Why Businesses Fail: 6 Common Reasons Explained

April 14, 2024

by Richard Jackson

why businesses fail

In this post

Reasons why businesses fail, 1. losing the lead in innovation, 2. poor strategic decisions, 3. reacting too slowly, 4. marketing strategy not aligned with industry trends, 5. unsuitable company culture and losing the talent war, 6. product or service quality issues, how to protect your market share.

Change is the new constant for businesses.

Entire industries can be disrupted seemingly overnight due to constant changes in technology, consumer behavior , and the market itself. Companies that fail to keep up with the shifting tides risk getting left behind.

Over the last two decades, the business landscape has transformed, leading to the disappearance of 52% of the Fortune 500 companies and 72% of the original FTSE 100 companies from 1984.

This trend of business decline and failure is not slowing down; it's expected to accelerate, driven by the ongoing digital revolution, which offers established enterprises and new market entrants unparalleled opportunities to disrupt the status quo and capture market share. 

However, it also creates a competitive terrain for businesses to navigate through. 

This article will examine the six fundamental reasons that contribute to the decline or failure of businesses, ranging from innovation gaps to strategic missteps, and the critical importance of staying agile in a rapidly changing digital economy.

Businesses, particularly startups, face an uphill battle for success. A number of factors can contribute to their downfall — from poor decision making and misaligned market strategy to unsuitable company culture and product quality issues.

Understanding these common pitfalls is essential for anyone looking to navigate the often choppy waters of the modern business world.

When companies have dominated a static marketplace over a long time, overconfidence and complacency are to be expected. What’s worked for years should surely work for years to come.

But that's not always the case.

According to a  survey by McKinsey, 94% of executives aren’t satisfied with innovation performance within their organization. Only a third of UK business leaders believe they’re innovating successfully enough to generate revenue or reasonable growth.

Just because a company was successful and innovative once doesn’t mean they’ll be able to maintain it. This can be due to various factors, including internal culture problems, budget issues, insufficient strategy and vision, and an inability to act on signals crucial to the future of the business.

Resting on your laurels in the fast-moving digital economy is effectively waiting to be disrupted by established companies and new industry entrants. Failure to innovate, enhance, or evolve your products or services represents a significant risk.

Success and failure ultimately rests on the effectiveness of a business’s decisions.

Whether it’s entering into a new partnership, expanding through investment and acquisitions, adjusting pricing points, or launching and removing products, the wrong choices can halt progress and see a once-thriving organization go backward.

A global survey by McKinsey suggests that only 5% of leaders believe their organization excels at decision making. What’s more troubling is that 70% of business leaders would rather delegate this responsibility to a robot.

So why do organizations make poor strategic decisions? Why does a company overextend itself or get key choices all wrong? It often boils down to a lack of quality data to make objective decisions.

It’s estimated that over 80% of companies lack real-time insight and instead rely on outdated data. What’s the consequence? A similar percentage of businesses are making wrong or sub-optimum strategic decisions and, therefore, losing revenue.

Without sufficient data, decisions default to experience or intuition, increasing the margin for human error. Poor strategic decisions by key stakeholders are a significant burden on organizations. Industry research suggests that 61% of companies have missed a strategic opportunity or suffered a financial setback because they didn’t adequately understand the competitive landscape. The potential cost? It’s estimated that for a typical Fortune 500 company, it’s 530,000 days of managers’ time each year or around $250 million in annual wages!

Every organization in the world has the potential to be affected by changes in the market.

That could be a change in a competitor’s product, marketing or sales strategy, a new product, feature, or service entering the market, or legal and political updates, such as new legislation.

All businesses need to be ready to adapt to survive. But even that may not be enough. History is littered with examples of businesses that have reacted to threats and opportunities in their market but done so too slowly to halt a decline in revenue.

In the digital economy, where changes occur more frequently than ever before, the risks are endless. Businesses can encounter threats from three potential sources.

First up are established players who can quickly steal a march with their vast resources and expertise. The next is the risk from established giants in other industries. According to a PWC’s Future of Industries survey , 56% of CEOs believe a large existing player from another industry will move into their industry.

Finally, 50 million start-ups are launched every year across multiple industries. These smaller, more nimble, and risk-taking businesses can move and react much faster than their larger counterparts, putting the latter at risk of decline.

In many instances, organizations either know about the impending threats and do little to counter them or are unaware of what’s about to happen. Either way, by the time they react, the market has already been disrupted, leaving them to play catch up.

Technology isn’t the only factor altering the business landscape. The world is ever-changing, and so are consumers’ values, cultural norms, and behaviors.

In recent years, we’ve seen attitudes change towards environmental issues, mental health, gender equality, and more. Accenture research shows that around 70% of millennial consumers will choose a brand over another if it demonstrates inclusion and diversity in its promotions.

A Nielsen study also revealed that 73% of millennials will spend more on a product from a sustainable and socially conscious brand. At the same time, 81% expect the brands they buy into to be transparent in their marketing.

All of these cultural, attitudinal, and behavioral changes have played a big role in how organizations are marketed. But for every good example, there are plenty of established brands that have misjudged the prevailing sentiment of the time.

Millions have been spent on marketing campaigns — from strategy to execution to media budget — only to have been withdrawn in the face of public backlash. While many of those brands have been stable or big enough to withstand the financial impact, others haven’t fared so well.

There are notable examples of businesses declining rapidly following a marketing misstep and misjudged strategy. It costs businesses revenue and people their jobs and gives rival businesses opportunities to move ahead in the market.

About 94% of entrepreneurs and 88% of job seekers say that a healthy culture at work is vital for success.

For businesses that get the culture right, the rewards are clear. They’re able to recruit and retain the best people. But for those who get it wrong, the costs can have catastrophic consequences.

A report by SHRM in 2019 shows that bad work culture cost American businesses $223 billion in the preceding five years alone! But what does it mean for individual businesses?

An inability to hire, or hire well, will also cost businesses thousands. The estimated cost of a bad hire is £30,000 ($38,000). This leads to more time wasted in the market and sky-high fees for recruiters. Likewise, if the broader company culture has significant problems, it can trigger a talent exodus and accelerate a company’s decline.

We live in an age of transparency thanks to review sites, social media, and other forms of user-generated content . As a result, both positive (philanthropic activities or training opportunities) and negative cultural traits bullying or limited opportunities) are more visible in the public realm. The leadership styles that were acceptable 20 years ago are no longer fit for purpose.

Complacency is one of the biggest factors in declining companies.

If the quality of their product or customer service doesn’t get the care, attention, and investment it requires, it will inevitably lose its relevance to the people who once used it.

Even a gradual decline in quality is likely to tarnish customer perceptions and undermine the proposition that the company has been built on. As customer satisfaction falls, they’re more likely to voice their concerns and opinions via the plethora of online platforms they have access to.

The damage to the brand and brand loyalty can push once prominent organizations to lose their position in the market

In many cases, the quality issues aren’t always a decline but rather a case of standing still while the market moves forward. A failure to embrace the latest technological trends, for example, could cause a product to lose relevance to consumers who are ready for more advanced solutions to their problems.

This is naturally compounded by the activity of competitors or new entrants in the market that have developed modern, forward-thinking propositions that offer the best quality service and experience.

A good example of this is businesses that have failed to digitize their offline processes or experiences.

So, what lessons can a business learn to best protect its market share?

In short, a business’s proposition should be an evolving entity. Because, in 10 or 20 years, it’s likely to be a very different proposition that dominates the market. If you don’t invest in and develop what you offer, or you’re not willing to disrupt yourself, another business will.

But how do you make the right investments? How do you ensure you don’t reinvent yourself at the wrong time—as many brands have done before?

The key is to keep listening and learning, staying close to your customer base. You can do that through surveys and review scores, as well as by monitoring their sentiment towards your brand and that of your competitors. Recognizing how they’re feeling and talking about the products and services in your market can help you identify and solve their issues.

It’s also essential to monitor the competitive landscape, analyzing what other businesses offer and what they do to innovate. It can help you identify threats to your market share and unexplored opportunities that can fuel your growth.

Finally, as we operate in this new digital era, staying abreast of technological advancements is vital. You must embrace the right innovations in your proposition and the processes behind them. Digitizing your business, products, services, and experiences can save people time and effort, which will help you stay relevant in the years to come.

Closing thoughts

The decline or failure of businesses can often be traced back to a combination of the six reasons outlined above. 

To thrive in the current business environment, companies must prioritize continuous innovation, make informed strategic decisions, remain agile and responsive to market changes, align marketing strategies with contemporary consumer values, cultivate a positive company culture, and uphold the highest standards of product or service quality. The digital age presents both challenges and opportunities, and success belongs to those who can navigate these waters with foresight, agility, and a commitment to continuous improvement.

Learn how competitive intelligence in SaaS has evolved and gain an edge in the industry.

Edited by Jigmee Bhutia

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Richard Jackson is the Chief Executive Officer and Co-Founder of WatchMyCompetitor (WMC) , a London-based competitor intelligence solution company. He was previously Chief Technology Officer for CitiGroup’s Corporate Bank.

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5 Reasons Strategy Execution Fails

A team of four business professionals discussing strategy at a conference table

  • 21 Dec 2023

If your organization struggles to keep up in an increasingly competitive market, it’s not alone. Successfully executing transformative strategies is a challenge for many businesses.

The benefits of effective strategy execution are immense. According to a PwC survey , companies that invest more time and effort into strategy execution are three times more likely to report above-average growth and twice as likely to report above-average profits than those that don’t.

However, strategic plans don’t always succeed.

Access your free e-book today.

Why Do Strategic Plans Fail?

Companies’ strategic plans often fail for the same reason: ineffective strategy execution. According to Harvard Business School Professor Robert Kaplan’s book, The Balanced Scorecard: Translating Strategy into Action , 90 percent of organizations fail to execute their strategies successfully.

“Studies have shown that execution is continually rated as one of the most significant challenges by executives,” says HBS Professor Robert Simons, who teaches the online course Strategy Execution .

For example, consider technology company IBM’s strategy execution mistakes . When personal computing became popular in the early 2000s, IBM managers continued to allocate resources to the business’s archaic aspects, like mainframes. As a result, IBM lost its industry standing once competitors began offering well-built, affordable PCs to consumers.

“There are many stories like this,” Simons says in Strategy Execution . “In each, we find a business strategy that was well formulated but poorly executed. And while you can find lots of advice on how to devise better strategies, there's very little guidance on how to execute those strategies.”

To help understand how to manage and implement strategy more effectively, here are five common reasons strategy execution fails.

1. Ineffective Resource Allocation

Resources are a powerful tool and provide the support to achieve strategic goals; businesses that fail to allocate them effectively rarely succeed.

For example, Circuit City was a successful electronics company that faced financial challenges caused by poor resource allocation. Instead of selling off risky business acquisitions , the company eliminated its most valuable resource: experienced sales staff. That decision proved detrimental when the company lost its competitive edge in providing quality customer service and industry knowledge.

One way to avoid similar outcomes is by designing high-performing jobs and understanding what roles require more resources and funding.

“Job design is a critical part of strategy execution,” Simons says in Strategy Execution . “If individuals don't have the resources they need and aren’t accountable in the right way, they won’t be able to work to their potential.”

To ensure your organization’s jobs align with its business strategy , Simons recommends using the Job Design Optimization Tool (JDOT) , which enables you to design or test any job by analyzing its balance of demands and resources.

The JDOT helps determine the following aspects of job design:

  • Span of control: The resources for which you’re given decision rights and held accountable for performance.
  • Span of accountability: The range of trade-offs affecting the performance measures used to evaluate employees—defined in both financial and non-financial terms.
  • Span of influence: How many people you must reach out to when attempting to influence others’ work.
  • Span of support: The support you can expect from those in other organizational units.

In terms of resource allocation, be mindful of who on your team needs wider spans of control. Those employees should directly support your business objectives and aid in strategy execution.

Strategy Execution | Successfully implement strategy within your organization | Learn More

2. Ineffective Risk Management

One of the most common reasons strategy execution fails is ineffective risk management . While external factors like emerging disruptive technologies and evolving customer needs can negatively impact business strategy, many companies forget to mitigate internal risks.

Consider the downfall of energy company Enron. Due to a lack of internal monitoring, the company misled investors and stakeholders about its financial health for years through fraudulent accounting practices .

Effective oversight can help prevent such situations, but leaders are often expected to monitor too many aspects of their businesses simultaneously.

One of the best ways to prevent what Simons calls “bad employee behavior” is through internal controls —policies and procedures designed to ensure reliable accounting information and safeguard company assets.

“Managers use internal controls to limit the opportunities employees have to expose the business to risk,” Simons says in Strategy Execution .

There are three types of internal controls:

  • Structural safeguards: Ensure a clear definition of authority for individuals who handle assets and record accounting transactions (for example, segregation of duties).
  • Systems safeguards: Assure procedures for processing transactions and management reports are adequate and timely (for example, database security).
  • Staff safeguards: Make sure accounting and transaction processing staff have the right levels of expertise, training, and resources (for example, job rotation).

Leveraging internal controls like these can help mitigate internal risks that could hurt your strategy execution.

“There's a lot of opportunities if we start thinking about internal controls and what it's trying to prevent,” HBS Professor Eugene Soltes says in Strategy Execution .

In addition to mitigating financial risks, internal controls can influence your company’s long-term operational and financial performance by safeguarding strategy execution.

Related: What Are Business Ethics & Why Are They Important?

3. Vague Strategic Goals

A common mistake when implementing strategy is underestimating the power of business goals and objectives .

According to a study by The Economist Intelligence Unit , 90 percent of senior executives say they failed to reach all their strategic goals because of poor implementation.

One example of a company impacted by poor strategy implementation is Target. Although a successful retail company, it had difficulty expanding into the Canadian market due to management’s inability to effectively communicate strategic goals, operational procedures, and differences in customer expectations to Canadian employees. As a result, Target had to close all Canadian operations .

You can help avoid such outcomes by using tools like the balanced scorecard .

“The balanced scorecard combines the traditional financial perspective with additional perspectives that focus on customers, internal business processes, and learning and development,” Simons says in Strategy Execution . “These additional perspectives help businesses measure all the activities essential to creating value.”

