Introduction
The startup world is a fascinating arena of innovation and entrepreneurship, but it’s also a place where most young companies don’t survive their first two years of operation. Research shows that up to 90% of startups end in failure, and the causes are diverse yet often preventable.
To better understand the most common threats facing young companies, we conducted a survey among 36 startup leaders, asking them to identify up to three main causes that could lead to their venture’s downfall. The results of this survey, combined with the capabilities offered by the Byzzpath framework, reveal a clear path to building more resilient and successful startups.
Research Methodology
The survey was conducted during Q4 2024 among a group of 50 startup leaders – founders, co-founders, and management team members from young technology companies. Respondents were selected from entrepreneurial communities operating across various sectors, from fintech to e-commerce, representing different stages of business development – from early-stage startups to post-Series B companies.
Survey Structure:
- Each respondent could cast up to 3 votes
- The list contained 10 predefined threat categories
- An “other” option was included for custom responses
- The survey was anonymous, allowing for honest feedback
Complete Survey Results
Below are the complete survey results from 36 startup leaders across various industries, representing both successful companies and those from the global startup ecosystem.
| Cause of Failure | Percentage | Problem Description |
|---|---|---|
| Financial Resources | 26.9% | Running out of funds (e.g., high costs) |
| Customer Acquisition | 19.4% | Marketing / Sales challenges |
| Market Demand | 13.9% | Lack of need or excessive competition |
| Human Resources | 10.2% | Lack of specialists / Low motivation / Conflicts |
| Regulatory Constraints | 9.3% | Regulatory requirements, complex/costly formal requirements |
| Product Stability | 8.3% | Product bugs and technical issues |
| Priority Alignment | 4.6% | Constant priority changes, creating new products |
| Other | 4.6% | [Various other causes] |
| Unfair Competition | 2.8% | E.g., poaching employees |
| Management | 0% | Poor management |
Survey response: 36 startup leaders with multiple votes allowed per respondent.
Key Survey Observations
Financial Problems Dominate
Nearly 27% of all votes concerned financial issues, confirming that cash flow is the biggest challenge for startups. This result aligns with global research indicating that approximately 38% of startups fail due to financial exhaustion. High operational costs, difficulties in securing subsequent funding rounds, and poor budget planning are the most common manifestations of this problem.
Marketing and Sales as Second Priority
Almost 20% of votes show that even a good product without the right go-to-market strategy is doomed to failure. This result reflects one of the key challenges facing modern startups: in today’s saturated market, creating a good product is no longer enough – you must know how to sell it effectively.
The Product-Market Fit Problem
14% of votes for lack of market demand demonstrates the importance of proper business idea validation. This is a classic mistake made by many founders who fall in love with their product without checking whether it actually solves a real customer problem.
The Human Factor
10% of votes for human resource problems confirms that people are the foundation of every organization. Interestingly, none of the respondents indicated management-related problems as a main threat, despite this category being included in the results table.
Detailed Analysis of Main Startup Threats
1. Financial Problems (26.9%)
Representing over a quarter of all responses, financial problems proved to be the most important threat according to surveyed leaders. High operational costs, cash flow problems, and difficulties in securing subsequent funding rounds are the main problem areas.
The Need to Build and Maintain a Business-Financial Model
Every entrepreneur starts with a grand vision. A revolutionary product, a service that will change the world, technology of the future. However, between vision and success lies one fundamental element: money. No matter how brilliant your idea is, if you can’t translate it into numbers that show how it will generate profits, you’re missing a crucial piece of the puzzle.
The Business-Financial Model is precisely that missing element. It’s a tool that transforms your dreams into a concrete, measurable action plan. Note that the Business-Financial Model is not a tool for financiers – it’s a tool for leaders to understand what’s necessary to achieve success within 3-5 years.
How Byzzpath Framework Addresses This Problem:
The Byzzpath Framework offers a comprehensive approach to managing company strategy from a financial perspective through:
- Business-Financial Model – systematic planning and forecasting of financial results
- Revenue and cost planning – goals the company must achieve, as well as business events that impact revenue and/or costs
- Funding rounds – structured process for acquiring capital from external investors
- Strategic approach to allocating resources for growth
2. Customer Acquisition – Critical Gap (19.4%)
Marketing and sales proved to be the second most important challenge, representing nearly one-fifth of all responses. Many startups create excellent products that never find their way to customers. This problem is multidimensional – entrepreneurs often focus exclusively on perfecting the product, forgetting the equally important aspect: systematically building sales channels and customer acquisition strategies.
