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Reasons startups fail

Updated: Aug 4

by Johari Hamilton

Starting a business can bring challenges and rewards.

In the article, Startups’ Road to Failure, it drills down on the various reasons why startups fail. The research was conducted using information gathered from 214 failed startups’ post mortem reports. The study looks specifically at data across 35 industries over a specific timeframe. Results were classified using the SHELL Method, a methodology “originally implemented to classify aviation accidents and errors."


According to the article, S.H.E.L.L. stands for “Software, Hardware, Environment, Liveware People and Liveware Environment” and it is a model that “adopts a system perspective that suggests that the human being is rarely the only cause of an accident.” This particular model was adopted because of its “simplicity and capability” when finding causes to aviation accidents.

Thus, by applying the SHELL Method to business, they were able to discover several reasons why startups fail. In addition to those reasons, the study also shows the rate of startup failure per industry. 

The article concludes with advice to help founders mitigate the misfortunes of startup failure.  To read the full article, click the link below.

Johari Hamilton is an intern with the Tennessee Small Business Development Center.

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