you find people who are ambitious, motivated, and experienced enough to handle the roles you put them in,” suggested Devidal.

When you’re first starting out, you might not have all the time and resources to train people up to their best abilities. Spending more on hiring experienced people from the get-go can ensure your startup starts off right.

However, it’s still your responsibility to keep your team motivated and productive. Offer competitive wages to experienced people to ensure they put their best foot forward. Make employee satisfaction a priority and monitor staff performance so you can iron out any weak points.

Too Much Competition

Maybe you have a profitable idea, a good team, and satisfied customers, but you’re just up against too much competition. Entering into a saturated market often means customers might already trust another company doing the same thing you are.

This, again, highlights the importance of market research. Having a unique idea or something different to can help. Opening a business in an area where there isn’t much competition in your industry can also result in success.

However, all businesses will face competition at some point in their lifespans, and it’s important to tackle it head-on. Offering lower prices, better customer support and experience, and more consumer-focused features can help you stand out ahead of competitors.

Dissatisfied Customers

Customer satisfaction is crucial to the survival of your startup. If you can’t impress your customers or clients, you will lose out on all of your potential profits.

Focus on ensuring every single customer has a positive experience. Make their experience efficient, enjoyable, and affordable. If you can make one person happy, it’s enough to make repeat sales, and they’ll often recommend you to their friends.

You also need to offer good customer support. This can mean favoring customers in disputes when it comes to things like refunds. You should also collect feedback from your buyers. This way, you can collect information on what they’re happy and unhappy with and adjust your business plan accordingly.

Marketing Failures

Naturally, you need to get your business out there, so you can start making sales. However, some small businesses spend far too much of their budget on marketing too fast.

As a general rule, it’s recommended to spend 1-2% of your sales budget on marketing. Small businesses that are just starting out can afford to spend a little more to get the ball rolling, but don’t go overboard.

The most important thing is to spend money on the most effective forms of marketing. Digital marketing is generally the most effective. Things like content marketing, email marketing, and social media engagement can give a great return on your investment. Things like TV advertising are far too expensive to justify the costs for small businesses.

Keep in mind you can also do your own marketing completely free. You don’t need to spend anything to improve the SEO of your site, share your content on social media and start a mailing list. If you’re willing to learn about marketing and put the work in, you can start bringing people to your business fast.

Losing Motivation

Often, small businesses start out strong but quickly fizzle out. Why? This is simply due to employees and even managers losing interest.

When you start a business, you need to be dedicated to the long run. Most businesses won’t become instantly successful like Facebook or SnapChat. You need to put years of work in to see steady profits.

Set yourself regular targets to keep yourself motivated. If you lose your passion, change things up and make things more exciting for yourself and the customers. Apply the same concepts to your employees to improve motivation all around your business.


Although startups often fail, it doesn’t mean yours will. If you carry out plenty of research, keep your customers satisfied, and keep aiming higher, there’s no reason you can’t be successful. Keep these common startup failings in mind and make sure you prevent them yourself.

About Joel Devidal:

Joel Devidal is a veteran in the business world; as a founder and CEO, he has a knack for finding investors, launching companies, and keeping steady growth post-launch. Beyond business, Joel is an active part of his community supporting local organizations and helping young entrepreneurs get their start.

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