According to Union Minister Piyush Goyal, there are approximately 75,000 startups in India, and the startup ecosystem in that country has so far generated 7.46 lakh jobs. “These figures demonstrate the strength of a vision. A vision of innovation and business driving growth, “Goyal posted in a tweet.

Although the data paint a positive picture, the actual situation appears to be different. Indian startups are suffering. Start-ups can fail for a variety of reasons. Why are startups failing in India, and how can business owners prevent it?

Sahil Arya, Co-Founder, and Director at Fat Tiger claims that founder errors are the main reason why startups fail (s). It frequently serves as the only criterion for rejecting a sound business idea. “In actuality, more so than the inherent allure of a business concept, I will always place my bets on the competent founder” (s). An idea can succeed if its founders are tenacious, steadfast, and possess a strong understanding of its industry. Even if the concept is not great, a capable founder will put forth the necessary amount of effort and steer the company in the right direction.

To achieve overall business growth, he or she can assemble the ideal team, choose the appropriate location, and work in symmetry and synchronicity. Additionally, I think that the right time and place are equally crucial in enabling your start-up to develop in the right way, he added.

According to Delphin Varghese, Co-Founder and Chief Business Officer of Adcounty India, recent studies show that the majority of startups fail at a rate of 90%. This is primarily the result of an inability to predict the market accurately and a lack of readiness to handle changing market conditions, such as the Covid-19 pandemic.

In addition, business failure results from the inability to create a profitable growth model where the cost of acquiring a customer is less than their lifetime value. Additionally, inadequate cash flows brought on by investors pulling out or poor product pricing frequently cause startups to fail. Finally, poor management abilities, shoddy hiring procedures, and flawed marketing all contribute to startups failing.

To avoid them, you must conduct in-depth market research and carefully plan your business venture to make sure that your product or service is one that consumers will need and pay for. “A capital-efficient business must have an effective sales and marketing strategy. It is necessary to take action to ensure a smooth cash flow while waiting for a repeatable and scalable sales motion to be established in order to deal with depleting cash reserves. Businesses may be able to survive until they start to turn a profit by increasing funding, making cost reductions, and in some cases, using personal funds. Finally, business owners need to understand how enlisting the right talent and developing sophisticated marketing plans contribute to business expansion, according to Delphin Varghese.

For a sustainable future, startups must carefully examine their financial situation.

Start-ups fail for a variety of reasons, according to Raghunandan Saraf, CEO, and founder of Saraf Furniture, including poor market demand and a lack of the necessary skill sets. Nevertheless, poor cash flow management is something that is frequently disregarded. It has frequently been noted that entrepreneurs have a passion for technology and innovation. They devote a lot of time to the product, but they lack strong financial judgment. This may lead to issues with cash flow like low margins, a lack of unit economics, higher operating costs, cash burn, etc. Long-term, this is not a very positive sign because it will affect the performance of the company as a whole.

A start-up can fail for a number of reasons, according to Ridhima Kansal, Director at Rosemoor, including a lack of prior market research, an inability to execute, the use of inappropriate marketing channels, and the hiring of an ineffective team.

She continued by saying there is no absolute way to prevent failures. However, one can take a few practical and wise actions, like assembling the best team, conducting in-depth research prior to the product’s release, and collaborating to carry out tasks more quickly. Similar to this, one should always have a backup plan in place in case of market uncertainty arises.

Aachho founder Rimjhim Hada believes that one of the main causes of so many startups failing and subsequently laying off workers is that they overestimated growth and went on a hiring binge with high investment pumping their businesses.

After the US and China, India was ranked as having the third-largest startup ecosystem in the world in the Economic Survey 2021–22, which was published in January 2022.