When paired with a strategy map —an outline of the cause-and-effect relationships that underpin your strategy—a balanced scorecard provides a roadmap for understanding the relationship between your business’s goals, measurements, and value creation .

Remember to define and outline your goals and objectives before implementing your strategy to ensure consistency and alignment throughout the execution process.

An example strategy map and balanced scorecard

4. Lack of Organizational Support

No matter how great your strategic initiatives are, you can’t implement them alone. Successful strategy execution requires the support of employees, stakeholders, and customers.

One situation that exemplifies why it’s vital to gain employee buy-in before implementing high-level changes is JCPenny’s failed 2011 rebranding strategy . Under new leadership, the company tried to implement a strategy focused on modernizing stores and pricing models, which was met with internal resistance. Longtime staff and sales associates felt disconnected from the new direction. Many employees also didn’t understand the pricing strategy and weren’t adequately trained in the company’s latest sales tactics.

One of the most effective ways to earn your team’s support is by communicating your company’s core values —your business’s larger purpose that inspires and guides employee behavior—and how it aligns with your strategy.

“You may think of them as little more than window dressing or ticking a box without much real impact on the business,” Simons says Strategy Execution . “But I've learned that the best companies—the ones that are most competitive and lead their industries decade after decade—put enormous emphasis on their core values and beliefs.”

Examples of core values include:

  • Diversity and inclusion
  • Sustainability

By aligning strategy with purpose, employees won’t just support your strategic initiatives but be engaged in their work .

Related: 6 Strategies for Engaging Your Employees

5. Imbalance of Innovation and Control

Innovation is essential to your organization’s long-term success. However, it’s critical that innovative products and services don’t hinder your business strategy’s execution.

For example, Uber has historically struggled with balancing innovation and internal controls. While the ride-hailing company has transformed the transportation industry, its need for innovation has led to several instances of misconduct due to insufficient internal controls . In response to public criticism and regulatory scrutiny, Uber has taken steps to address those issues and placed greater restrictions on what employees should and shouldn’t do.

You can help balance innovation and control by setting strategic boundaries , which define your business’s desired market position by identifying opportunities it should avoid and pursue.

You might be overwhelmed by such decisions. In choosing what to do and not do, you might worry about stalling innovation throughout your organization. However, restrictions are more guidelines than constraints. Instead, they should ensure innovation aligns with your business strategy’s direction.

How to Formulate a Successful Business Strategy | Access Your Free E-Book | Download Now

How to Succeed in Strategy Execution

Strategy execution doesn’t need to be intimidating. While many businesses have failed to execute their strategic initiatives, you can help ensure yours succeed by developing strategy execution skills .

By taking an online strategy course , you can build the knowledge and skills to reach your strategic goals. Through an interactive learning experience, Strategy Execution allows you to learn from real-world business examples to better understand the strengths and weaknesses of your organization’s strategy execution approach.

Want to discover more tools you can use to implement strategy? Explore Strategy Execution —one of our online strategy courses —and download our free strategy e-book to continue learning about how to avoid common execution mistakes.

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Resources for Your Growing Business

20 reasons why small businesses fail and how to avoid them.

What Are the Most Common Causes of Small Business Failure? Questions Startups Need to Ask.

The failure rate of small businesses is significant—as many as 45% of start-ups don’t survive the first 5 years. 1 Exploding Topics, Startup Failure Rate Statistics . So why do so many businesses fail? The primary causes of business failure are cash flow problems, poor financial planning, and a lack of market awareness.

We’ll explore 20 reasons why small businesses fail so you can avoid common pitfalls and develop a strategy to help your business grow and thrive.

Key Takeaways 

  • Most small businesses fail within the first 10 years.
  • Common financial reasons include poor pricing strategies, insufficient funds, and cash flow.
  • Creating a clear business plan can help small business owners avoid common failures.
  • Understanding your target market is key to creating a good business strategy.

Table of Contents

  • Lack of Planning
  • Choice of Location
  • Lack of Research
  • No Business Plan
  • Poor Pricing Strategy
  • Insufficient Funds
  • Cash Flow Problems
  • Poor Debt Management
  • Dependence on One Customer
  • Inadequate Profit
  • Competition
  • Lack of Market Demand
  • Unexpected Growth
  • Lack of Experience
  • Ignoring Customer Needs
  • Poor Management
  • Ineffective Marketing
  • Lack of Innovation
  • Forgetting the Customer
  • Ineffective Leadership
  • Frequently Asked Questions

1. Lack of Planning

A clear vision is key to successfully running your small business. Start by setting research-backed goals for your company: what benchmarks do you want to reach in your 1st year? In your 5th year?

Setting timelines helps you keep on track with your goals and helps you make adjustments if you find you’re not where you want to be. Create a strategy for your business growth and set up check-in points. 

For example, check in every 2 months to make sure you’re on track to reach your goals. This gives you a chance to follow up with what’s working well and change anything that needs to be modified to help you stay on track.

Fress Starts Deserve FreshBooks

2. Choice of Location

Business location is one of the most important decisions you can make when setting up a new small business. If you provide in-person goods or services, you need to make sure that there’s enough local demand to support your business. 

Businesses like bakeries and shops often rely on foot traffic for success, so visibility is key. Other industries like lawn care require you to commute to your customers, so you’ll want to pick a central location to minimize transportation costs.

If you offer remote services, location is still important—if you have some flexibility, consider how business taxes vary between states and municipalities. 

It’s also important to consider how you might expand in the future. If you see yourself opening up a second location, look for an area that has room to accommodate your future business growth. 

3. Lack of Research

Understanding your industry, competitors, and target market is key to business success and survival. Research common pitfalls in your industry so you can understand the specific challenges your company might face.

It’s also important to learn about your competitors. See how your services and prices compare to theirs, and consider whether you can offer any niche contributions to set your business apart.

Learn what customers are looking for from your company so you can deliver tailored experiences. Some demands are evergreen (constant), while others vary with market trends—research can help you determine and predict market trends so you can stay on top of your customers’ needs.

4. No Business Plan

In addition to your overall vision for your company, you’ll need to create a clear and actionable business plan. This helps communicate your vision to investors and other team members. There are many resources available to help you create a business plan, including business plan templates .

Your business plan should include:

  • A description of your company and what you offer
  • A market analysis including threats and opportunities
  • Competitor analysis
  • Marketing plan, including target customer profile
  • Budget and projected cash flow
  • Scalable growth plan

You’ll want to regularly revisit this business plan and review the success of each strategy. If you find anything that’s not serving your business, catching that early and making the right adjustments can be the difference between failure and success.

5. Poor Pricing Strategy

Setting the right price is a delicate challenge, but it’s essential for surviving as a small business. You need to price high enough that you cover your costs and make a profit, but low enough that it’s still accessible to a large customer base.

Start by understanding the costs involved in delivering your product or service. Calculate all the materials and labor costs, then factor in your profit margin .

Next, compare your prices against competitors. When you first start out, you may not be able to match the prices and profits of more established companies. If you find your prices are significantly higher, you might need to decrease your profit margin slightly. 

Remember that even if you can’t exactly match your competitors, there are other strategies you can use to distinguish your business—competitor prices are a guideline, not a hard rule.

6. Insufficient Funds

Financing is a common challenge for new businesses, and it’s important to ensure you have sufficient funds right from the start. There are a range of financing options you can consider, from small business loans to investor support. Research all your options and compare how they’ll support you in the short and long term.

It’s also important to effectively manage your finances once you’ve acquired start-up capital . Make sure you understand all of your business costs including licenses, materials, taxes, and labor. Balance that against your projected profits to make sure you’ll be able to stay operative through the first few challenging years.

7. Cash Flow Problems

Financial management isn’t just about the big picture—it’s also about the way your business spends cash in day-to-day business operations. Make sure you keep track of all the ways your company spends money, from larger costs like rent and labor to everyday transportation costs.

It’s easy to get caught up in things like marketing and product development and run out of cash flow early on. Make sure you have a clear budget that you review regularly to ensure you have sufficient cash flow to manage your business.

8. Poor Debt Management

There’s more to small business financing than just start-up capital and cash flow: you’ll also want to stay on top of any debt and ensure your credit remains strong. If not managed carefully, these challenges can easily spiral out of control and sink a small business.

It’s not uncommon for new entrepreneurs to assume some debt as a new business—you might have taken a start-up loan as part of your initial process. However, that debt can become problematic if you’re not making enough profit to consistently make your payments.

One of the most common signs of impending debt issues for small businesses is delaying bill payments. If you find that your business is struggling to meet bills, debt , or credit card payments, it’s time to do a close examination of your finances and cash flow to see where you might be able to cut costs and get on top of any financing issues before they become a larger problem.

9. Dependence on One Customer

Building customer relationships is important, but it can be risky to become too reliant on just one customer. Even if that customer represents a large share of your current profit, there’s never a guarantee that they’ll be able to sustain your company.

Once you’ve found a great customer, analyze how you won that customer and see how you can apply those strategies to finding new customers. Consider what that client was looking for and how they found your company so you can understand what worked well in your next marketing campaigns .

Build a customer profile and focus your marketing on reaching clients who fit that profile. See if they tend to live in a certain area, frequent a certain job or social media platform, or search for particular keywords. Try to diversify your customer base so you aren’t reliant on just one client for your business survival. 

10. Inadequate Profit

Most small businesses have low profits in their first few years, but there’s a point where those profits can become too low to survive. If you find that your profits aren’t enough to cover your expenses , it’s time to think about profit maximization strategies.

One of the first things to examine when you’re facing inadequate profit is your current cost management. Are there any areas where costs can be cut? Consider whether there are more affordable manufacturers, equipment options, or business spaces available to you.

You can also examine your pricing strategies. If you start by pricing low and you’re selling a large volume but still not making a good profit, your prices may be priced too low. Calculate how much you would have to raise your prices to make enough profit, and test out slightly higher prices to see how customers respond.

11. Competition

Even if you offer great products and services, it can still be hard to survive if you’re facing a lot of competition. Conduct a market analysis to see how many competitors are in your industry and area, what products they offer, and how their prices compare to yours.

Once you have a thorough understanding of your competitors, you can devise strategies to set yourself apart. This can include everything from offering competitive prices to providing a higher-quality product. You can also explore marketing strategies or consider how you can offer a slightly different product to fill a market niche.

12. Lack of Market Demand

Even the best businesses can fail if there’s no demand for their product. Market demand also fluctuates, so what’s in demand today can change by tomorrow. Keeping track of market trends and demand can help you stay ahead of the curve with what your company offers.

Start by assessing what’s currently in demand and how you can pitch your product to meet that demand. As customer needs evolve, you may need to slightly alter your products to adapt to changing customer needs.

13. Unexpected Growth

Growing your business is a hallmark of success, but it can also pose risks if you expand too rapidly without a clear plan. Unexpected growth can lead to over-extending your resources, overworking employees, and losing track of customers.

To prevent fallout from unexpected growth, it’s essential to have a scalable business plan. Make sure you can still deliver high-quality goods and services as you expand, so your customers stay satisfied. Keep track of how much money and labor you’re expending on new services so you can bring on new employees as you grow.

It’s all about striking a balance—you want to make sure you hire enough talent to keep up with growth but avoid hiring too early in case your growth slows down. Tracking your expenditures in relation to growth is the best way to create a plan for the future.

14. Lack of Experience

Successful business owners need vision and passion, but they also need experience to translate into their goals into a successful company. Lack of experience and industry knowledge can hold your business back, so it’s important to build a dedicated management team with a thorough understanding of the market.

A business mentor can help you manage the small business owner aspects of your company. Look for someone with experience managing their own business who can advise you on things like developing a business plan , hiring the right talent, and pitching to investors. 

It’s also important to bring on experts in your industry. Look for experienced financial advisors who can guide you through developing your financial strategies. You’ll build experience as you grow, but it’s a good idea to bring in experts for specific jobs like marketing and accounting.

15. Ignoring Customer Needs

The best source for understanding market demand is customers themselves. Responding to feedback helps you build strong relationships with your existing customers and helps you understand what you need to do to gain more customers.

Listen to customer feedback on pricing, services, accessibility, and any other concerns they may have. In some cases, you may not be able to accommodate every suggestion, but it’s helpful to respond and then do a cost-benefit analysis and see how making the recommended changes might impact your business.

If you feel like you’re not receiving customer feedback, consider reaching out. Comment and feedback forms after a completed order can be a helpful tool for gaining market analysis in real-time.

16. Poor Communication

Having a clear vision that you can communicate to investors and customers is important, but it’s just as key to having strong communication inside your business. When your team doesn’t understand your business goals, it’s harder for everyone to collaborate efficiently. 

If you’re operating your small business as a partnership, it’s fine to have different skill sets, but you need to be on the same page about vision and goals. Creating a business plan collaboratively can help ensure you agree on the primary strategies for your company.

Weak communication can lower morale and productivity and prevent your business from growing effectively. Consider making a modified version of your business plan that you can share with your employees. This can include an overview of your business goals and strategies to help everyone get on the same page.

17. Ineffective Marketing

Even with great products, your business can’t succeed unless you effectively reach your target market. Ineffective marketing strategies can hold you back from connecting with customers, while great marketing helps you reach new audiences and grow your business.

It’s important to have a targeted campaign with a clear focus. Start by identifying your target customers and learning about how they interact with local businesses. This helps you determine where to place ads, what to offer, and how to speak to potential customers.

Make sure your marketing strategy has a way to track results. That could include tracking impacts and clicks, measuring follow-through, and consulting with new customers to discover how they found your business so you can build on your most effective strategies.

18. Lack of Innovation

A great product at the start of your business may not remain competitive as the market changes. Innovation is essential for ensuring your business stays relevant and continues to be successful. 

This doesn’t mean you have to drop products if they’re still performing well, but it’s a good idea to consider how you can improve or develop new products if you have the capital to spend on development. This helps you stay ahead of the curve in a changing market.

Even with evergreen products, your business practices can still become stagnant. You’ll need to find new marketing strategies to reach new customers so that you can have a continuous revenue stream. Innovation spans all components of your business, from product development to new marketing methods.

19. Forgetting the Customer

Even if a product seems great to you, remember that in the end, it’s about the customer and how the product will meet their needs. Focus on learning about what the customer is looking for—what’s missing from current products, and how can your business satisfy that need.

