5 REASONS WHY OVER 90% OF SAAS STARTUPS FAIL

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5 REASONS WHY OVER 90% OF SAAS STARTUPS FAIL

We carefully analyzed over 220 SAAS startups in the past five years and the result wasn’t good. Over 90% of these companies failed in the first four years.

5 REASONS WHY OVER 90% OF SAAS STARTUPS FAIL
A chart showing the results obtained from the detailed analysis of the causes of failures for SAAS startups.

This article quickly explores the 5 most important causes of these failures and the mistakes we found to be common among them.

LIST OF CONTENT:

·         What is SAAS?

·         Lack of initial market survey

·         Lack of proper business plan

·         Lack of funding

·         Lack of technical expertise

·         The sleep-start syndrome

·         Conclusion

WHAT IS SAAS?

SAAS stands for Software as a Service. It is a web-hosted application that offers a specific service online in exchange for subscriptions.

SAAS companies often create, maintain, and update web apps and offer subscription-based access to generate revenue and profit.

Some good examples of SAAS are:

·         Zoom

·         Netflix

·         Gmail

·         Outlook

·         Google workspace

Five reasons why most startups fail will be briefly analyzed in the subsequent sub-topics.

LACK OF INITIAL MARKET SURVEY

You do not need to create what people do not want. This is where the initial market survey comes in, it clearly shows if your product has a valid problem to solve. 

Most of the failed startups created what people do not need.

LACK OF PROPER BUSINESS PLAN

It is often said that Proper Planning Prevents Poor Performance. Poor business models were found to be a major cause of failure. 

The business plans were found to be poorly detailed, and unprofessional.

A good business plan should be realistic about what to give to an existing market, and what to gain in return. These were found to be lacking among some of the failed companies.

LACK OF FUNDING

Low funding and low initial capital were found to have hampered the success of many of the startups we analyzed. 

The thing is, you will need funding to launch a robust advertisement and initial awareness campaign.

In the absence of adequate funding, a SAAS company would struggle to assume profitability.

LACK OF TECHNICAL EXPERTISE

Lack of technical expertise and professionalism especially on the part of the leaders was found to have dwarfed growth. Experts, who could keep up with the high level of competition in the industry, were lacking.

You will need to create the impression of expertise and reliability for the sake of proper branding; when starting up a SAAS company.

THE SLEEP-START SYNDROME

The sleep-start syndrome is a term we coined to describe the initial challenges almost every business faces at startup. Most SAAS startups tend to require an extraordinary level of patience, vision, consistency, and hard work.

The business growth at the starting point may tend to be sleepy, you will need to be consistent and patient to overcome this common initial challenge. Most successful businesses we analyzed faced and overcame their sleep-start syndrome.

CONCLUSION

In your attempt to start a SAAS company, you must ensure you satisfy the following checklist:

·         Is there a robust market for your product?

·         Do you have a feasible comprehensive business plan?

·         Do you have the required funding?

·         Do you have the required technical expertise?

·         Do you have the ability to mitigate the sleep-start syndrome?

Good satisfaction with the above checklist will put your startup on the path to proven success.

At quiztablet.com we do everything possible to ensure we satisfy the checklist above.

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