Blog image

Reasons Startup Fails After Their First Growth Spurt

As you grow, the owner might be very excited to begin scaling your startups, but the road ahead will definitely have bumps, and speed breakers if not noticed early could certainly lead to failures. Make sure you avoid the following speed breakers, unlike other startup companies which are growing rapidly.

Experiencing/ Enjoying a major spurt in your business for the first time?

If this is the case then the chances are that you will be committing some mistakes along the way, though some are natural mistakes that are considered to be a part of the growth, the remaining mistakes should be avoided at all costs.

Growing from a start-up or a mid-market company into a scale-up is a process that is filled with a lot of challenges, even an experienced CEO  or an executive will admit that there are a lot of challenges that are inevitable in the process of scaling a business, however, the faster you overcome the hurdles higher the chances of your business survival.

One of the biggest challenges you experience in the process of scaling up is that you do not know what's coming ahead but luckily for you, you can learn from the mistakes that others have already made, which can be considered a brownie point for you as you will be able to take suggestions and do’s and don't list from them.

One of the ways to overcome the above-mentioned challenges is taking the help of companies that provide Startup funding services. One of the rising companies providing startup funding services is 'Factsheet '

At Factsheet, they provide startup funding services that are proven to be very efficient and effective as they have a team of highly experienced experts that cover all the aspects like financial planning & analysis, and fundamental and market research. Hiring the services of this company can be the first step toward your ladder of success.

One of the major reasons the CEOs and executives of startup companies struggle and succeed is that they try to do multiple things at the same time all by themselves, it is essential to have focus, be disciplined, and gather the required data for you need to obtain detailed knowledge to know exactly what steps will prove beneficial for your startups.

Following is the list of the most common and dangerous mistakes the CEOs and executives of startup companies make that you can avoid:

1 Scaling up too fast

One of the most common mistakes that are made by companies in the startup phase is that they try scaling up their startup business based on just one or two clients they start believing that they have proven their mettle in the market.

Although the excitement is understandable it is extremely essential to validate your business module before you think of scaling up your business as even if you have more than 2 clients as a startup you still have to experience the full traction of the main market. You have to understand that the people who are buying your product are the people who generally tend to try out a variety of things, but your main aim should be to reach the majority. The process of bridging the gap between the minority and majority however can be difficult therefore this is the point where the majority of the companies get stuck up or even go down entirely, so you must test your product regularly to check whether the product is market fit and always have knowledge about the ideal customers for your product. Also, the success gained without the right presentation and strategic focus does not last for long  To successfully scale your business you need to be ready to acquire microscopic knowledge about all the aspects, especially at a time when the demand for your product is at a higher scale than expected, you must acquire detailed knowledge about the unite economics of these orders as well as the efforts that led to those orders and also including expenditure that has occurred during this process and compare them in terms of having these orders have turned out profitable.

The other essential part is not to get excited by the top-line numbers, as the process of rapid growth comes with additional costs that is more employees, more infrastructure, and a lot more of everything so you must be fully prepared to successfully take the additional responsibility that is mentioned above if not it will surely cost you in a big way. In any growth phase, you must dig deep to ensure that the growth is sustainable and consistent.

2 Lack Of Focus And Alignment

The thought scaling your startup occurs when your company gains more traction, but your company gaining more traction comes with added responsibility and more decisions this process of making such complex decisions can build up added pressure and this added pressure can cause you to make poor decisions that can hurt your potential for success and can even result in your downfall. Numerous companies have not been successful in raising their startups as they could not cope with the excess of opportunity, and to prevent this from happening to your startups where there is excessive stress and disorganized movements in all directions, you must know exactly what your focus is. that means you gain total knowledge of what you are doing along with gaining knowledge about the things that are to be avoided.

It is important to understand  that during this phase of your startup, there is no need for you to try to add new features or related products as once you have achieved a product that fits in perfectly with the market and based on that product it is encouraged you in elevating your startup it is highly essential that you consistently maintain the value of your prime product in the market  before you start building new stuff.'