If customers offer feedback, try to learn from that and incorporate it where possible. This can involve product innovation or customer service relationships. Customers will remember a great product, but they’ll also remember a personable and helpful business interaction.

Check-in with customers to make sure they’re fully satisfied with their experience. One way to do this is to send a follow-up email or form after their purchase. You can incentivize feedback by offering a small discount for filling out the form—this also encourages customers to return to your business.

20. Ineffective Leadership

While a great team and expert advice are important in supporting your business, it’s ultimately up to you to lead your company forward. If you’re burnt out or losing track of your vision, your team won’t know where to follow.

Strong leadership helps cultivate a positive company culture, a motivated team, and great client relationships. Your employees take their cue from you, so make sure to set a strong model for interacting with customers. 

Creating a good company culture starts with forging strong employer-employee relationships. Get to know your employees, their goals, and their challenges at work so you can help them perform their best. When you create a work environment that’s supportive and growth-oriented, it encourages your team to deliver their best work and help build your business.

Hit the Ground Sprinting

The reasons why small businesses fail can include everything from poor pricing strategies to ineffective marketing. Learning how to recognize problems like poor management and inexperience can help you identify issues in your company before they impact your success.

Understanding and recognizing why small businesses fail can help you create strategies to avoid common pitfalls. Tools like FreshBooks accounting software can also help you manage your expenses and avoid problems like insufficient cash flow. Try FreshBooks free to discover an easy tool to help your small business thrive.

FAQs on Reasons Why Small Businesses Fail

Is it true that 90% of startups fail.

Yes, ultimately about 90% of startups fail. A few fail in the first year, and most new businesses fail in the first 2 to 5 years. After 5 years, businesses that survive tend to see a small rise in profits and growth.

Why are small businesses declining?

Some of the biggest reasons why small businesses decline are market competition, lack of demand, and lack of financing. In many cases, larger and more established companies make it difficult for new small businesses to enter the market.

What is the biggest problem facing small businesses today?

One of the biggest problems currently facing small businesses is inflation. High inflation rates mean higher input costs for products, and usually also mean employees will seek higher salaries. It can also mean higher interest rates when trying to secure a first business loan.

Why are small businesses failing in today’s economy?

Many small businesses are failing in today’s economy because they lack planning and financial preparation. While market competition and funding pose challenges to business owners, these can be overcome with financial preparedness and a clear business plan.

Article Sources: 

  • Exploding Topics, Startup Failure Rate Statistics .

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Sandra Habiger, CPA

About the author

Sandra Habiger is a Chartered Professional Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Alongside her accounting practice, Sandra is a Money and Life Coach for women in business.

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why some business plans fail to succeed

Written by Grant Olsen | February 2, 2022

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There are all kinds of conflicting statistics and opinions for why businesses fail . The headline of one report might proclaim that “90% of businesses fail in the first 3 years,” while another asserts that by following their tips, “You can enjoy a 90% chance of success.”

It’s difficult to accurately aggregate the numbers and find global statistics on business failures, so we’ll use the United States as a microcosm for trends that are also relevant in Australia, New Zealand, Canada, the UK, and other parts of the world.

Here’s a look at survival rates when viewed at the end of the first, fifth, and tenth years:

  • 80% of businesses survive their first year
  • 50% of businesses survive 5 years or longer
  • 33% of businesses survive 10 years or longer

While these statistics highlight the fact that there’s certainly a risk of failure, they’re higher than some of us might expect. Anytime you’re looking at a vast collection of disparate individuals attempting something difficult, you’re going to see similar trends.

For example, let’s look at how many first-time college students seeking a 4-year degree stay the course all the way to graduation day:

  • 33% of students graduate with a bachelor’s degree in 4 years
  • 57% of students have graduated with a bachelor’s degree by 6 years

Some of the remaining 43% of students who didn’t graduate within 6 years will likely go on to attain their degree in later years, but it’s too inconsistent of a number to show up in most studies. For thousands of different reasons, hundreds of thousands of students fail to attain their bachelor’s degrees.

So the percentage of businesses that survive 5 years or more is strikingly similar to the percentage of students who earn a degree by 6 years. Sure, things happen that derail many of the businesses and students. But at least half of them are still standing after 5-6 years.

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Why Small Businesses Fail to Change

Just as many of those students who earned degrees switched majors during their college experience, it’s critical for business owners to maintain flexibility in their structure and operations. If the COVID-19 pandemic has taught us anything, it’s the immense value of a well-time pivot. Whether your change is compelled by a new idea or the pressures of the times, never hesitate to innovate.

As Dan Fries explains :

Sometimes a crisis, while always tragic, can force some positive effects. It might not feel like that right now, but by responding to COVID-19 will teach you some valuable skills. In other words, this is not the only crisis you are going to face as your business grows, and the lessons you learn in the next few months will be extremely useful when it comes to scaling your startup further down the road. In fact, some of the tools and processes above are likely to be relevant long after the current pandemic has passed.

When businesses embrace this open-minded approach, they usually find themselves among the 50% that are still strong after 5-10 years. As the old saying goes, “If you’re flexible, you’ll never get bent out of shape.”

Yet many business owners remain rooted in their old ways. It’s understandable that they believe in their products or services, and are attached to the business model. After all, it was these elements that inspired them to take entrepreneurial risks in the first place.

But if you love something, you need to take care of it. And part of nurturing your business is being willing to change directions when outside pressures are threatening it. Stubbornness can be mildly amusing in childhood friends or cranky great-uncles, but it can be devastating for a business.

Why do businesses fail when they resist change? Because they’re refusing to acknowledge the primacy of the customer. Let’s review a few examples of roadblocks to success that arose during the pandemic, and how they all connected back to the role of the customer:

  • Lockdown prevents a restaurant from serving customers inside the building. This scenario has played out again and again in nations around the world. It presents many dilemmas, but none larger than the inability of a business to directly serve its customers. Successful restaurants found ways to provide new pickup and delivery options, serve their communities, and even send meal kits by mail. They kept providing a quality product, though it might’ve looked much different.
  • The supply chain is disrupted. The inability to source the materials or ingredients necessary for your current model is problematic. But the main issue is that it prevents you from delivering what your customers are seeking. If replacements couldn’t be found for the supply chain, a pivot was required. For example, a bakery that couldn’t source eggs might stop selling baked goods and begin selling dry mixes to customers.
  • Depleted finances make it harder for customers to make purchases. With customers in many areas struggling to meet financial obligations such as rent and mortgages, it’s no wonder that some had to curtail purchases. By finding ways to lower costs so you can lower your prices, introducing tiered pricing, or creating new product options altogether to meet your customers’ needs, successful businesses continued to meet the needs of those who historically had depended on them.

Whether you’re struggling with cash flow issues or have a broken supply chain, your ability to deliver for your customers will always be the real issue. And discovering new ways to meet their needs will always be the real solution.

The fact is that pandemics will emerge, trends will evolve, and economies will fluctuate. So if you insist on moving your business forward in the exact same way regardless of these external factors, you’ll instead find your trajectory rapidly nosing downward.

The alternative is to commit to meeting your customers’ needs no matter what occurs. While it won’t guarantee a smooth journey, this North Star will guide you through all manner of catastrophes and downturns.

My BIGGEST Mistake in Ecommerce | Shopify Horror Story w/Gretta Van Riel

9 More Reasons Why Businesses Fail

We’ve identified the inability to adapt to their customers’ needs as a major contributor to businesses that go under before reaching their 1-year, 5-year, and 10-year anniversaries. When your customer is kept at the forefront, all your other efforts will steer you in the right direction.

But there are many other specific risks facing young businesses. These are risks that you should anticipate early and be on the alert for as time goes on.

With that in mind, let’s now look at 9 other reasons why businesses fail:

1. Poor Planning

Coming up with a great business idea is only the first step because it can’t go anywhere unless it’s supported by a solid plan . Outline where you’ll go in your first month, first 3 months, first year, and first 3 years. Make the milestones measurable so that you’ll know if you’re on track.

Of course, things will occur that necessitate updates to your plan. But the point is that you have a master document that outlines how you’re going to stand out from the competition, how you’re going to deliver value to customers, how you’re going to build your culture, and how you’re going to ultimately thrive.

2. Hiring the Wrong People

We get it—there’s a lot of pressure to build your team in a timely manner so that you can launch a business. But rushing this stage can kill your chances for long-term success.

You need to find people who believe in what you’re doing and have the skills to improve the ways you’re doing it. In the crucial early stages of a business, negative employees can quickly sink morale and overall performance.

3. Failing to Foster a Good Culture

As you assemble your team, communicate openly about the culture you’re seeking to build. Ask their opinions and make a point of incorporating new ideas from your team. The businesses that prioritize profits over people or have a leaders-versus-employees dynamic often fall by the wayside because their toxicity trickles right out of the office and can be sensed by suppliers, partners, and ultimately, customers.

4. Growing Pains

Plenty of defunct companies launched with a strong culture but lost it as the company scaled. There’s obviously no way to maintain all your team’s perks and traditions as new employees swell the ranks, but you can keep the heart of who you are.

Make sure that you continue seeking your team’s input and act on their ideas. New hires will bring innovative suggestions to make things better, while the old guard can share the things that you should most think about retaining.

5. Failure to Stand Out

Even if your business idea is a gem, you’ve still got to communicate it effectively to your audience. Otherwise, you’ll just get lost in the shuffle.

Using the market research from your business plan, craft a unique selling proposition that boldly articulates what makes you different from the rest. Questions to answer include:

  • What unique value do I offer?
  • Why is my solution better for customers?
  • How can I communicate these important differences?

The more you can differentiate your brand, the better your chances for success.

6. Not Focusing on the Essentials

Plenty of businesses lose their way in the first year as distractions pull them from the very things that give them a competitive edge. For example, if your quirky product packaging is beloved by customers, don’t ditch it as your business grows. Instead, find ways to make the packaging more efficient so that it complements your efforts to scale.

When your business stays focused, you’re better able to deliver on your unique selling proposition and to adapt to unforeseen bumps in the road.

7. Not Controlling Expenses

Launching a business is expensive. And growing that business involves a whole new set of financial demands. So it’s understandable that many businesses struggle to keep up with the pace.

You’ll put yourself in a much stronger position by carefully watching your expenses . If something doesn’t help you deliver an even better experience to your customers, it might not warrant the cost. This goes for everything from Netflix on the breakroom television to the vehicles you rent on business trips.

8. Not Managing Inventory

Balancing acts are hard enough for any person, which is why those who perform on the trapeze are referred to as “artists.” But business owners must control the inventory so they don’t lose sales from insufficient numbers or burn through capital by allowing too much inventory to pile up.

You can avoid these fates by investing in inventory management software that helps you track items through the supply chain, in your warehouse, and all the way to final deliveries .

9. Inadequate Profit Margins

It’s possible to bring in substantial revenue and still find yourself in financial danger. One of the factors that have claimed many young businesses is inefficient processes and poor pricing strategies that lead to low profits.

Your business provides distinct value to customers, so you should feel confident setting prices that reflect this fact.

Get the Skills That Won’t Let Your Business Fail

Want more strategies to help your business excel? We’ve prepared a library of free business courses that cover everything from finance to negotiations to advertising. Taught by proven entrepreneurs from a range of industries, they provide the type of insights that usually take years to acquire. In this way, you can fast-track your success and avoid many of the threats that impact other businesses in their early years.

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About Grant Olsen

Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on FitSmallBusiness.com and ModernHealthcare.com. Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

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9 Major Reasons Why Businesses Fail by Year 2 and How to Avoid Them

Posted january 28, 2021 by jake pool.

According to the Bureau of Labor Statistics, over 30% of small businesses fail within 2 years. Here's why and how you can avoid those issues.

According to the Bureau of Labor Statistics, over thirty percent of private companies fail within two years.

Of course, there are external factors that businesses have no control over. Sadly, the COVID-19 Pandemic is a prime example of one. Since such events are unavoidable, let’s focus on internal factors that companies can act on.

9 common issues to avoid when running your business

As a new business owner, what are the traps to avoid from the start? And what can you do to stay in business? By understanding the following pitfalls you can hopefully avoid them and keep your business running smoothly for far longer than 5 years. Let’s dive in.

1. Insufficient funds due to weak forecasting

Without a doubt, poor financial forecasting is the main reason businesses fail.

It is relatively easy to plan fixed costs such as rent, payroll, utilities, hardware, etc. Entrepreneurs should vet this out extensively when writing their initial business plan.

However, it can be more challenging to forecast revenue generated from sales . Many new business owners are overoptimistic in their planning and vision. This results in an inability to amortize (pay off) an initial investment. Thus, the business fails.

Similarly, companies may be tempted to launch their product or services at a cheap price to be competitive. While it can work in the short-term, it’s not a sustainable business model. Once you start with a low price, it’s difficult to increase.

Goals should be ambitious, but attainable. And the budget should reflect accordingly.

2. The business lacks value

The success of any business hinges of its value. It might sound obvious, but it’s not that easy. As a business owner (or future), you probably think your product or service is great. But it’s not enough.

Before launching a business, always do extensive research (there is a lot of data available) on your target audience. Benchmarking and surveys are also a must.

Here are some generic survey questions to ask:

  • Would you talk about this product or service with others?
  • Have you ever heard of a similar product or service?
  • How much would you pay for this product or service?

If your product is only valuable to you or a small group, or it doesn’t offer more value than your competition, it’s time to rethink things.

3. Inadequate business plan

As mentioned in the first point, budgeting is a key element of a business plan . But it’s not the only factor within the plan that will break a business.

A good business plan should include:

  • A comprehensive description of the business
  • Workforce needs and compliance (current and future)
  • SWOT analysis
  • Benchmarking Analysis
  • Marketing Plan

But a solid initial business plan isn’t enough. Business owners should review and modify it regularly to keep with the pace of the industry and assess internal goals.

Many failed businesses in this scenario end up listed on business marketplaces like UpFlip because there are entrepreneurs out there equipped to change a poor business plan.

4. No connection with the target audience

The first questions any business owner should ask are — Do I know my target audience and do I understand what they need and want?

If you can’t answer those questions, it’s time to conduct more surveys and research. Otherwise, there is a disconnect, and the business will ultimately suffer and fail. It seems like a bold statement, but the biggest part of a purchasing decision is emotion.

