Software product startup failures – How to avoid them?

software product startup failures-How to avoid


Many software product firms fail to make a profit on their investors’, founders’, and workers’ investments. Commercial, advertising, and delivery implementation errors are well-known, but product development mistakes are less visible. The important product development difficulties that can contribute to company failure are examined in this study.

A three-phase approach for the progress of product development from startup to adolescence is offered, with startup, stabilization, and growth being the three phases. The symptoms that may arise at each phase are explained, as well as the fundamental causes.

This allows stakeholders to compare and contrast their own design firms in order to avoid product-related collapse. The article will be of interest to investors, administrators, and product development managers who are backing innovative product firms.

Entrepreneurs and financiers are interested in software product companies. Because most software industries are global in nature and controlled by only a few technologies, there are tremendous long-term profitability and market prospects for a company that brings the proper offering to market.

Despite possessing a conceptually strong premise, most product firms fail before they reach their market potential. Sales, advertising, and operational execution failures are frequently to blame. Product development failures are also commonly to blame, although they can be difficult to diagnose for those who aren’t familiar with the process.

An example of startup failure

It’s a good idea to evaluate thoroughly before starting a business. The failure percentage of organizations is extremely large. However, such a large proportion can be seen positively. It implies that there is a lot to be learned from other person’s errors. It’s normal for a new business entrepreneur to commit errors.

Layer Inc. received $44 million in total investment. The goal of the company was to create an open cloud service for the communications industry. The objective was to construct a dynamic, extendable service network using VoIP (Voice over Internet Protocol). The concept and technology underlying it was both strong and had a huge amount of potential.

Layer ceased operations and went out of business in October 2019 despite its brilliant idea and solid finance. In the 2010s, the communication sector was extremely competitive, and Layer Inc. was unable to compete with its competitors. The finished version of the product was not as dependable as expected, and it did not stand up to the competition.

Reasons for failure of startups

Here’s a comprehensive overview from CBInsights, defining the major reasons why most software startups fail eventually, or at the start of tenure itself.

Developing a startup product from the bottom up is a lengthy and difficult process. You must produce a profitable software product, come up with an original and interesting idea, and effectively market it to people or other businesses. There are numerous hazards and typical challenges that your unique startup will almost certainly encounter during this phase.

  • Lack of a well-defined strategy

Many startups squander time and money by attempting to finish too much too soon. This inhibits the startup’s growth dynamics and stops them from achieving milestones and delivering something substantial on time and within budget. 

This becomes a bigger issue when startups get money and plan to expand functionality or invest in infrastructure that doesn’t align with their software development strategy. 

  • Not enough time and money is spent on market analysis and customer development

Many businesses make the mistake of believing they have a solution to an issue they feel exists without conducting sufficient consumer research to acquire objective data. As a consequence, many innovators believe their successful transformation has a market and user foundation.

The collecting of low-quality, prejudiced market research, which gives the misleading impression that people are interested in the product, worsens the situation.

The ultimate benefit of marketing research is frequently found in learning new perspectives that you hadn’t considered previously, or in realizing that you didn’t know what you didn’t know. It is frequently the motivating force behind businesses attempting to bring their wildest ideas to reality.

  • Validation failures due to a lack of validation or insufficient validations

One of the utmost critical qualities to have before starting up a business is the assurance, or at least a good proportion of certainty, that the market you’re going to pursue is the right one.  These can be:

  1. If your software adds value.
  2. How does it diverge from other possibilities?
  3. If it overcomes a problem.
  4. If customers are inclined to use and compensate for it.
  5. If it has possibilities or assumptions for economic prospects.
  6. If it is successful in the market.
  7. If your concept is reasonable.
  8. If it is feasible.
  9. Other statistics are required to improve the proposal or dismiss it entirely and consider a better product.
  • Legal consequences resulting in startup shutdowns

This is a vital point. Since we are businessmen, we search for a team of professionals in a variety of fields, such as finance, engineering, advertising, programmers, and so on. However, it is possible that the matter of law is not given the recognition it needs, and this is just another reason for a startup’s failure.

Each nation has its own set of regulations that apply to new businesses and startups, and understanding these rules is critical if you want to get your company off to a good start.

Breaking any of them, or failing to meet a commitment you have as an entrepreneur, can result in major personal troubles and have a negative impact on your business’s operations. In the best-case scenario, it could result in a fine or consequence that you could avoid by paying attention to these facts.

  • When it comes to product marketing, ignoring UX/UI design is a mistake.

Rather than spending time researching the product design, many businesses hurry to establish a technical solution. Until a product is built, a product design is a model for how it will look and perform. This causes issues since developers must now adjust the product design to an existing working brand instead of creating an effective result based on a design plan.

Furthermore, many designers fail to express the relevance of the overall design of individual design aspects to coders. As a result, programmers eliminate seemingly trivial aspects because they are unaware of their relevance.

  • Not possessing a suitable team or having a one-man team

If you’re beginning a business and don’t yet have a full staff, it’s a good idea to start looking for one. We are not implying that you lack the necessary traits, expertise, ability, or competence to begin and complete the task – rather, we are stating that it is a complicated task that cannot be completed by a single person.

And you’d end up failing as a result of this. So, attempt to put together a staff that isn’t the most qualified on the market, but is dedicated to your project. Everyone is required.

We should also highlight the next scene that will cause your startup to fail. It has to do with the wrong kind of individuals being chosen for the squad. Problematic people, people who aren’t driven by your project or aren’t well-prepared, or even a team that isn’t engaged or has poor management are all possibilities.

