Starting a UK company from scratch is quite a tough job and the results have proven that majority times the start-ups fail. Now the failure can depend upon number of reasons varying in each business, however, there are certain common patterns which we will be discussing below.

  1. Lack of Funds:

The most important element of starting a business is to be 100% loaded with funds or at least have a plan to obtain them on the way. Funds are required for the necessary infrastructure like equipment and plant and for daily operations. One cannot take the risk of starting a business with only 95% of necessary funds. Just like one cannot fly a plane without its 100% infrastructure. Start-ups with such poor funds planning are most likely to fail especially in UK’s competitive market.

  • Early Expansion:

Usually the new owners tend to become overconfident over their early successes that they plan to expand their factory, office, warehouse or some other redundant area. The expansion must be completely cost-effective and adequately financed. Also, a proper team should be hired and trained to match your rapid progress. It is always better to perfect the current working space before expanding.

  • Product-Market Failure:

Another major starting a UK company failure occurs when the product offered does not match the needs of market. This can be either due to poor execution or lack of strategic planning where the product and market simply does not fit. Mostly, the new products need few changes before meeting the market needs or sometimes they just need a complete do-over. But in the later scenario it means the search was not good enough.

  • Lack of Management Control:

A mostly common reason for start-up failure is poor management team. A good management should be able to keep away from above 1, 2 and 3 failures. The poor management control can weaken the subordinates by setting an example of poor execution and planning. This way the company can never go too far.

  • Lack of Innovation:

There comes a time in a business when the current customer base is not increasing because the business has become stagnant. And in order to keep the profits coming start-up businesses need to be innovative and trendy otherwise the competitor swipes away the entire existing customer base too. This innovation can be in the form of new designs, new offerings, different price strategy, etc. It all comes down to having a unique selling point to have a competitor’s advantage. But most start-ups do not give this aspect a lot of thought and tend to find downfall.

Start-ups are hard but not impossible. There is a certain kind of determination and knowledge that is required. Many people nowadays in UK opt for company formations through online websites because they are more aware of all the markets and their trends. The whole business is set up with proper planning and execution online along with proper research about the product and its market positioning. The chance of failure automatically narrows down.