Your product or service may have wonderful features and even value, but if it doesn’t connect with your target audience on an emotional level, it will fail.

For example:

If you run an office furniture business, obviously, the technical aspects of your premiere desk chair would be a sales point. But sturdy wheels and a comfortable backrest won’t differentiate you from the competition. 

Yes, you sell a chair. But also sell the idea of success, professionalism, or even luxury. The target audience must connect with your product on those levels. Otherwise, the business won’t stand out.

5. Competition is too stiff

Even with a comprehensive benchmarking analysis in the initial business plan, competition can evolve quickly. In many industries, there are new players every day in their respective markets.

To avoid failure, benchmarking must be a continuous effort. If your competitors are too big, it’s in the business’s interest to find a niche or some form of added value to your products or services.

Take TOMS Shoes , for instance. They broke into the highly competitive world of mid-level shoe sales by offering a socially conscious selling point to the value of their shoes. For every purchase, they give a pair of shoes to a child.

Note how their model also connects with their target audience at an emotional level.

6. Poor management

The success of a business comes from the top down.

Small business owners are often the only managers within a company. While it may work sometimes, it’s advisable to form a proper management team or at least hire a general manager.

Business owners don’t always have the necessary skills or time to be a good manager. Poorly managing or overlooking certain aspects of the business like human resources, marketing, or accounting can have a disastrous effect.

It’s important to learn to delegate to avoid wearing too many hats.

If you don’t have the money or infrastructure to hire full-time help (or in-house), think about outsourcing certain management tasks to a qualified freelancer via Upwork or a similar platform.

Otherwise, someone who can manage the company will soon take over.

7. Lack of a company culture

There is no happy company without happy employees. You may have a great business model and entrepreneurial skills, but the success of the company also depends on the staff.

It’s key to outline and implement a strong company culture from the beginning. And make sure that the people hired align with it.

Once in place, feed and maintain the culture mentality. Otherwise, you risk issues with high turnover. This has led to the internal collapse of many businesses in a shorter time span than two years.

8. Ineffective sales funnel

Getting leads is essential for any company, but your leads are worthless if they don’t convert. Many new companies focus on collecting data and leads and fail to nurture them properly.

To avoid bloating your sales pipeline , you need an effective sales funnel from beginning to end (and beyond!). It could vary depending on the industry, but be sure to nurture your leads as long as needed to complete the sale.

In the ideal sales funnel, leads convert when ready and become ambassadors of the brand. With a quality, automated system, you can sit back and watch it happen.

Here are a few ideas on nurturing leads:

  • Send industry-related freebies (How-to Guides, Tools, White papers)
  • Share relevant blog articles based on interest (personalization)
  • Wish them a Happy Birthday! (Gift, Voucher)
  • Set up a referral program with incentives
  • Engage with leads on social media
  • Use chatbot technology to answer FAQs when unavailable
  • Newsletters (Old fashioned, but efficient!)

In other words, create and maintain a relationship even after the sale!

9. Bad marketing

In the early stages of a business, marketing is crucial. The key is to find the right balance between a reasonable budget and efficiency. Fortunately, this is possible thanks to digital marketing.

The two biggest advantages to investing in digital marketing campaigns are cost efficiency and measurable results (as opposed to traditional marketing methods such as print or tv advertising).

When setting up a marketing campaign, define the target audience, budget, and a realistic conversion rate. Again, if you need help, think about outsourcing for Google Ads or social media campaigns .

Many companies fail because of an inefficient marketing plan that allocates funds to ineffective channels or to ineffective content. And when it’s too late, it’s difficult to redirect funds to make up for the loss.

Awareness is key

As stated, some external factors that negatively affect a business are unavoidable, but there are many internal factors business owners can act upon to prevent failure. The first two years are critical to creating a perennial business.

Be aware of these reasons and don’t become a statistic!

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Jake Pool

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why some business plans fail to succeed

50 Reasons Why Some Businesses Fail While Others Succeed

Why is it that so many businesses fail while so few succeed.

One of the great mysteries of entrepreneurship is why businesses fail . Some people start one successful business after another while others fail to succeed.

Why some businesses fail while others succeed?

No one starts a business expecting to fail. Starting a business can be a lot of fun and excitement. Success requires a lot of planning and starting the business the right way. Entrepreneurship is easier if you start your business the right way.

The worst part about a failing business is that the entrepreneur is unaware of it happening until it is often too late. It makes sense because if the entrepreneur really knew what he was doing wrong, he might have been able to save the business. Some entrepreneurs live in a land of denial while others are unaware of their mistakes.

One thing for sure, a business almost always fails because of the entrepreneur.

“ It’s not the plan that is important, it’s the planning. ” Dr. Graeme Edwards

There are over 28 million small businesses in the United States, according to the SBA .

It’s an impressive number. The sad reality is that only about 50% of them survive. What’s worse is that only about one-third survive 10 years or more. The life of an entrepreneur is unforgiving. It is a constant challenge. There are many moving parts. Any one of them could put you out of business.

Factors That Lead to Business Failure

Businesses fail for many reasons. The following list includes some of the most common reasons:

1 – Lack of planning  – Businesses fail because of the lack of short-term and long-term planning. Your plan should include where your business will be in the next few months to the next few years. Include measurable goals and results. The  right plan will include specific to-do lists  with dates and deadlines. Failure to plan will damage your business.

2 – Leadership failure – Businesses fail because of poor leadership. The leadership must be able to make the right decisions most of the time. From financial management to employee management, leadership failures will trickle down to every aspect of your business. The most successful entrepreneurs learn, study, and reach out to mentors to improve their leadership skills.

3 – No differentiation – It is not enough to have a great product. You also have to develop a unique value proposition, without you will get lost among the competition. What sets your business apart from the competition? What makes your business unique? It is important that you understand what your competitors do better than you. If fail to differentiate, you will fail to build a brand.

Why do small businesses fail? Statistically, small businesses that are most likely to fail are local trucking, plumbing and HVAC service providers, grocery stores, and security brokers.

4 – Ignoring customer needs – Every business will tell you that the customer is #1, but only a small percentage acts that way. Businesses that fail lose touch with their customers. Keep an eye on the trending values of your customers. Find out if they still love your products. Do they want new features? What are they saying? Are you listening? I once talked to the CEO of a training company who told me that they don’t respond to negative reviews because they are unimportant. What? Are you kidding me?

5 – Inability to  learn from failure  – We all know that failure is usually bad, yet it is rare that businesses learn from failure. Realistically, businesses that fail, fail for multiple reasons. Often entrepreneurs are oblivious about their mistakes. Learning from failures is difficult.

6 – Poor management – Examples of poor management are an inability to listen, micro-managing – AKA lack of trust, working without standard or systems, poor communication, and lack of feedback.

7 – Lack of capital – It can lead to the inability to attract investors. Lack of capital is an alarming sign. It shows that a business might not be able to pay its bills, loan, and other financial commitments. Lack of capital makes it difficult to grow the business and it may jeopardize day-to-day operations.

8 – Premature scaling – Scaling is a good thing if it is done at the right time.  To put it simply, if you scale your business prematurely, you will destroy it. For example, you could be hiring too many people too quickly, or spend too much on marketing. Don’t scale your business unless you are ready.  Pets .com failed because it tried to grow too fast. They opened nationwide warehouses too soon, and it broke them. Even the great brand equity that they have built couldn’t save them. Within a few months, their stock went from $11 to $0.19.

According to a study of about 3200 high growth internet startups done by  Startup Genome , about 70% of the startups in their dataset scaled prematurely.

9 – Poor location – Poor location is a disadvantage that might be too much to overcome. If your business relies on foot traffic, location is a strategic necessity. A poor location might make your customer acquisition costs too high.[/fusion_text]

10 – Lack of profit – Revenue is not the same as profit. As an entrepreneur, you must keep your eyes on profitability at all times. Profit allows for growth. According to Small Business Trends, only 40% of small businesses are profitable, 30% break even, and 30% are losing money.

11 – Inadequate inventory management – Too little inventory will hurt your sales. Too much inventory will hurt your profitability.

12 – Poor financial management – Use a professional accounting software like Freshbooks. Keep records of all financial records and always make decisions based on the information you get from real data. Know where you stand all the time. If numbers are not your thing, hire a financial professional to explain and train you to understand, at least the basics.

13 – Lack of focus – Without  focus, your business  will lose it the competitive edge. It is impossible to have a broad strategy on a startup budget. What makes startups succeed is their ability to quickly pivot, and the lack of focus leads to the inability to make the necessary adjustments.

14 – Personal use of business funds – Your business is not your personal bank account.

15 – Overexpansion – It is easy to make the mistake of expanding your business into too many verticals. Before you enter new markets make sure you maximize your existing market.

16 – Macroeconomic factors – Entrepreneurs can’t control macroeconomic factors. Common macroeconomic factors are business cycles, recessions, wars, natural disasters, government debt, inflation, and business cycles. Your business can still succeed in bad times. Hyatt, Burger King, FedEx, Microsoft, CNN, MTV, Trader Joe’s, GE, HP are only a few examples of wildly successful companies started during a tough economy.

Sometimes businesses fail due to a once in a lifetime economic turmoil caused by an unforeseen external challenge. The COVID-19 pandemic has forced many businesses to fail. Unfortunately, the destructive impact of the COVID-19 crisis is especially damaging to small businesses.

17 – No succession plan – Future leaders should be identified in advance. Without an effective business succession plan , your business is unprepared to fill openings in created by retirements, unexpected departures, or death.

18 – Wrong partner – It’s no secret that it is easier to succeed in business with the right partners. The wrong business partner will, at the very least hurt, or, at worst, destroy your company.

If you are serious about making it as entrepreneurs, focus on the following:

19 – Make a plan – It all begins with planning. The biggest mistake many entrepreneurs make as they start their ventures is that they don’t sit down and write a business plan. The goal is to keep it concise. Don’t treat it like a business school project. Leave writing a 50,000-word business plan to academics. Let them waste their time. You can do a great business plan in one or two pages. There are some great books on business plans such as “The Secrets to Writing a Successful Business Plan” and “Successful Business Plan“.

Your business plan should include the following:

20 – Core values – Your core values are the  fundamental beliefs that drive your business . They are your guiding principles that should remain constant. Even as your company grows your core values should remain the same. Core values can also serve as a moral compass. Some of the more common core values are integrity, trust, excellence, respect, responsibility, and teamwork.

Don’t allow your core values to become empty words, make them part of your culture.

21 – Mission statement – A brief statement that defines  why your company exists . Your corporate reason for being. It describes your target market and the services/products you offer. If you have done it right, your mission statement, in just a few sentences, will communicate the essence of your business to your business and to the world.

22 – Who are your customers – If you are  going to succeed in business  you will have a clear definition of your customer. It is not an abstract idea. It is something that can be expressed in numbers. For example, if your target customers are family law attorneys, you have to be able to put a number on it. For example, there are 175,000 (fictional number) family law attorneys in the USA and they are our customers.

23 – What is your product/service – It’s key to have a clear definition of the services you offer. Without a clear definition, you will be unable to effectively develop, market, and sell your services.

24 – Involve your customers in product development –  Most businesses that fail create products/services without involving their customers. If you are serious about success, you will build your products with your customers. Businesses that fail build products based on assumptions.

25 – How will you sell and market your product/service – Marketing and selling your service could be one of your  biggest business challenges . A sales and marketing plan is a must.  Set measurable goals . Create systems to manage the process.

Proper preparation doesn’t require a 100-page formal business plan. The keyword is “proper,” not “planning.” If you do everything in your power to properly plan your business, you increase your chances for success. Don’t confuse planning with avoiding action or paralysis analysis. No amount of planning is a substitute for action.

“No matter what one does, regardless of failure or success, the experience is a form of success in itself.” Jack Ma, billionaire founder of Alibaba

Your first action item is to write your business plan. Completing your business plan will give you an opportunity to process your idea in detail. One of the best things you can do is to collect your thoughts before you make a real commitment to starting your business. If you aren’t passionate about writing your business plan, it’s unlikely that you’ll get passionate about your business either.

One day you might think of a product that could revolutionize life on earth as we know it. You might dream up something so great that no one ever thought of before. The reality is that most  successful businesses  are without revolutionary ideas. Instead, they modify or improve well-established products or services.

Must Have Business Plan Components

  • Mission Statement
  • Company Description
  • Product Description
  • Market Analysis
  • Marketing Strategy
  • Revenue Projections

If you don’t prepare a business plan, your initial enthusiasm will fade and you will fail.

26 – In the end, enthusiasm is not enough to succeed. It takes much more than that. You need to research your market, your competition, the financial feasibility of your concept, and more. As you fight through the battles of making your dream come true, you need to be able to go back to read and re-read your business plan. The concepts laid down in your business plan will help you to convince your bank to give you the loan you need, or to determine the best marketing strategy for your business. Don’t be emotional when you prepare your business plan. Treat it as a business process with goals and deliverables. Once you complete it, ask yourself, “Would I invest in this company?” Remember, you are going to have to convince others to support your idea. Bankers, corporate buyers, investors, partners, and the like will look at your business based on facts. Their decision is not going to be based on emotion. When creating a written business plan you give yourself a chance to think about your idea thoroughly. As you put your ideas in writing, you tend to give them more thought. You might think writing a business plan is boring, or a waste of time. Truly, it should be one of the most exciting projects you could ask for. You are writing your future.

27 – You are accountable –  Many businesses fail because people treat them like hobbies. From day one treat your business as a business. Treat yourself as an employee. Set measurable goals and hold yourself accountable. If you only plan to work in your business a couple of hours a week, you can’t expect great results. Owning your own business requires focus and commitment. Educate yourself about the wide range of options and technologies. You can’t expect to get an ounce more out of your business than what you’ve put into it. If you are only willing to put in a few hours a week, expect to get a few hours a week of income. There are no shortcuts.

Entrepreneurs can stay accountable several ways:

28 – Write down your goals. Keep your goals in front of you and keep coming back to them, at least once a month.

29 – Build an advisory board.

30 – Join a peer advisory group. You will get feedback from fellow entrepreneurs. The best kind of peer advisory group is where your business is the smallest business. You definitely don’t want to be the largest or most successful business of your group. When you are the smallest you will be pushed harder to catch up to the others in your group.

31 – Find a coach. Try to work with a coach who has already built a successful business.