  • Using the incorrect technical stack for your software

Many startups utilize cutting-edge technologies in their development. They don’t worry about the future much, preferring to focus on bright new (and experimental) technologies. Using experimental technology, on the other hand, may need a bigger expenditure and may result in delays in meeting milestones.

To use the technology they haven’t used previously, developers will take much longer and demand more money. It also raises risk because creating a high-quality product is more challenging when a business is using untested new technologies.

Another issue with picking the correct technology is that most firms start small and grow over time. On a modest scale, choosing a unique or novel technology is fine if a number of experienced developers can be obtained. Scalability is a crucial feature of the future.

  • Employing the incorrect developers or team

Most software engineers have a collection of technologies that they wish to employ. Methodologies, programming languages, prototyping tools, operating systems, deep learning and AI tools, and so on are examples of these techniques.

It’s also hazardous to hire an unskilled developer. Because they lack appropriate error control experience, inexperienced developers have limited understanding and are more prone to failure at solving complicated code difficulties. If you are looking to hire junior developers for regular, non-critical sublime work, make sure your team has a great senior programmer to mentor and assist them. Otherwise, you risk creating a flawed product that is prone to cyber-threats and incurring additional costs in the post-release stage.

Ideas to avoid startup failures

  • Develop a strategic timescale

To be successful, you must first solve one particular issue for your intended audience or a specific section of it before broadening your influence. If the feature fails to assist users or customers in solving their problems, you should reconsider your entire concept.

When soliciting money, a product development plan emphasizes the mission and vision of a company’s current product. This roadmap outlines the organization’s objectives and illustrates how your company can benefit people through a well-defined conceptual design.

  • Provide assurance to customers on Market research

It is vital to perform research at the start of the project before any development begins in order to thoroughly grasp the market and your target users. This research will be used at all stages of development, from concept to completion. New research is also required to keep up with any developments in the market and among your users.

Evolution assists entrepreneurs with market research so that they may identify the underlying problem, analyze user demands, and determine the potential interest for a product and its attributes.

  • Conduct suitable tests after planning

The idea is independently verified, as are your corporate assumptions – technical validations of the software, industrial validations of the marketing strategy, the market, and even after attempting to launch a minimum viable product (MVP), or a broader rendition of the software, it is important to confirm with consumers and, if necessary, enhance product advancements.

That is our strongest suggestion. Always test what you’re planning to do or modify about your product to make sure it’ll be well accepted, sustainable, and in accordance with the industry and your objectives.

  • Be prompt on legal advice and judicial laws

Contact a lawyer and seek legal advice on how to proceed. If at all feasible, add it to your organization and assign it the responsibility of overseeing the legality of your firm, your activities, and, if necessary, supplementing it with an accountant to ensure that your payments are in order.

Furthermore, learn a little about your nation’s sovereignty so that you can keep an eye on things and, even if you have professionals on your side, you can justify yourself in court. It is a topic that every businessman should be familiar with.

  • Don’t waste time. Get into your product design!

Startups should engage in product design as quickly as possible in the development cycle. This guarantees that the startup doesn’t lose out on the opportunity to build a product that satisfies users by adding value to their lives. Through word of mouth and favorable comments, satisfied users translate into higher revenue.

  • Collaboration is crucial!

To maximize the likelihood of succeeding, developers and designers must collaborate during the design process. This guarantees that both groups are on the same level and can evaluate each design choice promptly, ensuring that the clients receive the best design and functional features possible.

  • Be a potent leader

First and foremost, be a strong leader and an effective manager, inspire your employees, and establish a team that isn’t necessarily the most gifted in the world, but at the very minimum the most complete. Try to discover individuals with a variety of abilities so that they may get to know one another better.

Search for applicants, do research, conduct interviews, make phone calls, talk to friends, check past colleagues, go to employment agencies, attend events, etc.  Starting a business with a one-person workforce is not a good idea.

  • Seek advice from market experts

Because new entrepreneurs may lack the technological expertise to choose the best technology on their own, they must seek advice from the market and industry specialists.

In the long run, employing hourly technology consultants to assist with these crucial concerns can save your firm a lot of money. Paying a high hourly rate to answer some crucial questions early in the development cycle is sometimes necessary.

The simplest approach to prevent these typical software development issues is to hire developers with startup-level expertise. These professionals, as opposed to those who are used to dealing with large companies and large funds, know which technologies are ideal for small tasks.

These programmers are also less likely to charge you excessive rates like those found in major corporations. It’s also crucial that they are enthusiastic about entrepreneurship and are aware of the dangers.


Establishing a technology custody agreement is a smart concept for both software developers and software users. Yes, some businesses fail, but it should not disqualify a startup firm’s software package from evaluation by clients. Both the supplier and the consumer of software can benefit from proper precautions, such as guarantees that the program source code will always be available in the event of unanticipated situations.

For many startups, the effective development of new software applications is a crucial action on the basis. A company that can demonstrate that it has developed one or perhaps more successful solutions in the industry and has the ambition, a clear plan, and competence to generate more might expect a good commercial sale price. If other elements are in place, an offering may be possible.

If you’re a startup looking for the right consulting to help you build your own successful software project, check out Metricoid. Metricoid is a foremost digital solution and consulting company – an offshore software development company founded by individuals with over 12 years of professional experience who have built a strong and dedicated team of specialists who can respond to all of your demands right away at even the most affordable prices. Above all, it is a startup-friendly organization. As noted in the article, the primary phases of software development demand close monitoring and guidance to guarantee that everything falls into place properly. With the help of Metricoid guidance, you can be completely happy from start to finish, and leave the technical and challenging aspects of your product development to the specialists. Protection Status