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Top Reasons Why B2B Startups Turn Turtle and How to Avoid Them

According to reports, a whopping eight out of ten startups fail in their first 18 months of establishment. It may come as a shock to every bullish entrepreneur that US Census Bureau’s Business Dynamic Statistics reveal that every year 470,000 businesses of the 480,000 that are set up shut shop. Bleak as these statistics look, they should not discourage entrepreneurs from setting up new businesses. Instead, they should take it as a reminder not to be overly optimistic when establishing their B2B venture or be casual in their approach. The difference between failure and success is often the ability to anticipate the pitfalls and being able to avoid them with smart strategies. A quick look at the top reasons of B2B startup failures and how to sidestep them:

No Unique Value Proposition

The most important reason for you to consider establishing a startup is that you believe that you can offer to your target audience something that is not yet available or in a way that is distinctly superior to the rest. This differentiation referred to by marketers as a unique value proposition is unarguably the most compelling reason for a startup to come into existence and endure as a successful business venture. You should ensure that it has all the features that are expected by customers but should not dilute the quality just because you are trying to offer everything under the sun. If the market so warrants, you may need to focus on doing a few things in a visibly better way. It is, however, coming to a decision about what to offer that most startups come to a cropper. Remember it is what differentiates you from the rest is what makes you successful but determining it may take years of experimentation and making changes to the product features, the target audience, or the style of marketing. However, till such a fit is achieved, you have got to survive; typically most businesses don’t have that sustaining ability and fold up.

Unfortunately, there is no surefire way of identifying your unique value proposition. The typical method comprises identifying real customer needs that are not being addressed and then trying to develop effective solutions to fulfill that need. Market research, including a thorough scan of the competitive environment along with interaction with potential customers, is the best way of finding out what customers will be willing to buy your product for. To cater to that identified market need, you may need to modify your product, the way it is delivered, the marketing and promotion, or even the profile of the customers to whom you market. You will need to display a great deal of flexibility since you will be learning on your feet.

Inadequate Funding

Among the many things that can power your startup to success, perhaps the most important is money to sustain operations. For B2B companies, adequate funding is even more important because the sales cycle tends to be quite long on top of which, the credit is also for extended periods. Adequate cash reserves are a matter of vital necessity for B2B startups as it helps them to ride out long periods of low sales.

To avoid being cash-strapped you need to keep ready cash flow forecasts that will help to prepare for fund infusion either from personal savings, family and friends, loans or even investors. However, if you find that revenues are not being generated regularly and you are forced to find new funds simply to pay for the overheads and to service debt, you are heading for trouble. Try and tweak the business model as far as possible to generate an even cash flow and keep the credit period as short as possible.

Inadequate Market Size or Potential

While it is true that a truly revolutionary product will create a market for itself, very rarely new products launched by startups are that radical. Most startups that offer me-too products are destined to fail. According to studies, 44% of B2B startups fail simply because there was no market for their products or services even if the offerings were good. If there is no one to buy your product, it really does not matter how good or innovative it is.

The only way to ensure that there is a potential market for your idea is to conduct extensive market research that will establish that there are enough people who will be willing to consider purchasing your product. You can engage in market research either on your own or hire a professional agency. If you are doing it by yourself, you should study the products that are already in the market and find out their strengths and weaknesses. Also, you should study the companies behind the existing products and see what sort of market coverage and penetration they have achieved as well as their marketing, distribution, and advertising strategies. There are quite a few market research tools that are available that can make your task easier. You should also try to identify the profile of the target audience because in most cases, these are the very same people you will want to sell to. Typical ways of customer data acquisition include online surveys as well as focus group studies. To ensure that your results are accurate, you should filter your respondents so that they correspond to your target audience profile. Since the task of collecting data can be tiresome and costly, you may consider purchasing the data from professional agencies.

If you are not comfortable with analyzing data, it is better to hire a professional market research agency to provide you with a meaningful analysis of the market scenario, opportunities, as well as threats. It can be a relatively costly affair but may well be worth it to get better quality results that will prevent you from wasting time and money chasing incorrect audiences.


While startups can fail due to a variety of reasons, some of the most common ones have been discussed above. It is very important to be completely committed to every aspect of your business and make corrections whenever deviations are spotted.

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