One way that provides your assistance in this process is that you can hire services from companies that offer business growth advisory, one of the upcoming companies that provides one of the best business growth advisory services is Factsheet, as Factsheet provides their business growth advisory that covers all the necessary aspects right from assistance in business plan & modeling to business ideas valuation this assistance is provided by a team of highly experienced experts of Factsheet that assist you in such a manner that you acquire the desired results. One of the major highlights of their services is that their team of experts also assists in formulating special strategic plans that are easy to communicate with your entire team through which every member will be working as one and help you in achieving team alignments.

To get your startup to scale up, you need to have the right goals and metrics planning in place that need to be transparent for everyone on the team assignment focus and commitments are the main factors that determine whether the fast growth of your business is sustainable or not. Every person makes mistakes but the key aspect is being aware of them, this is one of the ways that can help you identify what works and what doesn't as you don't track and measure you cannot improve.

3. Hiring prematurely:

One of themost common mistakes that the startups tend to make in their period of growthis that they higher too fast , as during the period of rapid growth the demandfor your product is at an all-time high and the manpower that  is required in order to fulfill these demandsis low in order to fulfill the excess demand that occurs during the rapidgrowth many startups tend towards hiring employees in a very quick mannerwithout following the proper steps for highering that results in higheringemployes that do not fit into the company culture at all that definitely hurtsthe company s morel in the most brutal way , as the wrong candidates caninfluence others into sharing bad habits with each other and that can result ina drop of  productivity per employee , toavoid this situations it is also important that you stay lean there is no needfor highering too many people ,rather you can go for a smaller motivated and ahighly productive team rather than opting to go for a sluggish team with poormorale.

Having said this it would also not be beneficial for your startup to delay the process of hiring new employees for too long as the failure to deliver is among the core reasons behind business closures it will be beneficial in making the hiring process more efficient by highering employees that believe in your vision.

4. Mistaking Leadership for Management :

When the company that you have started is still in the initial startup phase it can be possible for you to handle all the functional roles, but if you believe that you can continue the same process in the future this decision will turn out to be a fatal mistake. To remain on the right track that ultimately leads you towards achieving your ultimate goal, you must stick with your primary role is leading, and don't start managing there are many examples of startup companies that experienced the consequences of opting to go for managerial as well as the business leader role.

Opting to go through with both roles as the owner of your startup can gain success  but this success will be for a shorter period as through a certain period you will come to terms with the real situation as continuing with the same approach will lead you in experiencing your business to stretch out too thin and also will lead to loose connection with your staff on the ground that results in losing focus and flounder as the connection between the entrepreneur and the  team on the ground is considered to be one of the major aspects to help the startup in scaling successfully.'

As the main role of a business leader is to inspire others, make connections, secure funding for their companies, and have a vision to achieve continued growth the leaders are also considered to be the ideal machines, and the qualities of a good manager highly differ from those the that of the leader, you must leave the execution part to those who are great at it.

5 Lack Of Setting Long-Term Goals:

Goals are meant to give you directions and help you in remaining on track during day-to-day operations. Focusing on setting your smart goals, can help in identify your future path and in return provide you with much-needed assistance in formulating specific action steps needed to get there.

Commonly, startups and scale-ups set up goals but they are for a shorter timeframe that is based on monthly, quarterly, yearly, or 2 to 5 years goals for measuring their progress they fail to define their long-term goals. If you fail to identify the long-term goals the short-term goals that you have set might end up being the wrong ones.

In order to gain agility long-term goals are often overlooked but they often forget inorder to gain agility you first need to know where you are going, and in order to gain agility you need to make quick and smart decisions and in order makesuch decisions, you need to attain a clear sense of direction.

6. Over customizing:   

One of the most common mistakes that fast-growing companies make when they start to scale up is that they say yes to every request that the customers make which can result in the risk of overpromising and under-delivering.

