Startups and Entrepreneurship : Why do most Indian Startups Fail?

Aug 17, 2019 by Arfah #Startup Stories ,#Business & Economy

Startups in India is a reasonably recent phenomenon, the conversion of job seekers to job creators has impacted different individuals, industries and the country’s economy as a whole.

Startups and entrepreneurships have created a niche for themselves. In this new age generation entrepreneurs aim to target wider market by either creating something no one has thought of or to operate their business by reinventing an already existing product or service.

In a country like India given the social, cultural and political environment, startups are bound to face challenges that they either grow out of stronger or lead to greater opportunities or ultimately fail against.

An enterprise or startup in India is naturally subjected to a several advantages like having a larger population of youth that are empowered to work therefore resulting in wider talent base and higher creativity.

There is also an advantage of being an emerging/developing country since every problem regarding health, food, education, infrastructure etc creates an opportunity for startups to solve it and run a business around it. A larger population also means that there is a larger home market which has several needs to be catered to varying across diverse lifestyles, consumer expenditure and disposable income.

On the other hand, the craze of having ones own startup and with everyone wanting to utilize oppurtunities that the  startup boom in India is providing, many individuals fail to comply with the basic regulations and guidelines for establishing a successful startup in the long run; following are some of the most common reasons  as to why most Indian startups fail

-Imitation may be the best form of flattery but that isn’t the case in startups, in India many individuals in the name of inspiration tried to imitate successful businesses like Amazon and Flipkart and most of them failed.

-Congested market sectors are another reason startups fail, in the overcrowded sectors like food delivery, a number of startups have mostly failed due to one too many startups of similar nature.

-The most common market strategy to provide discount in order to increase sales has backfired on most startups resulting in their failure. Many startups have provided unreasonable discounts in their initial stages which lead to more investment at low returns eventually running into losses.

– The misinterpretation of market needs is a prominent cause of startup failure. Entrepreneurs fail to understand the market and their needs, implementing western models in the Indian market which more often than not, fails to work out.

– Execution of business models that are viable in the long run is an important pre requisite of success in future, Indian startups lack sustainable business models and do not possess a clear vision of the enterprise they have started resulting in shut down of businesses within a short period of time.

– Decrease in productivity due to excessive funds is extremely common. Indian startups have started to attract large investments through venture capital unlike other countries resulting in inappropriate and disproportionate allocation of funds for the startup.

– Failure of Indian startups is often due to entrepreneurs implementing their ideas on a large scale before testing it on a comparatively smaller scale.

– To undermine the capability of competitors and be overly confident in the initial stages of startups is what lead to the failure of most Indian startups like ‘Auto On Cab.’

– Negligence in the marketing department of the startup has caused many startups to fail in their operations.

– The timing of a startup impacts it to a great extent.

Indian startups aim to gain huge profits but refuse to brainstorm the dedication effort and feasibility of the startup in actual time which is why certain startups that may succeed in future fail in the present day scenario.