Why 90% Of Tech Startups Fail and How an App Development Partner Can Make a Difference

A startup is often associated with adventure, because it has a lot of risks. But while startups may have different backgrounds/budgets/ideas and goals, there are certain mistakes that most of them have.

In this article, we will look at the main ones and give some recommendations on how to avoid them.

90% Of Startups Fail: Stats

A startup is a young fast-growing company based on an innovative business idea and technology. According to statistics, about 90% of startups fail. This is not influenced by industry or country, it is about the very model of the company.

At the same time, it is important to understand that 10% of the total number of startups do not survive their first year. But the period from the second to the fifth year of a startup’s existence is considered the most difficult, here 70% of startups fail.

There are a few more figures regarding the activities of startups:

• only 2 out of 5 startups turn out to be profitable;
• startups from the mining industry are considered among the longest-lived — 51.3%;
• only 1% of startups are destined to become unicorns;
• 1 in 3 startups start with less than $5,000 in capital.

6 Reasons For Startups' Failure

So, among the most common reasons for startup development outsourcing failing, the following are distinguished.

Lack of money

There can be various reasons for this, ranging from a lack of cash flow to poor management. There may also be a problem of attracting funding.

Misunderstanding the market

Many startups fail because they don't understand their true market and customer. The more narrowly defined the niche and target audience is, the easier it will be to define goals and build digital products successfully.

Lack of business research

You can't count on success without doing business research. By understanding the needs of the audience and having studied all the representatives of the niche, you can choose your specific place in this chain.

Bad partnership

If a startup is based on partnership, it is important to understand that your vision and goals are aligned. Any discrepancy leads to violations of all processes and reduces the chances of success.

Bad Marketing

Marketing is as important a component of a business as its financial component. The marketing strategy must be carefully thought out and take into account not only the current situation, but also prospects and force majeure.

Lack of expertise

Often owning a business is an alternative to working. At the same time, a person may not have managerial experience or expertise in this area. But the lack of business skills and understanding of the field can negatively affect a young business and relationships with software development companies.

Read also: Fundraising for Tech Startup: 6 Proven Ways To Raise Funds for App Development

The Best Ways When The Right Development Partner Helps

By hiring an outsourcing company, you can cover all your development needs, spending less money, and make fewer mistakes. How to choose a suitable partner among a wide variety of companies?

Consider the main aspects that help determine the technology partner correctly.

1. Determining the needs of the project

No one but you can and will know your project better than you. Define the goals and metrics you want to achieve. This will help you understand if the developer company is able to help you achieve them. At this stage, you should determine your budgets and stop lists for your quality software solutions.

2. Define the final picture of the project

Starting to cooperate with outsourcing, you must understand how you see your final product. Knowing the absolute requirements of the project, you must be aware of their reality and have a visualization, such as a presentation, to represent the company with which you are thinking of collaborating.

3. Understand Duration Timing

You can use your own expertise or contact the developer company for an estimate. This will determine the potential workload on the development team, help guide the overall development process and optimize product usability.

4. Set a budget

It's not enough to just have an idea of ​​how you see your software development projects. It is also important to understand how much you are willing to spend on its implementation. Start with an MVP or prototype and then move on to full development. But do not put the budget at the head of everything, because in addition to the price there should be quality.

5. Determine the type of outsourcing

This is the very stage when you need to understand how you will build communication with the outsource development team for custom software development. For example, it might be a popular choice to go with an offshore development team or outstaff. In any case, you should get to know the team and discuss every detail of your further interaction. 

6. Geographic location

In addition to time zones, the cultural component and even the language barrier also matter. Although most companies today have a requirement for specialists in terms of knowledge of a foreign language, so you can easily hire Ukrainian developers.

7. Benchmark

It is always better to choose from several options, communicate with companies and evaluate their portfolio and level of professionalism.

Read also: How to Hire Top Mobile App Developers for Your Team: Tips, Costs & More

How TopDevs Can Become Your Best Partner

TopDevs has extensive experience in native mobile apps and web development for business. We are experienced in such industries as: Media & Entertainment, Sports & Fitness, Logistics & Tracking, Healthcare, Retail & E-Commerce, Education & E-Learning, Real Estate, Dating, and Fintech. Что касается стран, то we have the largest number of clients from the following countries: USA, Australia, Sweden, Switzerland, Finland, Denmark, Norway, Austria, Australia, Israel, and New Zealand.

Software development outsourcing is always considered the best solution for a startup. The best ratio of price and quality with quality implementation is what we are ready to offer our customers.

We help startups to stand up strong with:

• Prototyping (demo of the look of your app/website)
• MVP development (demo of the functionality of the basic version of the product)
• Full-Cycle Product Development (providing development from the scratch)
• Post-Launch Support (improvement and bug fixes after release)

Wrapping Up

Starting a business is always associated with risks that should be taken into account. As a startup owner, you must understand all the risks and understand goals and objectives. Never skip the research stage, because it depends on it whether you find your place in the market.

From our experience of working with startups, we have noticed how often business owners do not understand what they want to get from their venture and do not always believe in it themselves. Therefore, we are always ready to talk with customers and help them achieve their goals. We are ready to discuss any of your ideas and realize it, transforming a dream into a business!