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The topic I have been researching this semester is business startups. This is a significant research area because startups are considered the key way to bring new technology to the contemporary market. As our world grows more virtual and an increasing amount of companies shift to providing intellectual property rather than physical, startup entrepreneurship will become even more popular globally. However, startups are infamous for having high chances of failure. My research question asks what the most popular mistakes that business startups make today are. I investigated this question by searching the keywords mistakes and business startups on academic sites such as JSTOR and Google Scholar, and most of the sources found were qualitative and quantitative analyses published within the last five years.
Based on this research, my thesis is that startups fail due to a flawed business model, lack of market demand, and inadequate team composition. The Triebel et al. (2018) article will provide background information on startups high-risk, high-reward potential and the importance of organizational culture. The rest will support my claims that a flawed or absent business model and lack of market demand are responsible for startup failure. Furthermore, I will argue that the lack of investors and capital cited in Bednár and Tariaková (2017), Cantamessa et al. (2018), and CB Insights (2021) are attributable to these internal issues. In order to make my argumentative research paper more compelling, I think I will also need to conduct a case study analysis of at least three failed startups in order to make my own deductions about common startup mistakes.
Annotated Bibliography
Bednár, Richard, and Tariaková, Natália. Indicators of startup failure. Industry 4.0, vol 2., no. 5, 2017, pp. 238-240.
This is an academic article published in an international scientific journal on mechanical engineering. While the journals main focus is not relevant, the subject of this particular paper and its relative recency makes it appropriate for my research. The purpose of the article is to identify the factors leading to the failure of startups through an analysis of current scientific literature and a structured questionnaire. The five most serious problems include:
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no money;
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lack of market need;
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no investors due to lost confidence;
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inaccurate finance planning;
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team conflicts and bad leadership.
Cantamessa, Marco et al. Startups Roads To Failure. Sustainability, vol. 10, no. 7, 2018, pp. 1-19.
This is an academic, peer-reviewed article published in an open-access journal focused on human sustainability. It is an appropriate source for my research project because it provides a quantitative analysis by engineering researchers and was published within the last four years. The purpose of the article is to present a simple methodology for the structural analysis and classification of startup failures. The SHELL model was originally created for aviation accidents and was readapted to an entrepreneurial context for this paper. The results found that the four most common reasons for startups failure include:
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no/wrong business model (35%),
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lack of business development (28%),
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run out of cash (21%),
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no product/market fit (18%).
Lie-Nielsen, John. Five Common Mistakes Every Startup Makes. Forbes, 2020.
This is an online magazine article written for a general audience. The author is a self-proclaimed entrepreneur and investor that was able to publish this on the Forbes website in exchange for a membership fee. While the information is presumably based on personal experience, it will be used to illustrate how closely the beliefs of the general population regarding startup failure coincide with the results of academic research. The author aims to provide advice to aspiring entrepreneurs by presenting the five most common startup mistakes. This list includes:
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lack of an efficient and constructive strategy;
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lack of market research;
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lack of financial planning;
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lack of an experienced cross-disciplinary team;
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lack of preparation for failure.
The Top 12 Reasons Startups Fail. CB Insights, 2021.
This is a research brief presented by CB Insights, a business analytics company that provides information on private companies and investor activity. The aim of this brief is to summarize their research results in an educational yet entertaining manner for the casual reader. Given that it is an established analytics platform with data that was published less than a year ago, this fits the purposes of my project ideally. After sifting through 111 startup postmortems since 2018, CB Insights identified the top 12 reasons startups fail. These reasons include:
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failure to raise new capital;
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no market need;
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got outcompeted;
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flawed business model, and
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regulatory/legal challenges.
Triebel, Claas et al. Failure In Startup Companies: Why Failure Is A Part Of Founding . Strategies In Failure Management, Sebastian Kunert, Springer, Cham, 2018, pp. 121-140.
This is a chapter in an edited academic book about business, management, and consulting failures. This is an appropriate source published within the last four years that will lend an interesting perspective for my research project because it focuses on organizational culture. The aim is to identify a typology of startup failures through individual cases. The authors analyzed the results of previous international studies on startup failure, including the 2013 EXIST, 2014 CB Insights, 2012 Startup Genome Project, and 2014 DIHK. The common reasons for failure were divided into two clusters:
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internal, such as different expectations, alienation, and bad marketing,
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external, such as lacking capital, incorrect timing, and being overtaken by the competition.
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