32 – Find an investor, an angel or venture capitalist .

33 – Forget the idea, take action –  You should never start a business based on a great idea. An idea is just that: an idea. It’s worthless. It is not going to help you succeed in business. Ideas won’t do; you need action to succeed. Wantrepreneurs are full of ideas that never result in action. Entrepreneurs are action takers.

Here are some effective ways to turn your idea into action:

34 – Believe that you can do it. I don’t mean fooling yourself into anything, but the only way can you make it happen if you believe that it will happen.

35 – Reach out to mentors. There are many successful people within your own existing network, and you can also make new connections. Connecting with mentors helps you hear what it takes to be an entrepreneur.

36 – Minimize risk, but understand that it is unavoidable.

37 – Give it due time. Ideas are fast, but making them happen will take time. Even if all goes well, almost everything you do in business will take longer than expected.

38 – Get others to believe in you. Successful entrepreneurs are great at selling their visions. You might have to convince vendors, partners, landlords, investors, employees, or a list of more people.

39 – Prepare to fail – Do not fear failure. There is one thing for sure, you will fail before you succeed. Expect failure but don’t fear it. Think of it as a normal part of your business. It is necessary. It is good for your business. It teaches you. It helps you make the right decision the next time. It is super important that you don’t associate failure with quitting. Only those that take action fail and only those that take action succeed.

40 – Pivot, rinse and repeat – Successful entrepreneurs are always adjusting. There are many reasons to adjust. Your customers might ask for a new software feature. Or, the recession might have put your best customers out of business. The price of raw materials might rise one day. Your business and its environment are dynamic. If you are good, you develop a keen eye for changes and make quick adjustments. Most businesses that fail do so because they ignore the world changing around them.

41 – Focus on your customer – You customer keeps you in business and puts you out of business too. If you listen to them, you can improve your products or services. If you ignore they fire you. Customers don’t disappear, they go to your competitors. Reach out to your customers. Ask them questions. Ask what they like or dislike. Welcome negative feedback. Don’t be defensive about it. Negative feedback gives you a chance to improve.

42 – Stay profitable – Staying profitable will solve many problems. The lack of profit could put you out of business even if you have record sales. Forget sales. Forget your revenue. Forget the total number of customers. Always be mindful of profitability.

43 – Manage cash – Entrepreneurs that fail often confuse cash flow with profit. The two are not synonymous. It is possible for you to go bankrupt with record cash flowing into your business. To succeed in business you don’t just need cash flow, you need positive cash flow. With positive cash flow happens when the cash funneling into your business is more than the amount of cash leaving your business. It is simple yet often ignored. The companies that ignore this end up with negative cash flow. This happens when the outflow of cash is more than your incoming cash. You should never allow negative cash flow.

Here are 10 of the most profitable companies in the world:

  • Exxon Mobil
  • Wells Fargo
  • J.P. Morgan Chase
  • Berkshire Hathaway
  • Johnson & Johnson
  • General Electric (GE)

Here are a few ways to improve your cash flow:

44 – Get paid in advance, ask for deposits or full payment in advance.

45 – Be very selective in offering credit to customers, avoid it if possible.

46 – Increase your sales.

47 – Offer incentives for early payment.

48 – Secure loans for emergencies.

49 – Disasters do happen – Even though Warren Buffet has a hands-off approach to managing his portfolio of companies. He does require the CEOs of each of his companies to have a one sheet in case of an emergency. The sheet of paper contains information on key aspects of the company. While the one sheet of paper might be overly simplified the point is that you have to be prepared for the worst.

50 – If you will succeed in business, you must figure out how to deal with the unexpected. It’s not that “what if it happens“, but “when it happens“. What if your best salesperson quits tomorrow? How long before you will replace her? Do you have a system in place, so when you hire a replacement she can sell?

Systems are crucial to recovering from a disaster. Formal procedures are key. Identify the key parts of your business and think about what it would take to recover losing any of them. For example, if your company relies on your e-commerce website, develop a system to recover your site even if your current site crashes and  your hosting company  goes out of business within the same day. You don’t have to be paranoid about it, but create systems of key parts of your company.

Unsuccessful Business Strategies

If you want to succeed in business, you need to learn from unsuccessful business strategies. An unsuccessful business strategy involves a business model which lacks profit. Driving profit is a must for any successful business.

After all, the core purpose of a business os to make a profit. But profit itself isn’t enough to succeed. Companies should focus on constant innovation with a relentless focus on exceptional customer service.

A profit-first approach can be a short-term win but a long-term loss. If you want to succeed in business, you must drive innovation in your industry. Profit is only a by-product of exceptional service.

Exploring additional revenue streams will help companies become more profitable.

In Conclusion

Few places are less forgiving than the business world. Eventually, everything adds up. If your customers prefer your competitors, your employees would rather work for someone else, your partners no longer believe in each other or the business, and the many mistakes you can make along the way. And that is why businesses fail.

Yes, it is true that most businesses fail. It is also true that many of them succeed. Those that succeed are not the result of miracles. Entrepreneurs who lead businesses to success understand that it takes a carefully planned and executed strategy. A little luck also helps.

Why do most businesses fail?

Ineffective business planning is a top reason for business failure. Business planning requires time and effort, that many entrepreneurs are unwilling to invest.

Without a business plan, a business is more likely to fail.

Most businesses fail because they either run out of money, have bad management, or rely on a poorly executed marketing strategy.

The biggest reason most businesses fail is a lack of funding. Without working capital, no business can continue to operate. Payroll, funding day-to-day business expenses, is a recipe for business failure.

Many businesses fail before they have a chance to take off because they lack a successful go-to-market strategy.

Inadequate management is another common reason for business failure. To keep a business going and growing requires a wide range of skills. While the business founders may have the required skills for some aspects of the business, they may not have all of the necessary skills.

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29 comments.

why some business plans fail to succeed

Nice post. Understanding your customer is a crucial point.

why some business plans fail to succeed

What do you do in your business to understand your customer?

why some business plans fail to succeed

Great article! Covered a lot of perspectives. Most owners believe that “knowledge is power” however they should understand that only “applied knowledge” is only the power that works! -great point. Keep up the good work. I love Success Harbor.

Hi Georgia, Thank you for your comment. I hope you keep coming back to read our posts. Let me know if I can help you. George Meszaros Success Harbor

why some business plans fail to succeed

Nice article covered most of everything that is required to build a successful business. I can tell you put a lot of time and effort into this article.

Thank you, Selvam, for the kind words. Come back soon to read more of our content.

why some business plans fail to succeed

All of these are great reasons why small businesses fail. From my point of view it all comes down to this: All successful businesses have a clear marketing strategy that makes everything they do more effective.

Good point, Patrick. Thank you for taking the time to comment. I hope to see you back on Success Harbor soon 🙂

why some business plans fail to succeed

Thank you GEORGE for this tremendous effort to help those who have the business mind, especially people like me who are business students, I really benefit a lot. thank you once more.

Thank you for taking the time to comment. I am glad that you find it beneficial. How much more time do you have left before you receive your business degree?

Hi, I have only one year left Sir.

why some business plans fail to succeed

Thanks George .. please keep updated about reasons of failure in similar pattern. It helps alot.

why some business plans fail to succeed

Great article!

But, I think it is important to differentiate different kinds of businesses, especially venture capital startups versus plain old small businesses. The failure rate for VC startups is much higher than for other small businesses.

Surprisingly, this is by design!

I don’t mean that the VC’s want you to fail at all, they don’t. But what they want even less is for their VC fund to fail. In order for a large VC fund to succeed, they need to make sure they get a couple of GIANT successes. These are billion dollar companies they call “Unicorns”.

A small success just isn’t helpful. I’ve done 7 VC Startups now–I founded 3 and participated in 3 others. My success ratio is actually very decent. 2 of the 3 companies I founded were successful and 1 of the 4 others IPO’d. That’s much higher than the VC success ratio.

It may surprise you to learn that the VC’s would consider all 3 successes to be failures–even the IPO! None of them produced billion dollar results for them even though they all produced 7- to 8-figure results for me. On the very biggest deal, the VC’s initially told us to walk away from a $10 million dollar payday after just 10 months of work because it didn’t make them enough money.

My conclusion after working that world for years is that if you want to succeed, and you don’t need to be a billionaire to call it success, avoid VC’s. Start your own business.

Thank you for sharing your business experience, Bob. Perhaps, one day we could do an interview about your business experience.

George, sure, would love to do an interview! You can track me down any time on my entrepreneurship blog, BobWarfield.com.

Sounds good, Bob.

why some business plans fail to succeed

Thanks for another great article. I especially enjoyed your point “One thing for sure, a business almost always fails because of the entrepreneur.” Which made me smile and frown. Knowing that it applied directly to this entrepreneur. I had discovered through my business consulting that the most successful startups are those by owners willing to look at their strengths and weaknesses, and not hide

Hi Marsha: Thank you for taking the time to comment. Please come back soon.

Hi Vikash, You wrote “almost” all major issues. Can you think of any major issues that are not in the article? I might include them.

why some business plans fail to succeed

I can’t think of any other place where you could find such a comprehensive and realistic article as this one. It covers all the bases in simple to understand language. Yet all around us we know that some organisations are unable to take advantage of the wisdom here. This is basic stuff – 101 primer, but it comes in the type of “simple, but not easy”. Utterly brilliant.

Thank you, Roger. Do you own a business or thinking about starting a business?

It’s my pleasure, George. I’ve started several, bizarrely with an unusually low failure rate, mainly in the supply of software services to investment banks. I sold out some years ago, took some time to look after my son, and then fell into “Obliquity”, a term coined by Sir John Black of ICI, when he first discovered that the best way of achieving an objective was not always the obvious way. It’s worked well for me, and I’m considering if it’s possible to teach others quickly and effectively as a change of direction, rather than doing it myself. What I find frustrating is the number of people who could do well, not taking the small steps that would transform their lives.

We live in a world that craves attention. If you give your attention to a person, or to a meeting, to a seminar etc. just one person can influence the outcome to get the best result for everyone – but particularly themselves. And yet nobody does this. I’ve found it particularly useful in a commodity – like market where clients will dump you for a cheaper competitor in a heartbeat. It took me years to realise that if you sold a commodity, there was no USP other than yourself and a cunning plan. The wasted time spent trying to differentiate our offering from the rest was ridiculous. Besides, if by some miracle you came up with something, the entire market could copy it.

Sorry, George, I wasn’t intending to write this much – it’s just on my mind at the moment. Take care!

I appreciate the detail in your response.

why some business plans fail to succeed

Thank you, George Meszaros, for writing this article! It contained a lot of information that made sense to me, in like normal person writing. I want to start a business after I get into high school, yeah I know, the chances of success are about 20%, if I had to guess, but I am putting in the work now. But thanks for writing this article it’s very helpful.

Thank you for the kind words, Justin. Good luck in high school.

why some business plans fail to succeed

Did you have it easy when you started up as an entrepreneur?

I don’t think anyone had it easy when started a business. Starting a business is hard.

why some business plans fail to succeed

Thank you very much for this article. I think this is the best article ever on why businesses fail. Thank you, and keep it up.

Thank you for the kind words, Dmitriy 😉

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Home » The Tony Robbins Blog » Career & Business » 14 reasons why businesses fail

14 reasons why businesses fail

Learn more about business failure – and how to avoid it.

why some business plans fail to succeed

WHY BUSINESSES FAIL

So why do businesses fail ? What makes one entrepreneur succeed while another experiences business failure ? It comes down to a combination of preparation, strategies and knowledge. 

1. Not having an effective business plan

If you don’t have an effective business plan, you can’t properly communicate your vision to your team. Tony Robbins advocates not just having a business plan, but having a business map for entrepreneurs to take their small businesses to the next level. Your business map will help you master vital stages of the business cycle, like scaling. Explosive growth can be tempting, but not scaling in a mindful manner is one of the biggest reasons why businesses fail – you have to strike the right balance between growth and infrastructure.

2. Not putting the customer first

One of the top reasons why businesses fail is that they fall in love with their product instead of their customer. To circumvent business failure , fall in love with your client and figure out every single way you can meet their needs. Anticipate what they want, what they need and, when possible, determine what they might not even know they need yet. Turn your customer into a raving fan – somebody who will tell everybody about your product or service or company. Once you grasp that your customer’s life is your business’ life , you can truly envision how to succeed.

3. Not hiring the right people

Hiring the right people has a massive effect on nearly every area of your business. One of the most obvious examples is sales: If you don’t have enough sales, you can’t pay your team or yourself and you cannot grow. Confident salespeople are a key to increased sales. It’s also astounding how many businesses fail due to inventory mismanagement. Hiring someone who is skilled at inventory management or using a good inventory management software is an easy way to solve this issue.

4. Doing it all yourself

Yes, you are an entrepreneur, but that doesn’t mean you have to do everything on your own. A business is only as strong as the psychology of its leader – and the ability to let go and trust others is an essential leadership trait . If you need to control everything, it’s likely you won’t succeed over the long term. Delegating is a top skill to manage a business effectively : it helps you manage your time, focus your energy on what matters most and spot potential up-and-coming leaders within your company.

5. Lack of flexibility

Remember Blockbuster? Radio Shack? Tower Records? These giants of their industries all fell victim to the same reason for business failure : inability to adapt to a changing market . Entrepreneurs who fall in love with a service or product and refuse to change directions when the market demands it are likely to fail. The key to long-term success – in business and in life – is flexibility and a willingness to pivot when necessary.

6. Lack of innovation

Peter Drucker and Jay Abraham, among the greatest business minds of our time, maintain that business failure – and success ­– all starts with two key factors: innovation and marketing . Innovation means finding a better way to meet your clients’ needs than anybody else. Anybody can make some money for some amount of time. But if you want to become successful and sustain that success over years and over decades – if you want to build a brand – then you have to find a way to add more value than anybody else in the game. And that comes from constantly innovating.

7. Not understanding your industry

This is one of the driving factors behind why businesses fail to innovate. Certain industries require more innovation, while others may have different product life cycles. Consider the technology industry. The life cycle on an average product is about six months. And in some sectors, like the app business, it’s just one month. People expect continual innovation and improvement , and if you don’t deliver that to them, someone else will. It’s a different world we live in today, where the only constant is change. And if you aren’t staying ahead, you’re falling behind.

