Why 90% startup’s FAIL in Pakistan?

There is a high failure rate of startups in Pakistan. Many factors are included in the failure of startup. In this blog, we will highlight every entrepreneur’s most common mistakes in their newly operated business.

In this dynamic world of startups, Pakistani Entrepreneurs must consider two factors if they don’t want their startups to fail. Two factors are Adaptability and customer focus. Success is not measured by securing funds for startups, it’s about understanding the market needs and continuously evolving to meet them.

Many startups fail because they rely on external funding and lack market research without focusing on building a customer-centric business model. Developing and establishing a sustainable business model is crucial otherwise your business can’t be sustained in this competitive era. Airlift’s shutdown in 2022 is a prime example because they have secured a substantial investment but failed to establish a sustainable business model fails the brand which ultimately led to the shutdown of its operations.

Here are the factors which results in the failure of startups:

Replication of Existing Business Model:

A common issue faced by startups is that entrepreneur often copy and replicate someone else’s business model, applying it to their local market without any modifications. This approach, lacking a comprehensive understanding of market dynamics, regulatory environments, and customer needs, often leads to failure. Each country has unique culture, economics, political, and regulatory factors, so simply imitating a business model and implementing it locally is not a viable strategy.

Unrealistic Expectations:

Another contributing factor to the failure of startup in Pakistan is unrealistic investor expectations and fake forecasts. Investors often have high expectations and expect rapid returns on their investments. However, startups cannot simply manipulate numbers on an Excel sheet to meet these expectations. Real-life business operations are complex and require thorough planning and execution.

Impatience:

Impatience is another factor that can hinder startup growth. Founders sometimes become too eager for rapid expansion and growth, expecting instant success. However, building a successful business takes time, dedication, and perseverance.

Mismanagement:

A lack of planning and improper capital allocation can also lead to the failure of startups. Inexperienced entrepreneurs start running a new company without adequate planning, resulting in funds mismanagement and inefficient resource allocation.

Legal Barriers:

Many legal challenges arise in a company’s journey, right from branding issues to when a company starts expanding into new markets. Some of these legal challenges can be so serious that they can put an immature end to the company.

Intense competition:

For new startups, a major challenge is competing with established a business that have already captured the market and successfully meet customer needs. Securing a place in such a competitive environment is challenging. Established competitors might be large and capable of eliminating you from the market with their financial resources and scale.

Customer Trust and Adaptation:

Building trust with customers can be difficult for new businesses, especially in sectors where established brands dominate. New businesses should spend heavy investment in their marketing and branding to attract customers.

Due to mismanagement of funds and lack of financial planning results in running out of money before achieving the desired goal. Entering the market at wrong time and failing to respond to competition can also lead to failure of startup. If startup wants to stick in a market and doesn’t want to fail and leave the market quickly, it needs to constantly plan, execute, track the results, and learn from its mistakes. Plan well, don’t be short-sighted, and be flexible to ever-changing market dynamics.