7 Warning Signs That Your Startup Is Heading In the Wrong Direction (And What to Do about It)

by / ⠀Blog Entrepreneurship / February 19, 2015

Startup Mistakes

Ever heard stories of startups that packed up after months of operation?

Sure, it happens every time. In fact, it is estimated that about 9 out of every 10 startups fail.

Truth is, these startups did not fail in just a day; there might have been some things that went on prior to that event, things that caused them to conk out at the end, some early warning signs that showed they were headed for the rocks.

When a business is headed for the rocks, you know sooner or later it’ll crash.

You don’t want that to happen to your business, right?

The good thing is that these early warning signs are noticeable and avoidable, too. That means you can do something to avert them and forfend your business from winding up.

But it starts with you getting to know those signs; so in this article, I’ll be sharing with you on those possible signs so as to keep you on your mettle and help you recognize them if ever you come across any.

I have also included tips on what to do if you ever encounter these warning signs.

Ready? Here we go:

1. The Operating Cost is Higher than the Generated Revenue

I know a couple of companies that came out openly to announce that they’re closing up because they couldn’t keep the servers running anymore.

Imagine being in business, your customers love your product; they are paying for it, but their entire fees put together can’t cover the marketing and advertising outlay alone, not to mention the employees’ salary.

You’re (secretly) pumping money into the business from elsewhere and hoping things will bump up soon.

But unfortunately, nothing’s changing; only that more and more people are signing up still with the meager fee while you’re battling to keep the servers running. After a while, you will quit.

Put differently, when the generated revenue is measly compared to the cost of operation, that’s a possible sign that the business is up the creek.

WHAT TO DO: Change something; it could be the business model, the product and/or service, your modus operandi and approach, the idea or even the pricing. Whatever it is, change it.

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Also, you may want to cut down on your operating cost, number of staffs, or even move to a smaller office to rein back on rent.

A business should not only be able to keep itself going by taking care of its operating cost, but should also be able to generate quality revenue much enough to keep its operators going.

2.  No (Obsessive) Early Adopters

This is usually as a result of not making what users want, or simply because the market isn’t yet ready (or not ripe enough) for the product.

If there are no real humans around you (apart from your mom) who are fanatical about your new product, that’s an indication that there’s no demonstrated user need and also a warning sign.

A product, service, or app should be able to pull some attention from at least a small group of people with which you can build a following.

WHAT TO DO: Of course you already know nobody buys what they don’t need or want, so create what people want.

If you’ve already released the product into the market, consider going back to the drawing board with your team and working on a stronger market-appealing product.

If you’ve not yet released the product, I recommend you conduct a feasibility study on your idea before jumping on it, no matter how exciting it is.

3.  Poor Marketing/Advertising

It’s not enough just to have a super market-appealing product or service or both, you have to put it out there for the world to see.

Failure to do so may ultimately lead to the failure of the entire firm.

That’s simply because an inferior product plus great marketing can sell more than a great product with marketing that’s not up to snuff.

Did you know that most businesses spend far more money on marketing and advertising versus the money used in creating the product itself?

If it’s only a small group of people, mainly made up of your family and friends, that are aware of your offerings, there’ll be no much patronage.

WHAT TO DO: Upgrade your marketing; if you have to hire a copywriter to write a terrifically persuasive sales letter or to rewrite your web copy, please do so.

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Come up with a solid marketing strategy or get an expert to do it for you and be sure implement it thoroughly.

In summary, perk up and improve on your marketing.

4.  Poor Communication and Not Listening to Customers

This involves communicating poorly with customers, ignoring critics, and not listening to customers. In general, it’s about poor company/customer relationship.

Your customers are an important part of your business; therefore, nurturing healthy relationships with them is a vital part of growing and sustaining that business.

Poor communication and unhealthy relationship between a company and the public can lead to many injurious things like lack of trust, criticism, and even a total seizure.

Whenever that’s the case, you know the company is on the wrong path and may soon fold.

WHAT TO DO: Treat your customers right and offer excellent customer service.

In business, communication must be a two-way thing; so set up a proper communication channel through which information can flow to and fro the company and the public. Genuinely interact with them; listen to what they have to say.

Let customers know important changes you’re making.

Handle critics as it should be. Respond to negative reviews positively and capitalize on positive reviews.

5.  Brawl Between Founders and/or Investors

Conflicts kill partnership and destroy relationships, and can also bring a whole company an ugly end.

To maintain a cordial relationship with everybody in a team is not easy, but it is surely possible and achievable.

Conflicts don’t have to be but IF it ever comes up, below is a summary of what to do.

WHAT TO DO: Let go. That’s just about the only solution, sometimes.

Don’t be too quick to judge or criticize. Make up quickly. Seek remedies instead of pouring out blames. Don’t play the villain; don’t be the guy causing the troubles.

In addition, set up a strong regulation that handles relationship issues between workers, co-founders, and investors.

What’s more, trust your fellow workers.

6.  Lack of Vision, Focus and Goals

Without a clear vision of where you’re going to, you may end up going nowhere.

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A business without a vision is a business without a future. If you stop dreaming, it’s an indication that you’re ready to grind to a halt.

As a young entrepreneur, you should be able to know where you’re going, and be able to motivate your team to go there with you. Anything contrary to that is a sign you’ve missed the track and might be heading in the wrong direction.

WHAT TO DO: Not only should you have visions for your business, you also have to be focused on those visions.

Set goals and motivate yourself and your team to work at achieving those goals. Don’t stop dreaming even when you’ve already achieved “all your dreams”.

7.  An Incapable Team

Behind every successful company is a capable, successful team.

Incapable team members can cause a startup to seize up as fast as bad, unwanted product would.

WHAT TO DO: As the leader of the team, be a good example.

If a team member or two are not doing what they ought to do when they ought to do it, you might have to cut them off.

Put new staff on probation to test their capability and suitability. Training of both new and old employees is too imperative to ignore.


While it is not necessary that a business should collapse, it’s important to know that businesses do not collapse in just a moment. There should have been things that triggered the collapsing, some which I just shared with you above.

Keep these warning signs on check and if you ever notice any of them, apply as appropriate the tips in the “WHAT TO DO” sections of the article to triumph over those troubles and keep your business going.

Zoe Uwem is a young entrepreneur, a successful freelance writer, copywriter and a content marketing strategist who writes for and helps companies spread the word about their businesses. Zoe blogs at his personal blog and runs the Freelance Writing HQ, a community for freelance writers. You can hire him to write for you, too. Find Zoe on his website, ZoeUwem.com or follow him on Twitter @ZoeUwem.

Image Credit: Shutterstock.com

About The Author

Matt Wilson

Matt Wilson is Co-Founder of Under30Experiences, a travel company for young people ages 21-35. He is the original Co-founder of Under30CEO (Acquired 2016). Matt is the Host of the Live Different Podcast and has 50+ Five Star iTunes Ratings on Health, Fitness, Business and Travel. He brings a unique, uncensored approach to his interviews and writing. His work is published on Under30CEO.com, Forbes, Inc. Magazine, Huffington Post, Reuters, and many others. Matt hosts yoga and fitness retreats in his free time and buys all his food from an organic farm in the jungle of Costa Rica where he lives. He is a shareholder of the Green Bay Packers.


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