8. Fear of business failure

Business failure is one of the main , if not the biggest, fears of any business owner. If it weren’t for that fear, we wouldn’t even be asking, “ Why do businesses fail ?” However, as you develop your entrepreneurial and managerial skills, you will find that one of your greatest assets in running a successful business is overcoming your fear of business failure . Without minimizing the validity of your fears, you need to learn to view business failure as a learning opportunity rather than an insurmountable obstacle. Remember, life happens for you, not to you .

9. The wrong mindset

One of Tony Robbins’ central philosophies is that our mindsets create our realities ; what we believe influences what we are able to achieve. As entrepreneurs, when we embrace strategies for turning business failure into success, we transform our mindset from one of defeat into one of empowerment . And when we are empowered, a failing business is not the concluding chapter in our story; it is only the beginning. Don’t let your limiting beliefs disempower you. Instead, stay hungry in your search for success . Your hunger will inspire you and pay off in the end.

10. Lack of vision

Marketing guru Jay Abraham understands the question of why businesses fail. It’s a high-velocity and high-leverage mindset that prepares business owners to navigate the ever-changing seas of business. Rather than adapt your dreams to the economy, you must set and achieve your own goals, independent of circumstances. How can you accomplish this? By recognizing that business success hinges on loyalty to a vision .

11. Lack of passion

A passion-driven mindset lets you persist in honing your ethics and beliefs while learning from all the reasons why businesses fail . By adhering to your passions, you’re able to see your circumstances clearly – the positives and negatives. With this level of focus, you create an unstoppable drive to accomplish your goals. This focus allows you to take risks, acknowledging that feelings of doom and failure arise not from circumstances but from feeling stuck in the status quo. Don’t get stuck – persist.

12. Ineffective marketing strategies

Whether your company is large or small, marketing is the next critical step . Why do businesses fail in their operations? If you cannot find a way to market your product or service, then your business will have a hard time getting off the ground. Because the truth is, you could have the most innovative product or service, but the best product doesn’t always win. Do you think McDonald’s has the best burger? Probably not. But their marketing strategies are top-notch.

13. Not understanding your X factor

To market effectively and prevent business failure , you have to understand what your “X-factor” is . What are you here to deliver and how can you improve your customers’ lives? Take, for example, FedEx founder Fred Smith. Even in FedEx’s early stages when profits were slim, Smith invested in three market studies for testing the value expedited shipping would add to his product. Smith’s research paid off: He discovered his X factor and FedEx is now a household name, in large part due to its corner on the market via expedited shipping.

14. Asking the wrong questions

To help discover what your true value is as a business, go one step further and ask yourself the right questions . This includes core questions like: What does the marketplace need? Who is my customer? What can I do to make my company talkably different ? And perhaps one of the most important questions you can ask yourself is, “What business am I really in?” Let’s look at an example of a wildly successful company that needed to ask itself that very question: Apple.

How Apple came back from business failure

businesses failure apple example

Today, everyone has heard of Apple. It’s one of the most valuable companies of our time, with a market cap of nearly $2 trillion and a stock that is soaring above its competitors. But it wasn’t always that way. Apple is actually the perfect example to look at when considering why businesses fail .

Apple’s founder Steve Jobs was fired from the company in 1985. Before re-hiring Jobs in 1997, the failing business operated at a loss and inched toward bankruptcy. In fact, Michael Dell was advising decision-makers to shut Apple down and give its shareholders their money back. But Apple persisted, and Steve Jobs asked himself one of the most critical questions in his lifetime: “What business are we really in?”

At first, the answer seemed obvious – Apple was in the computer business. But how were they supposed to win back customers when 97% of all computers across the United States were run by Microsoft?

That’s when they realized that no matter how good their product was, Microsoft was embedded and entrenched in the masses. After all, it was one of the main reasons Apple found itself in bankruptcy.

So Jobs asked, “What business do we need to be in?” And Apple decided that it needed to be in the business of connecting people to their passions – to their photographs, their music, to each other. When he did this, he avoided one of the top reasons why businesses fail : lack of flexibility.

Answering this question created one of the most life-altering shifts for Apple. The company transitioned into building basic, cool technology that connects people to what they love. Upon rehiring Jobs, the company arranged a partnership with Microsoft which signaled the company’s turnaround. When Apple launched the iMac just one year later, the firm returned to profitability and made its mark. Before long came the iPod and iTunes, then the iPhone. Their net sales soared. S ince that point Apple has never stopped innovating, and their marketing campaigns have propelled the company to an entirely new realm. Had Jobs viewed his firing as the death toll of his career (and company), the firm would have never experienced its revival.

Today, is Apple really in the computer business? Only 10.4 % of their business is computers, which means almost 90%  is not – the vast majority is made up of iPhone , iPad and Apple Watch sales. Honestly answering the question “ Why do businesses fail?” was vital for Apple to change course and become profitable.

If success is about innovation and marketing, then you have to decide who your customer is, what they need, what business you are in and what business you really need to be in. Answering these questions can change your entire business, because the answers will ultimately allow you to change your offer. As we say, change your offer, change your business – and change your business, change your life.

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Why Start-ups Fail

  • Tom Eisenmann

why some business plans fail to succeed

If you’re launching a business, the odds are against you: Two-thirds of start-ups never show a positive return. Unnerved by that statistic, a professor of entrepreneurship at Harvard Business School set out to discover why.

Based on interviews and surveys with hundreds of founders and investors and scores of accounts of entrepreneurial setbacks, his findings buck the conventional wisdom that the cause of start-up failure is either the founding team or the business idea. The author found six patterns that doomed ventures. Two were especially common:

Bad bedfellows.

Other parties besides the founders—like employees, strategic partners, and investors—can play a major role in a firm’s demise. Quincy Apparel, for instance, was undone by weak support from its investors and factory partners and inflexible employees.

False starts.

Many overlook a crucial step in the lean start-up process: researching customer needs before testing products. Like Triangulate, an online dating start-up, they keep rushing to launch fully functional offerings that don’t fit any market needs.

The good news is, firms can avoid that pitfall by rigorously defining the problem they want to solve, getting one-on-one feedback from potential customers, and validating concepts with real customers in real-world settings.

It’s not always the horse or the jockey.

Idea in Brief

The light bulb.

Most start-ups don’t succeed. A foremost expert on entrepreneurship realized he didn’t understand why.

The Autopsy

An examination of start-up failures revealed two common mistakes by founders: failing to engage the right stakeholders, and rushing into an opportunity without testing the waters first.

Founders should take conventional entrepreneurial advice with a grain of salt, because it often backfires. They also should find the right investors and management team and avoid giving short shrift to customer interviews and research.

Most start-ups don’t succeed: More than two-thirds of them never deliver a positive return to investors. But why do so many end disappointingly? That question hit me with full force several years ago when I realized I couldn’t answer it.

  • Tom Eisenmann is the Howard H. Stevenson Professor of Business Administration at Harvard Business School, the Peter O. Crisp Faculty Chair of the Harvard Innovation Labs, and the author of Why Startups Fail: A New Roadmap for Entrepreneurial Success (Currency, 2021).

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Why do business plans fail?

Table of Contents

Bad product ideas

Poor partnerships , a lack of detail , unrealistic financial planning , how a simple app can help improve your business plan.

Unfortunately, not every business will be a success. The failure of businesses is usually due to some issue in their business plan, and there are hundreds of different issues a business plan could have.

This article will describe some of the most common reasons a business plan might fail and how you can avoid them. We’ll look at common pitfalls such as:

  • Poor partnerships
  • A lack of detail
  • Unrealistic financial planning

Sometimes, a business plan fails simply because it focuses on bad product ideas. A bad product idea means that the product or service your business specialises in does not sell well, and the lack of sales leads to an income problem for your business.

Business plans containing bad product ideas usually come about due to a misunderstanding of the term ‘ unique selling point ’. A unique selling point is what makes your product stand out from the products of the competition. It’s a feature that makes the product better as well as being unique. 

Many bad product ideas come from individuals that focus too much on the ‘unique’ part of the term unique selling point. While it is important to have a different product from anything else on the market, make sure you also know what your customers want from a product .

While it’s nice to have help running your business, it’s important to find the right person for the job before you write a contract for a business partnership . If you create a business plan as a partnership and your partner fails to fulfil their responsibilities, your business will struggle to succeed.

There are three things you may want to consider if you’re trying to avoid poor partnerships. The first is your partner’s skill set: look for someone with talents related to your business idea as well as talents you don’t possess. It’s helpful to have a diverse collection of skills within your business. 

Secondly, make sure your potential partner is as passionate about the business as you are. If they aren’t, you may find that you end up doing most of the work or that they leave the business as soon as things become difficult. While measuring passion and emotional investment is challenging, finding a business partner that matches your feelings regarding your business plan is vital.

Finally, create an exit strategy. While you may have found a perfect business partner, you never know what difficulties you’ll encounter in the future. So make sure you know what to do if there is an internal conflict in your company that you can’t resolve peacefully.

When you write a business plan , you need to make sure that you plan for almost anything. One of the biggest reasons business plans fail is because they don’t account for certain situations.

It’s impossible to plan for truly unexpected problems, but a detailed business plan will account for most situations by listing off your company’s weaknesses during a SWOT analysis . SWOT stands for strengths, weaknesses, opportunities, and threats, and it’s a standard part of most business plans. 

By using SWOT to list weaknesses in your business plan and potential threats to your success, you can start planning ways to deal with problems. For instance, you might identify a lack of sales as a potential threat. To account for this, you could invest in marketing or reduce your prices. If your business plan doesn’t account for these sorts of situations, it increases its chances of failure. 

Another reason for lack of detail in a business plan is low-quality research or not performing research at all. Without researching the market and industry you operate in, you’ll struggle to learn about your competitors or understand your customers’ needs. Thorough research is an essential part of avoiding business plan failure.

Financial planning is essential in business. You might not know the future of your business, but with a decent financial plan, you’ll be able to avoid most obstacles to success. If your financial plan is poorly thought-out or unrealistic, though, it might not be as valuable.

Financial plans are all about mapping out your company’s growth. If you’re too optimistic about this growth, it can cause serious problems. Unrealistic expectations can cause unprepared businesses to go bankrupt very quickly.

For example, say you expect to be making £1,000 a week in sales revenue by your second week of business. Your financial plan relies on this for you to pay rent and buy supplies. If it gets to that week and you’re only making £500, you’ll not be able to pay the bills that allow your business to operate. 

To avoid these problems, try lowering your expectations. Even if you think you have a fantastic product idea, it’s better to prepare for the worst than plan for the best and run into trouble. If you create a conservative financial plan that expects some success but accounts for things like low sales, your business plan is much less likely to fail. 

One of the biggest parts of your business plan is the financial aspect. To create a business plan that’s unlikely to fail, you’ll need to make sure you have a good understanding of accounting and a way to track how you’re spending your money.

The Countingup app offers built-in accounting software with its business account so that you can manage all your financial data in one place. 

With additional features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here .

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11 Reasons Why Companies Succeed and 5 Reasons Businesses Fail

11 Reasons Why Companies Succeed and 5 Reasons Businesses Fail

Entrepreneurs are superheroes as they all take the leap of faith and embark on a journey into the unknown. It takes a certain type of person to take on the responsibility of founding a company or working for a startup. The nature of a startup is one that contains sacrifices, emotional and physical investment, and pressure to perform.

On average, nine out of 10 startups go out of business, and the remaining that are able to survive and succeed are the ones that capture the qualities outlined below.

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11 Reasons Small Businesses Succeed

Part of why small businesses succeed may be due to sheer luck, but there are also ways that entrepreneurs can set themselves up for success. Here are 11 reasons why businesses succeed.

1. Passionate leadership and a strong “why”

A key component in why a small business will succeed is its leadership and their vision. A well-defined vision is a skill or gift that every company leader needs in order to cross the finish line. It will be the major force behind an entrepreneur’s success and will serve as a compass in tough times. A startup needs to envision how to monetize from the very beginning. The first dollar counts, especially for potential investors. 

2. Good management team

Even with passionate leadership and a vision for what the company needs to accomplish, good management will make or break a small business. Managers are the people in place who take the established strategy and delegate tasks to the right team members to get it done. A good manager cares more about the health of their team than their own ego, and it shows. As Marcus Buckingham’s adage from First, Break All the Rules goes: “People leave managers, not jobs.” 

3. Company mission and vision statement

Small business success can easily be traced to a clear company mission and vision statement. It may sound simple, but a company that knows why it exists and is able to say so in a concise, clear way will succeed far more often than others. A company mission and the vision statement to go with it helps guide employees in their decision making and inspires them in their day-to-day work. 

4. Unique value

A successful business knows what it offers its customer base. New businesses that turn into successful companies are able to differentiate themselves by adding a unique value to their customers’ lives. You don’t need to have a completely new business idea; even if you’re able to provide an existing product or service but in a better way, you can provide unique value. 

5. Good market fit

Beyond providing customers with a unique value, successful entrepreneurs are able to find a good fit for their business in the marketplace. There are as many types of businesses as there are small business owners in the world, but knowing that there’s a need for what you do — especially a need that can grow — can help set you up for success. 

Compare your financing options with confidence

Compare your financing options with confidence

Spend more time crushing goals than crunching numbers. Instantly, compare your best financial options based on your unique business data. Know what business financing you can qualify for before you apply, with Nav.

6. Sound strategy

A successful small business is built on a sound strategy. While you can’t plan for every possible bump in the road, a roadmap (teamed with that mission and vision statement) will guide your decision making to keep you on track. A solid business plan can also help you lock in small business loans down the road. 

7. Marketing budget

Gone are the days when a small business owner could start a healthy business without budgeting for marketing. Nowadays, a marketing plan contributes to your business’s bottom line by bringing in new customers and helping keep current customers informed on what you’re doing. To succeed in business, social media marketing, advertising, word-of-mouth marketing, content creation, and more need to be part of your business’s plan from day one. 

8. Strong financial planning and good financial health

A successful startup is efficient in managing its finances and able to operate very lean. Every angle should have its own budget assigned and unnecessary expenses should be avoided. It’s important to know what the company needs in order to accomplish milestones and budget accordingly. When resources are limited, and time is of the essence, companies need to master the skill of doing more with less.

