5 Reasons Why Startups Fail In Creating Brand Recognition


In this era of hot IPOs and unicorns, people often get carried away by the stories of startup successes. However, outnumbering these success stories are the number of startup failures. Not everyone knows how to get noticed and gain brand recognition. There are a ton of reasons why these fail ranging from lack of passion to burnout to failure to innovate. 

Every company has a different failure story. Just like no two success stories are same, no two failure stories are same too. However, these reasons all just boil down to these key failure themes, each of which should be kept in mind when planning your venture. 

Let us explore the 5 key reasons of why startups fail in creating brand recognition.

Reason #1. No Market Need

This is one of the top reasons for the failure of most of the startup brands. One of the key points of establishing a brand in the market is to think it about from the consumer’s perspective. Is your product compelling enough to be set apart from its competitors in the market? Is it a must-have or a nice-to-have product? Is the market ready for your product?

Instead of tackling an interesting problem, your product should aim to solve an essential one. In fact, the best success stories are the one that address the most common pain points. If your product fails to capture the interest of your customers and makes no effort to simplify their lives, then it is sure to fail in the longer run.

Also Read: Top Benefits of Brand Building for Startups

Reason #2. Poor Company culture

Another top reason for the failure of most of the startups is the lack of a smart, adaptable business model. The company may gain a quick boost during the launch depending on an interesting website or innovative product but may fail to retain the same during the later period. In order to overcome the same, you need to develop a more nuanced approach to market and sell your product. 

Scaring off the investors by staying committed to a single marketing channel or failure to innovate when sales drop is one of the major reasons for the failure of most of the startups.

Reason #3. Poor Product Pricing

Deciding the right product price is a complicated process that requires a lot of thought and research on part of the startup. The right price is the one which is low enough to attract the customers but high enough to at least cover the company costs. Figuring out the right balance between the two is what makes for the recipe for a successful startup. 

Conduct a thorough competitor research and an in- depth analysis of the incurred costs in manufacturing of that service or product to ensure long term success.

Also Read: Essentials of Start-up Branding to Beat Competition

Reason #4. Incompetent Company Personnel

Building a successful startup requires a lot of passion and effort from the founders and company personnel. However, not every firm has what it takes to gain success. Many a companies have failed to create a brand niche for themselves due to a weak management team. After all, a company has to operate on both the levels- the long run and day to day minutiae. 

The founders of any successful startup have to surround themselves with people who can do what they can’t do. They should not be yes people but self starters and willing to do the grunt work. One of the best ways to avoid having your personnel bring your company down is by identifying the weaknesses of your team and hiring people who can best rectify them. 

Reason #5. Out- Competed

Sometimes, the market is saturated enough with competition making it difficult to find a unique niche.  Many a times, the failure of the startups is dictated not by their own weaknesses but by the strengths of their competitors. 

In order to curb this failure block, the company needs to devise a comprehensive and well executed marketing strategy to raise brand awareness and digital presence of the firm. Get to know your target audience better and understand how to convert them into your loyal customers.

An important part of standing out is developing a strong and recognizable brand identity that resonates with your audience and differentiates you from the competition.


In the end, starting a business is tough, and sometimes it doesn’t work out. But it’s okay! By learning about why startups fail, we can avoid making the same mistakes. We need to listen to what customers want, make sure everyone in the company gets along, price our products right, hire good people, and market our brand well. 

If we do these things, we can have a better chance of success. So, let’s remember these lessons and keep trying our best!

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