An Overview Of Why Startups Fail

An Overview Of Why Startups Fail


3 min read


SaaS (Software-as-a-service) is a method of software delivery that allows easy access to data from any device with an internet connection. This method is cloud-based, whereby users have remote access to the SaaS application so far they have stable internet but the main SaaS servers aren’t close to the users.

SaaS start-ups are companies that host applications and make it easy for customers to access these applications via the internet thereby creating a better user experience through their products.



The reasons why SaaS start-ups fail are;

  • Lack Of Market Interest

One of the most important reasons for establishing a business is to solve an existing problem.

Most SaaS businesses fail for this reason because they are not solving existing problems and probably dealing with the wrong problem that doesn’t need a solution.

For example, Most developers without solid research are quick to create an app that he/she thinks will solve a problem and when the app is established it doesn’t get the wide reach as expected.

This is caused by poor research or survey on customers’ requirements, instead, developers should be able to create a solution and see if there is a market for it before establishing a product that also saves resources.

Bad timing can also be one of the reasons for the decrease in market interest.

  • Running Out Of Cash

Most businesses fail even before they start due to the fact that they fail to plan ahead financially for any cost that is going to be used for the start-up.

  • The churn rate shouldn’t be underestimated.
  • One should put aside extra funds for product improvement.
  • Don’t overestimate future revenue.
  • Poor Management

Management says a lot about building a start-up because it emphasizes the right direction for the start-up.

Leadership and management should be clear and everyone should be on the same page if not this can lead to the ruin of the product.

  • Failed Business Model

This is when the LTV(lifetime value) is not defined and is higher than the CAC(cost of acquiring a customer) and this will lead to business failure. I.e, failure to achieve product market fit.



  • Poor Market Research

To answer the why who and what of establishing your product, research is necessary. Most people open businesses without doing proper research and survey about the product which later leads to business failure.

  • A Miscalculation In Resource allocation

Most people forget the marketing aspect of their product which is also very important. One should also be able to pay marketers to promote their products, outsource, and PR campaigns to promote the product effectively.

  • Letting Details Kill The Big Picture

Most people tend to focus on so many details and forget the main reason for creating the product in the first place. This is one of the mistakes most people make instead of focusing on customer experience and the functionality of the product itself.


Everyone establishing a SaaS start-up should research, lay out a budget, and plan beforehand to avoid business failure. You should note that having a business idea is easy, implementing it is a step forward, but ensuring that it survives and grows rapidly is a critical goal.

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