9. Access to capital

Being able to get financing when you need it is by far one of the most important and difficult aspects of small business ownership. Unfortunately, access to capital is also often part of your existing network, business history, and ties to financial institutions, which means access to it can be harder for historically excluded groups. 

According to research by the Ewing Marion Kauffman Foundation, 83% of entrepreneurs don’t have access to capital like bank loans. But there are companies like Nav that are trying to change that. By providing Nav with some data points on your company, we can help you find the best business financing options for your business’s needs, including tips on how to open up even more opportunities by improving things like your business credit scores . 

10. Empowered employees

A successful business is chock full of employees who not only do their jobs, but do them with passion and engagement. Seeing your employees as business partners is a great way to ensure that your employees are empowered to do their work. Just like in Jim Collins’s Good To Great , if the right people are seated in the right seats of the bus, the startup will eventually find its direction towards success. 

According to 6Q , disengaged employees can do more damage to your business than you might expect, through bad customer service, a tarnished reputation, and even by making other employees miserable. You can encourage your employees to do their jobs well by providing mentors, encouraging new ideas, and addressing micromanagement and other burnout factors before they become real problems. 

11. Diversity

Business leaders recognize that surrounding themselves with people who will just agree with their line of thinking is no way to succeed. Getting a diverse array of thinking in your small business can help you identify problems and their solutions in ways you may never have considered. This is why diversity isn’t just a “woke” buzzword — it’s a way of life for companies that want to adapt, increase productivity, and be successful in the long term. 

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5 Reasons Small Businesses Fail

Business failure can come down to a number of factors, some of which are out of our control. But here are five reasons small businesses fail that may be completely up to their owners. 

1. Financial insecurity

Cash flow is the bloodline of any business. This means that businesses can be ruined with inadequate capital. Successful startups are the ones that have sufficient capital to run their business operations. The primary duty of a startup CEO is to be able to raise capital, whether through angel investors, crowdfunding, or business financing. 

2. Bad financial management

Just having capital isn’t enough to make a business successful. Managing that funding is just as important as getting it in the first place. One good first step is to get a business bank account to separate your personal finances from your business finances and help you get a clearer picture of what money you actually have. Other financial no-nos that may spell doom for your business include not having a budget, spending too much, and even spending too little. 

3. Ignoring marketing

You may know that you have a great product or service that meets a market need and offers unique value, but how are your prospective customers supposed to do that? Businesses of all sizes and types ignore marketing at their own peril. 

4. Lack of competitive awareness

A company that operates in its own bubble and ignores what competitors are doing is bound to fail. In order to succeed in business, you need to know what your competition looks like. You don’t need to do much in terms of market research, either — regularly checking competitors’ prices, advertising, and social media can give you insight into their strategy and plans. In many industries, collaborating with competitors can even increase your market share as well. 

5. Failure to pivot in unpredictable times

Yes, having a strong business plan and a solid strategy with a well-thought-out roadmap is extremely important to business success. But when major changes happen (like, say, a huge economic recession or a global pandemic), a good business leader will be able to pivot. Many brick-and-mortar companies that didn’t turn to e-commerce through the pandemic in 2020 missed out on new revenue streams and went under as a result. Truly successful startups are always looking for opportunities to do something better by thinking outside of the box and constantly questioning the status quo, and this is even more true during unpredictable times. 

Entrepreneurship is a great skill, and setting businesses up for success is one of Nav’s top goals. If you’re looking for business financing or business credit cards , we can take out the guesswork by providing you with options based on your business’s needs and unique situation. Sign up for a free account to see your options today. 

Photo credit (Getty Images/ Andrew Rich )

This article was originally written on June 24, 2014 and updated on January 17, 2024.

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Headshot of Yun-Fang

Yun-Fang is a small business advisor who has lived in the SF bay area for 15 years. She is a software engineer and has worked at Yahoo!, Facebook and Soldsie prior to becoming an advisor for Nav. She is passionate about using technology to connect people and to make the world a level playing field.

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  • Not Investigating the Market
  • Business Plan Problems
  • Too Little Financing
  • Bad Location or Marketing
  • Remaining Rigid
  • Expanding Too Fast

The Bottom Line

  • Small Business
  • How to Start a Business

Top 6 Reasons New Businesses Fail

why some business plans fail to succeed

It's often said that more than half of new businesses fail during the first year. According to the U.S. Bureau of Labor Statistics (BLS), this isn't necessarily true. Data from the BLS shows that approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more. These statistics haven't changed much over time, and have been fairly consistent since the 1990s. Though the odds are better than the commonly held belief, there are still many businesses that are closing down every year in the United States.

According to the BLS, entrepreneurs started 1,054,052 new businesses in the year ending March 2023. From the historical data, we can expect approximately 210,810 of these businesses to fail within the first two years. With the right planning, funding, and flexibility, businesses have a better chance of succeeding. We'll go through some of the biggest mistakes that startups can make and figure out how to improve your chances of success.

Investopedia / Ellen Lindner

1. Not Investigating the Market

So you've always wanted to open a real estate agency, and you finally have the means to do so, but your desire to open the agency blinds you to the fact that the economy is in a down housing market and the area where you want to work in is already saturated with agencies, making it very difficult to break in. This is a mistake that will result in failure from the start. You have to find an opening or unmet need within a market and then fill it rather than try and push your product or service in. It's a lot easier to satisfy a need rather than create one and convince people that they should spend money on it.

2. Business Plan Problems

A solid and realistic business plan is the basis of a successful business. In the plan, you will outline achievable goals for your business, how your business can meet those goals, and possible problems and solutions. The plan will figure out if there's a need for the business through research and surveys; it will figure out the costs and inputs needed for the business, and it will outline strategies and timelines that should be implemented and met.

Once you have the plan, you should follow it. If you start doubling your spending or changing your strategies whimsically, you are asking for failure. Unless you have found that your business plan is overwhelmingly inaccurate, stick with it. If it is inaccurate, it's best to find out what's wrong with it, fix it, and follow the new plan rather than change how you do business based on quick observations.

The more mistakes you make, the more expensive your business will become and the greater the chance of failure. You may also be called to pivot when market conditions change drastically and impact negatively the chances of success based on the initial business plan. In this case, you revisit your plan and edit it fully based on the decided pivot.

3. Too Little Financing

If you have started a company and things aren't working out, and you have little capital and a struggling business, you're not in a good position to ask for another loan . If you're realistic at the beginning, you can plan to start with enough money that will last you to the point where your business is up and running and cash is actually flowing in.

Trying to stretch your finances at the beginning may mean that your business never gets off the ground, and you'll still have a lot of cash to repay. Lean management strategy is warranted in this phase in particular but can be applied even after this phase. Try to think of multi-channels for funding and financing. Get educated about this area and be creative searching alternative sources of financing.

4. Bad Location, Internet Presence, and Marketing

A bad location is self-explanatory if your business relies on location for foot traffic . Just as dangerous, however, is a poor Internet presence. These days, your location on the internet and your social media strength can be just as important as your company's physical location in a shopping district. An online presence will let people know that they can give you their business, so if the need is already there, the availability and visibility of your business is the next important step.

This is similar to marketing . Not only must you make sure that marketing reaches people, but it must also reach the right people. So make sure the type of marketing lines up with the audience you want to reach. Big billboards may not be the way to go for an internet company, just as online ads may not be the way to go for a heavy-construction business. If the need is already established, make sure you're reaching the audience who needs your product or service.

5. Remaining Rigid

Once you've done the planning, established your business, and gained a customer base, don't become complacent. The need that you're fulfilling may not always be there. Monitor the market and know when you may need to alter your business plan. Being on top of key trends will allow you lots of time to adjust your strategy so that you can remain successful. One must only look at the music industry or Blockbuster video to know that successful industries can undergo huge changes.

6. Expanding Too Fast

Now that your business is established and successful, it's time to expand, but you must treat the expansion like you're starting all over again. If you're expanding the reach of your business, make sure that you understand the areas and markets into which you'll now be reaching. If you're expanding the scope and focus of your business, make sure you understand your new products, service and intended consumer as much as you do with your current successful business.

When a business expands too fast and doesn't take the same care with research, strategy, and planning, the financial drain of the failing business(es) can sink the whole enterprise.

Though the rate of business failure in the first two years is around 20%, it doesn't mean that you have to fail. Through research, planning, and flexibility, you can avoid many of the pitfalls of a new business and be a part of the approximately 25% that make it to 15 years and beyond.

U.S. Bureau of Labor Statistics. " Table 7. Survival of Private Sector Establishments by Opening Year ."

U.S. Bureau of Labor Statistics. " Table 5. Number of Private Sector Establishments by Age ."

why some business plans fail to succeed

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8 reasons why businesses fail

Many of the common reasons for business failure are preventable, if you know what to watch out for.

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why some business plans fail to succeed

by   Jane Haskins, Esq.

Jane has written hundreds of articles aimed at educating the public about the legal system, especially the legal aspe...

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Updated on: February 1, 2024 · 3 min read

  • 1. Not doing enough market research 
  • 2. Not having enough money 
  • 3. Putting together the wrong team 
  • 4. Disagreements among partners 
  • 5. Not focusing on marketing 
  • 6. Relying too heavily on one customer 
  • 7. Getting beaten by competition 
  • 8. Picking the wrong location 

About four out of five small businesses survive their first year. After that, the statistics aren't so encouraging.

Only about 50 percent of small businesses make it for five years or more. The reasons they fail can be complicated—or alarmingly simple. Here are eight of them.

hands of 2 men playing Jenga

1. Not doing enough market research  

You may be passionate about gluten-free kale donuts, but is anyone else? Research on the front end will tell you whether there is a viable market for your product or service.

The research phase gives you a chance to test and adjust your concept and to see who your customers might be—before you invest your life savings in a kale farm.

2. Not having enough money 

It's common to both underestimate startup costs and be overly optimistic about how long it will take your business to turn a profit.

Other money problems can include poor budgeting, taking on too much debt, and not keeping enough cash reserves to carry the business through seasonal ups and downs and unexpected slow periods.

When the economy took a nosedive in 2009, more than a few small businesses went down with it.

3. Putting together the wrong team 

You might be able to design a great product that everyone wants, but that doesn't mean you and your partners are skilled at finances, procurement, marketing, human resources, or simply have all the necessary qualities of a great team member.

Trying to do it all yourself, promoting people out of loyalty, and hiring friends and family are just a few of the ways you can fail at team-building. Personalities play a role, too—your team needs to be able to work together toward a common goal.

4. Disagreements among partners 

Partnerships are great—until they're not. When partners can't get along with one another, don't share the workload fairly, or have different visions for the company, the whole business suffers.

To decrease the chances that your partnership will turn sour, communicate honestly and regularly, and create a procedure for resolving disagreements.

5. Not focusing on marketing 

Without marketing, you won't have customers. Without customers, you won't have a business. Many small business owners don't realize they need to be strategic about marketing.

This means having a plan, some measurable goals, and a way to track whether your efforts are working. Business owners get into trouble when they don't have a marketing strategy, spend too much money on something that's not working, or get so busy that they neglect marketing altogether.

6. Relying too heavily on one customer  

It's thrilling to land a big customer or client, but it's risky to depend on one customer to support the majority of your business.

Even the biggest and most reliable customer can go bankrupt, be acquired by another company, change management, or just change directions—leaving you and your business scrambling to replace them.

7. Getting beaten by competition 

The classic story of a startup that failed to a competitor is personal finance website Wesabe. It got off to a good start in 2006, until Mint.com came along in 2007 with a catchier name and a friendlier user interface.

Unable to compete, Wesabe went out of business in 2010. Sometimes you can survive strong competition by adjusting your business model, but sometimes you can't.

8. Picking the wrong location 

Location can be everything for a brick-and-mortar business. There's a lot that goes into picking a location, including customer convenience, visibility, parking, nearby competition, the image you want to project, and your budget.

It's not easy to get out of a commercial lease and switch locations, so a bad choice at the beginning can be a business breaker.

If you're starting a small business, it's good to be aware of the common pitfalls and try to avoid them. But if you spend too much time worrying about all the ways your business might fail, you risk failing in the easiest way of all—by never getting your business off the ground.

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5 Consequences of Skipping a Business Plan

Author: Kody Wirth

9 min. read

Updated May 10, 2024

You’ve got a great business idea, something that could be truly special. 

You’re ready to dive in, ditch the day job, and build it yourself.

But you keep being told you need to write a business plan .

It feels like an unnecessary roadblock when all you want to do is go, and you’re tempted to skip it entirely.

After all, what’s the worst that could happen? 

That’s the question we’re tackling in this article. 

I spoke with seasoned planning experts Tim Berry , Sabrina Parsons , and Noah Parsons to uncover the consequences of starting a business without a plan. 

1. An idea isn’t always a business

That initial rush of excitement when a business idea hits is intoxicating. You imagine the possibilities, the potential…but the journey from concept to reality is where things get tricky.

“Without a business plan, you won’t know if your idea can be turned into a business,” Sabrina cautions. “To transform an idea into an actual business, you need to test if it’s viable .”

The problem? Most people lack a framework for that testing. 

The idea remains trapped in your head. You lack answers to critical questions, like:

  • Does it solve a real problem ? Who are your ideal customers, and what pain point are you addressing?
  • Is there a market? Are enough people willing to pay for your solution?
  • How will you make money? What’s your basic business model for turning a profit?

Creating a one-page plan gives you a structured way to answer these questions. It could save you from wasting time and resources chasing a dream that was never meant to be a business. 

Or it might just reveal that your idea has potential and deserves more research.

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2. If you build it, they don’t always come

Even a seemingly good idea may not actually work . 

It could be too expensive to execute, face overwhelming competition, or simply not appeal to enough customers. 

“If you build it, they will come” is one of the biggest myths in business,” says Sabrina. “You need to attract people who actually want to buy what you are selling.”

This means finding product-market fit—the sweet spot where your solution meets a real customer need.

“It’s the single most important factor in the early stages of a business,” explains Noah. “If your product doesn’t solve a problem for your customers, you don’t have a business.”

True product-market fit requires testing. It means getting out there, talking to potential customers, and getting honest feedback:

  • Do they truly need what you offer?
  • Is the price point appealing?
  • Are you even targeting the right audience?

