08/11/2014 11:47 am ET Updated Dec 06, 2017

5 Major Warning Signs Your Startup Could Fail And What to Do About Them


Startups fail painfully often, but if you take note of the warning signs early on and react accordingly, you can prevent disaster.

Building a startup is a major risk, even if it seems like all your numbers and ideas are in perfect order. The vast majority of startups eventually fail, but sharp-eyed entrepreneurs can decrease the chances of succumbing to failure by understanding the warning signs of a collapse and taking action immediately.

Every startup faces problems from day one, ranging from simple annoyances to compromised long-term plans, but it's not the existence of these problems that causes startups to fail--it's the reaction, or lack of a reaction, to them that causes the downward spiral.

Consider these five warning signs that your startup could fail, and take action if you see any of them in your business:

1. Customer interest is diminishing. Customer interest is going to vary, much like stock prices, but the overall trend should be steady or improving. If you notice a consistent wane in customer interest over a period of several months, it's time to add a new product or service, or change what you currently offer.

2. Your top employees are expressing doubts. You should have a team that understands the volatility associated with startups, and is willing to weather the storm. But if those same team members are starting to have major concerns, it's time to take notice.

3. Bills are accumulating. It's going to be tough to cover all your bills no matter what in the early stages of your startup, but if you notice bills starting to pile up, it could be a sign that your revenue isn't strong enough to support you. Take a close look at your expenditures and cut what you can.

4. Your employees are overworked or underworked. Do you notice people sitting around, doing nothing? There could be a lack of demand for their job. On the other hand, does everyone seem overworked and stressed? It could be a sign of a lack of team efficiency.

5. You can't hit any of your goals. While it's reasonable to assume some of your goals will be too challenging to hit, if you consistently fail to hit any of them, it's a sign you need to readjust your business plan.

Don't panic at the first sign of trouble. It's natural for startups to encounter hiccups and strained plans. Simply stay flexible and make adjustments to avoid disaster.

Jose Vasquez is a serial entrepreneur and tech enthusiast dedicated to helping startup technology companies get the direction and momentum they need to succeed. As the founder of Build. Brand. Blast., Jose has established a collective resource for tech entrepreneurs to consult when brainstorming, creating, launching, or expanding a new business. Jose is also the founder and CEO of Quez Media Marketing, a marketing firm that combines technology and creativity to help new and growing companies get the results they need.