Promising campaigns, high budgeted introductory programs, enchanting outlooks typically depict the start up of a new company. The newspaper have nothing else to talk about than such startups for few days, however within a few months or an year in most of the cases, the newspapers are even more thrilled with the abrupt failures of such start ups. Statistics run vague and ever other research company has a figure to quote and a theory to state however there has been no straight reasoning behind such disastrous failure of new companies. However this article attempts to present a close analysis and the basic reasons behind failure of start- up companies, based upon extensive research on such failures and of course a study of the few popular theories.

Well the top one among the contenders in the list is the lack of planning at the core. This reason is further characteristic of smaller companies, which tend to move with the flow and are not clear about their own vision. As for the larger ones, lack of planning often implies over or under assumptions. They plan but are usually misguided or misled by the new situations, over optimism and lack of experience. The difference is that of between theory and practical. What seems right on paper falters in practical. The goals are either too deviated or have little in common with the resources.

The second in the list and indeed fallout of improper planning is the drained cash flow. Lack of substantial cash to manage dealings gives a chance to creditors to impose bankruptcy or insolvency. To avoid such adverse situations, it is best advised to have a reserve and make sure that the required funds for maintaining a comfortable cash flow are in place, even if that requires an extensive budgeting or thinning the entire structure.

Among others that follow, an important determinant is the company’s logistic and inventory planner vis-à-vis the marketing strategy. A hasty marketing strategy accompanied by over production can easily lead to a situation when your gods are lying idle in the ware houses and you of course have no idea of how to deal with them.

Over delegation or extremely centralized operations also fall in the lead among other reasons for failure. Many aspiring owners, have little clue as to when should they leave a particular decision for their managers to decide. It is important to sleep over few things and let the experts decide rather than being over involved at every step.

The absence of a devil’s advocate among the management team i.e. someone who has the sense and power to negate the wrong also acts as an important contributor of the failure. Many bosses are too weak to accept the fall-outs and therefore do not leave a spot for devil’s statement in the board which leaves little scope for success.

Businesses are difficult to start but are even more difficult to manage. The growth and eventual success largely depends upon your working style and the implied planning, which if paid due attention could help curb the ever increasing failure statistics.