5 reasons why start-ups fail in India


New Delhi: Prime Minister Narendra Modi’s highly publicised venture “Make in India” ushered in a new era in the Indian industrial sector with more and more start-ups sprouting up and contributing towards the development of the Indian economy.

While some of the start-ups flourished and went to the extent of challenging global giants like Microsoft, others perished or were limping towards an untimely death.

Despite the aspiration and the tenacity that the start-ups promise, they have some common flaws which trigger their downfall.

Lack of efficient workforce: Despite the presence of a pool of talent, selecting the exact fit becomes cumbersome for the start-ups. Fear of failure and uncertainty associated with the small companies deter talents. At the initial stage, the companies do not have the financial resources to rope in qualified people. The compromise that the companies make during talent acquisition later proves to be a thorn in their path of success.

Lack of training: Most employees learn tricks of the trade while working and being mentored properly. Since start-ups are lacking in resources the way big fish have, proper mentoring of the workers does not happen. This leads to a stagnancy and affect the productivity of the company. Most of the new small time organizations are brilliant with their ideas but have minimal professional experience. As a result, a gap is created which add to the woes of the organization.

Lack of marketing strategy: Constraints in the financial resources keep the start-ups away from spending too much on branding and marketing. As a result, even if the product is good it fails to reach the target customers. Hiring a marketing guy is also not possible for them. Moreover, the start-ups focus too much on the productivity and neglect their branding and marketing activities. The product, as a result, fails to get marketed.

The problem of copying: Most start-ups follow the models developed in the Western countries. In the process, they forget the environment they are working in. Instead of formulating a strategy focussed on the local needs, start-ups try to emulate companies of USA. This leads to a massive set back as what works in the US does not always work in India.

Strategic work plan, regular mentoring and adapting to the local situation might assist in the flourishing of the start-ups. But the government must formulate a policy and support them for developing a sustained economy.