Revenue Growth Fundamentals in the Digital Transformation Era
In the dynamic business world, revenue generation is a key element of every company’s operations and one of the most important aspects of its strategy. Whether dealing with B2B or B2C sales, every transaction requires a carefully planned and executed process.
Sales Process – Consistency as Key to Success
“Success is not what you do from time to time, but what you do consistently” – emphasizes Tony Robbins. Sales success is not accidental; it’s the result of a consistently applied and well-planned process.
Byzzpath Framework Solutions:
- Marketing and Revenue Growth Strategy – comprehensive customer acquisition and revenue growth strategy based on market analysis and systematic sales process
- Systematic implementation of sales processes using CRM tools
- Focus on building strong online presence and market communication channels
- Methodology for market assessment and identification of key customer needs
- Structural approach to building long-term customer relationships
3. Market Demand – Product-Market Fit Problem (13.9%)
Representing nearly 14% of all responses, problems with product-market fit constitute the third most important threat indicated by experienced leaders. This is a warning against one of the most costly mistakes in business – creating solutions that nobody needs, or entering markets dominated by strong competition without a clear competitive advantage.
Market success is not a matter of chance, but the result of systematic analysis and validation. Many young companies make the fundamental mistake of investing significant resources in product development without conducting sufficient market validation.
Byzzpath Approach:
The framework places great emphasis on early market validation through:
- Feedback from MVP – systematic collection of opinions about Minimum Viable Product from real users
- Business Model – Unique Value Proposition – clear definition of unique customer value based on confirmed market needs
- Iterative approach to product development based on real market needs and continuous offer optimization
4. Human Resources – Foundation of Success (10.2%)
Representing just over 10% of all responses, problems related to human resources rank fourth among the main threats indicated by experienced leaders. Lack of specialists, low team motivation, and internal conflicts are problems that can destroy even the best business idea.
Employee as Foundation, Not Resource
“Customers don’t come first. Employees come first. If you take care of your employees, they will take care of your customers” – this philosophy by Richard Branson aptly captures the paradigm shift in modern management.
Byzzpath Solutions:
- Team Building & Internal Communication – systematic building of team culture based on trust and cooperation
- Structural approach to human capital management with emphasis on potential development
- Focus on internal communication as a key element of management in the hybrid work era
- Strategic processes for recruitment, onboarding, and talent retention
- Building a work environment that supports both business goals and personal employee development
The Byzzpath Framework – Systematic Approach to Building Startups
The Byzzpath Framework is a comprehensive system of 108 steps divided into four main phases: Prototype (P), Startup (S), Advanced (A), and Beyond (B). Each phase addresses specific challenges and needs of a developing company.
Phase Prototype (P) – Idea Validation
- Illustration of the idea and clear problem definition
- Market and customer segment identification
- Creation of unique value proposition
- Risk exploration before full implementation
Phase Startup (S) – Building Foundations
- Legal entity creation and accounting setup
- Building first funding round
- Development of marketing strategy and revenue growth
- Creating basic online presence
Phase Advanced (A) – Scaling
- Professionalization of external communication
- Building data-driven organization
- Management through OKRs
- Subsequent funding rounds
Phase Beyond (B) – Expansion
- M&A strategies
- Additional product lines
- Advanced funding rounds
Practical Application of Byzzpath Framework
For Beginning Entrepreneurs: The framework provides a clear roadmap, showing what to do at successive stages of company development. Instead of guessing, entrepreneurs can focus on executing proven steps.
For Experienced Founders: Even experienced entrepreneurs can benefit from the framework as a checklist, ensuring they don’t skip important elements in building their company.
For Investors: The framework can serve as an evaluation tool, helping investors understand what stage of development a startup is at and what the next steps are.
Conclusions
Survey results clearly show that the most common causes of startup failure are problems that can be predicted and prevented. The Byzzpath Framework offers a systematic approach to each of the main challenges indicated by startup leaders.
The key to success is not avoiding all mistakes – that’s impossible. The key is a systematic approach to building a company that minimizes the most common risks and maximizes chances for success. The Byzzpath Framework offers exactly such an approach, transforming the chaotic process of building a startup into a structural path to success.
Recommendations
For startup founders, we recommend:
- Start with validation – don’t proceed to full implementation without confirming market demand
- Plan business strategically – create a business-financial model at an early stage
- Invest in your team – organizational culture and communication are the foundation of long-term success
- Use a systematic approach – a framework like Byzzpath can be the difference between success and failure
Building a startup is a marathon, not a sprint. The Byzzpath Framework provides a map for this marathon, helping entrepreneurs reach the finish line of success.