A startup can go on for months without noticing some warning signs that indicate an impending failure. The start-up journey will be smooth until problems emerge one after the other. Founders will try to solve small problems in their start-up, which will lead to the start-up diverting their energy towards the problem rather than directing it towards their vision. Sometimes, problems don't come to light until and after a startup collapses. When there are warning signs, they are often ignored until it's too late. However, looking for these signs and making a conscious effort to address them will definitely help a startup move forward in a positive way.

Let's take a look at five warning signs for start-ups to avoid failure

1) Unable to define the needs of the users

A startup should always be aware of the needs of their customers and these needs keep changing from time to time. Clients are the key to a successful start-up more important than investors. It is very important to address customer complaints and listen to the feedback, even if some feedback may be very negative, it has to be followed up.

2) Failure to pivot

A startup can do great things and rise rapidly, but it will fail if it doesn't adapt to changing needs and technology. There is no guarantee that a successful business model or product will work forever. Many well-known start-ups have successfully pivoted over time. For example, Blockbuster, a video rental chain, was one of the largest companies in the United States of America before the advent of Netflix. The online streaming platform gave Blockbuster the opportunity to acquire them and adapt them to their model, but Blockbuster declined and the rest is history.

3) Market forces are not taken into account

The market is a special place where the start-up can learn a lot about pricing, demand, supply, sales, management, etc. Even if things go smoothly for the time being, start-ups should have contingency plans for situations that may occur in the future. Preparations need to be done for at least a year to ensure smooth flow of activities. The recent COVID-19 pandemic is a prime example as most of the start-ups are completely blindsided. Although this situation can be called an act of God, some start-ups have set aside some funds to be used in such times. Another example is UberEats in India, which went ahead without considering the food delivery market ruled by Zomato and Swiggy as a saturated market. The business had to be sold to Zomato.

(4) Wrong products.

While a startup can come up with a game-changing idea, putting it on the market has to be a calculated one. Although the technology and the idea behind it are ahead of the times, there is a possibility that the product may not be widely accepted in the market. Famous examples of failures and success include Orkut, Facebook, Meru, Ola, Foodpanda, Zomato, BlackBerry Messenger, and WhatsApp, respectively.

5) The State of Money

Working capital management is the biggest focus of any startup as it directly affects the survival of a startup. One of the biggest reasons start-ups often fail is due to running out of capital, poor product fit, and failed pivots. Take the case of Hola Chef, for instance, a start-up that connects users with chefs who cook exotic food. Venture capitalists liked the idea of this startup, but investors backed out of Hola Chef due to the arrival of Zomato and Swiggy, which ultimately led to the startup being shut down and eventually acquired by Ola-backed Foodpanda.