Reasons Business Startups Fail
Reasons Business Startups Fail

Reasons Business Startups Fail


Written by Gregory L. Phillips, Founding Partner

Top 20 Reasons Startups Fail


There are multiple reasons business startups fail. CBInsights looked at 101 startups postmortem and found the top 20 reasons startups fail. Here is the list:

Reasons Business Startups Fail - Phillips | Kaiser
Houston Business Attorneys

"Many startups can avoid a lot of the reasons listed just by having the right legal advice and thus avoid another top reason startups fail: legal challenges."


At Phillips Kaiser we consult business owners who face many if not all of the issues on this list, whether it's legal challenges, disharmony among investors or partners, pivot went bad or just the failure to pivot. These are common recurring themes amongst startups that can be avoided.

According to, 50% of small businesses fail in the first four years.

It's a fact most startups will fail.

However, many of those failures are preventable.

How Startups Obtain Quality Legal Advice Without Breaking The Bank

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The Lean Startup Methodology

Applying the Lean Startup methodology can significantly reduce the chances of failure. And yes, Facebook, Google, Instagram, Airbnb, Snap, YouTube, Dropbox, MailChimp, and TechCrunch, all used the Lean Startup methodology.


The Lean Startup methodology means getting a product or service to the market fast while being capital efficient. This reduces the chances of failure from the second top reason startups fail:  ran out of cash.


Once your product or service is available in the marketplace, it is iterated repeatedly. Demand is continuously tested, and the market determines if the iteration is wanted or not. Thus, mitigating the chances for failure of the top reason listed on the chart above:  no market needed.


Shortening product development cycles and measuring actual progress without resorting to vanity metrics can help in learning what customers really want. This alone can reduce many of the top reasons startups fail, such as mistiming the productnot understanding the customerpivot gone bad, and loss of focus.


Many startups can avoid a lot of the reasons listed just by having the right legal advice and thus avoid another top reason startups fail:  legal challenges.  Legal representation does not have to cost an arm and a leg. Today, startups and small businesses can utilize General Counsel Services which can reduce legal fees for startups and small to mid-market size companies by 60 percent or more!

The Lean Startup, by Eric Ries, is a must read for any business owner. Jeffrey Immelt, the ex-CEO of General Electric made this book required reading for all his managers. In an age when companies need to innovate more than ever, The Lean Startup will help you measure progress, set up milestones, prioritize work, measure how customers respond, learn whether to pivot or persevere and learn how to build a sustainable business.

Retaining legal counsel is essential for the long-term success of every startup and new business. Unfortunately obtaining legal counsel from conventional leveraged firms is expensive. General Counsel Services by Phillips Kaiser offers a new way for companies to get legal help, protection, and advice without breaking the bank or burdening their bottom line.


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