Their are many examples where startups end up giving the customers too much power in terms of fulfilling all the needs of every consumer without taking the major aspects like asking yourself does the startup has the capability and them an power that is essential to successfully fulfill all the requirements of their customer.

It will be much more beneficial if the startups try to fulfill only those needs of their customers to which they have all the required backing in terms of manpower and all the other aspects that will be required to fulfill those needs.

7. Focusing On Marketing Too LittleToo Late :

One of the major mistakes that startup founders make is that they assume that they don't need to market and that their customers will find them directly as many of them believe that marketing is a function that is not as necessary as some of the other aspects of a business, they only use marketing as the last options in order to gain traction, but thinking that without proper marketing you can gain major sustainable growth all by yourself is a bit naive.

The best type of marketing that would be beneficial for your business is based on the type of services that you provide, and the marketing strategies that are based on the target audience, this marketing can be in a format of traditional advertising, online marketing, or content marketing but to scale marketing, you will need strategic choice with clear KPIs and ROIs that are well measured. Too little strategic focus on marketing san also results in becoming an independent on one marketing format only that can affect the reach of your business.

8. Postponing The Next Round OfFunding For Too Long

At this stage of your business running out of money should be avoided at any cost, and in order to avoid this, you need to be ready with the action plan to impress investors early than you may have intended.

Venture Capital firms that invest in the later stage are more risk-prone than you rearly-stage or pre-revenue investors, attracting them is much harder and time-consuming to seal the deal. But to grow your facility, you need fast cash.

One of the major aspects of the CEO's job is hunting down funding with a strategic approach, if not approached strategically and you fail to partner up with investors in the long run this can very well result in a sinking of your startup.

The successful term of business growth is having an ample amount of cash in hand in order to invest in marketing, and sales, and to build a team that supports customers. Often in the early stages, startups are interested in any source of funds, they don't strategically choose their investors they need to partner with those who can fund successive rounds of investments as the startups don't take the strategic approach they end up having to hunt down new sources of funds regularly this process takes a lot of time and makes it hard to match up funding time with the need to cash to grow

In the scale-up phase apart from the difficulties that business leaders are most likely to experience in their quest to impress their investors it also becomes much more challenging to estimate your expenditure correctly.

9. Lacking A Scalable Infrastructure :

As you plan to or grow your company nothing scales automatically unless you are systematically set up, for scale for which you need to have the right infrastructure in place that consists of systems, procedures, and physical space to keep the pace and make optimal use of your company's momentum.

One of the major aspects of the scalable infrastructure must-have is a separate communication department as There are many examples that indicate that there are a lot of startups that expect communication naturally evolves with grow this a wrong assumption as it is a lot easier to communicate the changes and progress to few people but if you're in the process of growing your business also includes the increase in the number of people that are involved with your business as the number of people associated with your business increases it becomes much more challenging to communicate with all of them at the same time.

During the phase of rapid growth, it is much more likely for messages to get misinterpreted, key points to get lost, and wrong assumptions to be made, and in order to avoid this happing with your startup it is much more essential for you to invest in your companies communication infrastructure as to be assured that every one that is associated with your organization stays on the same page. The next aspect of your infrastructure that has to be set up properly is the IT infrastructure which does not only include having the right system in place for communication and execution it also includes investing in redundancy.

10. Not Being Agile:       

As the only thing that is consistent in the business market is changing, unexpected situations occur, market trends change, and competitors can pop out of nowhere frequently leading you to make changes in your course quickly at any point of time especially in the case of startups and scale-ups if you are not aware and agile enough to take quick actions to encounter the unexpected situations that can very well be the reason of your downfall.


If you are experiencing speed breakers on your road to major business success, it is very important that you remember that you are not the only one that is traveling on this road there are others too that have experienced similar types of challenges that you are experiencing.

In order to avoid these speed breakers, you can always implement the tools and strategies that have proven to work for others that were facing a similar type of challenge on their road to success.


Leave a Reply

Your email address will not be published. Required fields are marked *