India is having the world's 3rd largest startup ecosystem. Despite being one of the fastest growing economies of the world, 90% of the startups become unsuccessful within the first five years of existence. They have received a lot of attention in recent years because of objectives like "Make in India". India is becoming a capitalist country to strengthen the economy. What can be the reasons for the consistent decline of growth most of Indian startups? Let's analyze in this article.
What successful organizations have done
Every entrepreneur wishes to see his/her startup become a big thing. There are some basic elements that are present in big organizations that make them globally successful. Startups cannot set their benchmark like them initially but there are some basics that are necessary to be followed. These are a quality product/service, clear strategy, teamwork, leadership, problem-solving attitude, right people, balance, management, and persistence.
Name any business, however large, small, old, new, successful, or failed, these above-listed qualities are a must for every organization to follow. Keeping in my these things and having their meaning properly known, one must have an idea why his/her startup is not working fine.
Reasons for failure
Now we understood the basic requirements, let's understand why Indian startups are failing. Since 2016, even extended governmental schemes failed to improve Indian companies' business models. The main problem with Indian startups is a lack of creativity. Most of the companies are just replicas of Global foreign-based firms. Over 1000 companies were shut down between 2017 to 2021 just because of duplication and lack of business development.
Infrastructural issues, expansion, and bulk hiring creates a burden on firms to raise funds. In response to this, many startups fail to either plan investments or take help from investors. They either fire their valuable employees or compromise with the infrastructure which eventually hinders the growth of the startup.
The biggest problem with the Indian startup is its lack of management. Many small companies have horrible work ethics. In some companies, you might find people either missing for important posts or working for posts they are not qualified/experienced enough. You might see a team working without any plan, leader, or target. This is the case with small startups as well as MSMEs (Micro Small and Medium Enterprises). They always lack quality and services and hence lose customers.

The poor hiring decisions also affect the company a lot. Though India has the most number of job seekers still it lacks the competency and talent. Companies have to invest a lot in training the new employees. Many startups, either take bad hiring decisions or ignore the importance of proper training. In addition, newcomers in the market prefer MNCs because of the exposure and job security, while in most startups, work ethics affects employees efforts and hence dedicated employees find themselves vulnerable.
How can Startups overcome failure?
Though there is a lot to learn in startups than in MNCs. But things have changed a lot in the last six years. The digital revolution and the COVID-19 pandemic have created a new normal. The IT startups have done a great job. India has generated a lot of revenue from IT firms. But IT sector alone cannot boost the confidence of Indian startups. The solution for the problem is as follows:
- Give priority to management. Thorough knowledge of the field is a must.
- Market research should be done more frequently to get products or services a fit for the market.
- An employee is not a machine, don't let them think they are not secure. Retain the best team members.
- Never ignore customer feedback. Keep improving with acceptance.
- Take sensible risks; engage with a good business development consultant.
Conclusion
The government taxation system has also affected the businesses in India a lot. Foreign companies come to India for cheap labor, but the Indian companies have different strategies altogether. It is sometimes hard to keep balance among everything but not impossible. With more startups, our country can overcome the burden of unemployment. It requires constant change and efforts to convert this dream into reality. The capitalist mindset should be persistent in everyone to collectively contribute to the growth of the country's economy.




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