You can’t meaningfully ask these questions without first outlining the assumptions baked into your idea. Who are your customers? What problem do you solve? What’s your basic business model?

Again, creating a one-page plan forces you to address these assumptions from the start. It lays the groundwork for the kind of testing that separates successful startups from those that fizzle out because they misread the market.

3. You won’t know how much money you need

You hear about bootstrapping success stories—entrepreneurs building empires from scratch. But the reality is every business requires some investment, even if it’s your own .

“You need to know how much it will cost to start and keep the business running—and then what it will take to become profitable,” Noah stresses. 

If you lack a business plan, you’ll have no idea of your revenue and expense categories. These are the starting points for creating sales, expense, and cash flow forecasts that help you understand:

  • Startup Expenses : How much cash do you need to make your business operational?
  • Operating Costs: How much will it take to run your business for the first year?
  • Hidden Fees: Have you considered every potential expense, from licenses to marketing?
  • Cash Flow : How long will it take for enough money to come in to cover your ongoing expenses?

Trying to figure this out in real-time is a recipe for disaster. 

As Sabrina puts it, “It’s like playing high-stakes poker blindfolded. You’re risking everything without a clear picture of what you’re working with.”

A plan brings clarity. It helps you determine whether you have the funds to succeed, how quickly you might become profitable, and how to allocate your cash wisely. 

Without it, you risk running out of money before your business has a fighting chance.

4. You won’t know what is and isn’t working

“Tracking your business performance— reviewing how your actual results measure up to your plan—is the key to running a successful business,” Noah emphasizes. 

Without a business plan and financial forecasts, you’ll lack the foundation to build a business strategy. That ‘blindfold’ that Sabrina mentioned before will stick with you throughout the life of your business.

Here’s what that means:

  • Inefficiencies bleed profits: You won’t be able to identify the areas where you’re losing money.
  • “Big decisions” are risky: You won’t know when it’s the right time to make critical decisions (like hiring team members or expanding).
  • Profitability is a mystery: Without tracking towards specific business goals, “what it will take to be profitable” remains unknown.
  • No data for decisions: When do you need to change course? Without the clarity a business plan provides, it’s impossible to say.

“Managing your business against your plan leads to better decisions,” says Sabrina. 

It doesn’t have to be complicated—again, with a simple one-page plan, you’ll have a tool “to better understand your financial drivers and revenue opportunities.” 

This plan becomes your roadmap. It lets you make data-driven decisions, minimize risk, and proactively steer your business toward success. With this knowledge, surprises become fewer, and your understanding of your business will grow deeper.

  • 5. You will struggle to raise money

Investors and banks live in the world of business and financial plans . 

As Tim states, “Don’t get caught thinking investors just want pitches and summaries. They expect a plan and will want to go over every detail.” Without these documents, you’ll face serious hurdles in securing funding. Tim adds: “I’ve seen investors reject a startup from just summaries without reading a business plan document. But I’ve never seen them invest without having seen a plan.”  

Think of it this way: If you don’t have a plan, you either scramble to assemble one or walk into investor meetings unprepared. 

“I’ve seen it countless times in actual investor pitches,” Tim recounts. “Things seem promising until investors start digging into specifics like marketing spend or administrative costs. Those without a well-thought-out plan freeze up. Investors can smell that a mile away.”

The very process of creating a business plan primes you for the questions investors will undoubtedly ask. “The planning process forces you to answer questions about your business that you may not have thought to ask yourself,” explains Noah. 

This includes the critical question: How much funding do you truly need?

“Getting the right amount of financing for your business will save you heartache and money,” says Sabrina. “Do yourself a favor and create a full financial forecast to understand exactly how much funding you need.” Otherwise, you risk under or overestimating, damaging your credibility with investors.

TLDR: If you’re seeking outside funding, a formal business plan isn’t just helpful—it’s essential. While a more detailed plan is likely necessary, the one-page plan we’ve discussed will form the foundation.

  • Failing to plan is planning to fail

Writing a business plan will make you a better business owner.

It’s not just about avoiding pitfalls; it’s about unlocking your business’s full potential. The planning process forces you to dig deep, examine your ideas, and refine them into a powerful strategy built for long-term success.

The best part? You don’t need a complex, time-consuming document to reap these rewards. 

“We’re talking about a lean one-page plan to run your business,” Tim emphasizes. It’s easy to develop, keep updated, and build on bullet points, lists, and tables. If you know your business, you can do it quickly.”

So, whether you’re a new or existing business—don’t face the consequences caused by skipping out on your business plan.

Download our free one-page business plan template and write it in as little as 30 minutes . You and your business will be glad you did.

What are the consequences of not having a business plan?

Skipping the business planning process can lead to several negative consequences:

  • Your idea might not be viable: You risk wasting time and money on a product or service that nobody wants or isn’t profitable.
  • You could miss your target market: A plan helps you understand your ideal customer and ensure you’re offering something they truly need.
  • You’ll be financially unprepared: You won’t know your true startup and operational costs or how to reach profitability.
  • You’ll lack a roadmap: Without a plan, it’s difficult to track progress, identify problems, or make strategic decisions.
  • You’ll struggle to get funding: Investors and lenders rely on business plans and financial statements to assess the potential of your venture.

Remember, even a simple one-page plan can help you avoid these pitfalls and set your business up for success.

Can a business survive without a business plan?

Technically, yes, a business can survive without a plan. There are examples of businesses that found success without traditional planning—but they are the outliers.

The reality is that businesses without a plan face significantly greater obstacles. They’re more likely to:

  • Make costly mistakes due to a lack of foresight.
  • Miss out on opportunities due to a lack of direction.
  • Struggle to obtain funding from investors and lenders.
  • Fail to understand their full financial picture.

While survival is possible, a business plan dramatically increases the odds of not just surviving but thriving.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Content Author: Kody Wirth

Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.

Start stronger by writing a quick business plan. Check out LivePlan

Table of Contents

  • 1. An idea isn’t always a business
  • 2. If you build it, they don’t always come
  • 3. You won’t know how much money you need
  • 4. You won’t know what is and isn’t working

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48% of small businesses don’t make it past 5 years: Here’s how your business can beat the odds

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Small businesses are the backbone of America,  making up the majority of all U.S. businesses. But despite Americans relying on small businesses to meet their everyday needs, almost half of all small businesses close after five years.

There are many reasons why small businesses fail, with financials and lack of planning being the leading causes.

To understand why more than half of small businesses fail within five years, we’ll look at small business statistics , failure reasons and what you can do to keep your business up and running.

Key insights: Small business statistics

  • 435,629 businesses applied for business formation in March 2024 ( U.S. Census Bureau )
  • Small businesses account for 99% of all U.S. businesses ( U.S Bureau of Labor Statistics )
  • Between 2013 and 2023, small businesses employed an average of 46% of the workforce (U.S. Bureau of Labor Statistics)
  • 79.4% of businesses survive past their first year ( U.S. Bureau of Labor Statistics , 2018-2023)
  • 52% of businesses survive five years after opening (U.S. Bureau of Labor Statistics, 2018-2023)
  • 34.7% of businesses survive 10 years after opening ( U.S. Bureau of Labor Statistics )

Why do small businesses fail?

While it can be difficult to pinpoint exactly why almost half of all small businesses fail within five years, there are areas that can make or break a business.

Small businesses may fail because they don’t have enough revenue or aren’t getting their products and services in front of the right customers. They may also fail due to poor business planning or lack of capital. Here are some reasons that small businesses don’t make it past the first few years:

They don’t have a clear business plan

A business plan is a good exercise in mapping out a business’s strategy. It helps business owners outline key aspects of growing their businesses, including stating the value of products and services and outlining the business structure, financial forecast and budget. It also allows the busines      s to show potential revenue and any relevant goals or metrics.

Without a business plan, it can be difficult to scale a business and make thoughtful, strategic decisions.

They can’t get access to financing

Businesses may also not make it past their first five years because they may face financial challenges and need financing. Unfortunately, financing is hard to obtain for businesses under five years old.

According to the 2023 Small Business Credit Survey , 40 percent of businesses five years old and under were fully approved for a loan. By comparison, 53 percent of businesses between six and 20 years old were fully approved, and 66 percent of businesses over 20 years old were approved.

While there are lenders who offer some of the best startup business loans with more accessible eligibility criteria, brand-new businesses may still struggle to qualify. Additionally, as newer businesses are considered higher risk, lenders may charge higher interest rates and fees, making it difficult to fit loan payments into a new business’s budget. So, it’s no surprise that the 2023 Small Business Credit Survey found that 36 percent of businesses aged five years or younger used personal funds or a loan from family and friends to finance their business.

They manage cash flow poorly

Another common reason for closure is when a business can’t properly manage its cash flow. Good cash flow management starts with a business setting up and following a business budget, which will track your business’s fixed and variable costs and estimated revenue.

Some business owners think that a business budget is optional, and they don’t know their exact revenue and expenses. Without knowing where the business stands financially, it may fail at the first sign of a cash shortfall or emergency expense. The Q1 2024 Small Business Index found that while 71 percent of small businesses are adequately prepared for any future threats or disasters, 27 percent of businesses say they are only one disaster or threat away from closing.

They don’t have a target market

Many small businesses go to market without having a clear user or customer in mind or a defined product and niche. Small businesses may also enter a saturated market, making it difficult to stand out from all the other businesses offering the same products. Without market research and a customer in mind, businesses are not likely to succeed and make enough revenue to be profitable.

Small business failure rate by industry

Different industries have varying failure rates, which can relate to the profitability of some industries and businesses .

For example, hotel and accommodation services are one of the top industries for growth potential and have a fairly low failure rate. Similarly, agriculture makes up 5.6 percent of the U.S. gross domestic product and has one of the highest five-year survival rates at 65.2 percent.

Source: Survival of private sector establishments by opening year, 2018 to 2023. U.S. Bureau of Labor Statistics

How to maintain a successful small business

Achieving success with your small business means making a strategy for growth and planning ahead to overcome challenges that may crop up. Here are tips for running a successful small business:

Set goals and double down efforts

Use a business plan or other planning document to set business goals, including revenue, sales and marketing goals. Understand what measurements you’re going to use to determine if you’re successful. Then, put in the effort to make sales calls, go to trade shows or work on product development so that you can achieve your goals.

Develop a marketing plan

Consider the various platforms you will use to market your business, whether that’s direct mailers, social media , TV commercials or print advertising. Think through how you will reach your potential customers and track the success of your advertising campaigns to help you make future decisions.

Keep a close eye on finances

Set a business budget and keep track of all revenue and expenses down to the dollar. You want to know how your money is being used so that you can make the most of your income, cut down on waste and plan for unexpected expenses. If possible, also consider starting an emergency fund that you can use in case of an unexpected expense, slow month or actual emergency to avoid financial strain.

Hire talent

You may not have the time or skill to operate every part of your business alone. Think about hiring a talented employee with more skill in an area than you have. By doing so, you may increase sales while giving yourself time back to focus on the areas that you enjoy or excel at.

Apply for financing

You may not need the funds now, but you can apply for a business credit card or line of credit to use for future expenses, build business credit and establish a relationship with a lender, which can benefit your business in the long run.

Bottom line

Being a small business owner means joining the millions of small businesses that serve Americans the most, but it also comes with risks. U.S. Bureau of Labor Statistics data shows that from 2018 to 2023, only a little over half of all small businesses survived five years. But knowing the risks of your industry and managing finances and business loans well will give your business the best shot of surviving and becoming successful over many years.

Frequently asked questions

What is the #1 reason small businesses fail, what should you do when your small business is failing, what is the biggest key to success for a small business.

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Article sources

We use primary sources to support our work. Bankrate’s authors, reporters and editors are subject-matter experts who thoroughly fact-check editorial content to ensure the information you’re reading is accurate, timely and relevant.

Business Formation Statistics . U.S. Census Bureau. Accessed on April 24, 2024.

2023 Small Business Profile . U.S. Small Business Administration. Accessed on April 24, 2024.

Survival of private sector establishments by opening year . U.S. Bureau of Labor Statistics. Accessed on April 24, 2024.

2024 Report on Employer Firms: Findings from the 2023 Small Business Credit Survey . Federal Reserve Banks. Accessed on April 24, 2024.

Business Employment Dynamics . U.S. Bureau of Labor Statistics. Accessed on April 24, 2024.

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50 Reasons Why Some Businesses Fail While Others Succeed

THREE-PART SERIES: Part One

George Meszaros – Cofounder – Success Harbor 50 Reasons Why Some Businesses Fail While Others Succeed

Read Part 2 here and Part 3 here .

why some business plans fail to succeed

Why is it that so many businesses fail while so few succeed ?

One of the great mysteries of entrepreneurship is why businesses fail. Some people start one successful business after another while others fail to succeed.

Why some businesses fail while others succeed?

The worst part about a failing business is that the entrepreneur is unaware of it happening until it is often too late. It makes sense because if the entrepreneur really knew what he was doing wrong, he might have been able to save the business. Some entrepreneurs live in a land of denial while others are unaware of their mistakes.

One thing for sure, a business almost always fails because of the entrepreneur.

“ It’s not the plan that is important, it’s the planning. ” Dr. Graeme Edwards

There are over 28 million small businesses in the United States, according to the SBA.

It’s an impressive number. The sad reality is that only about 50% of them survive. What’s worse is that only about one-third survive 10 years or more. The life of an entrepreneur is unforgiving. It is a constant challenge. There are many moving parts. Anyone of them could put you out of business.

Businesses fail for many reasons. The following list includes some of the most common reasons:

1 – Lack of planning  – Businesses fail because of the lack of short-term and long-term planning. Your plan should include where your business will be in the next few months to the next few years. Include measurable goals and results. The right plan will include specific to-do lists with dates and deadlines. Failure to plan will damage your business.

2 – Leadership failure – Businesses fail because of poor leadership. The leadership must be able to make the right decisions most of the time. From financial management to employee management, leadership failures will trickle down to every aspect of your business. The most successful entrepreneurs learn, study, and reach out to mentors to improve their leadership skills.

3 – No differentiation – It is not enough to have a great product. You also have to develop a unique value proposition, without it you will get lost among the competition. What sets your business apart from the competition? What makes your business unique? It is important that you understand what your competitors do better than you. If you fail to differentiate, you will fail to build a brand.

4 – Ignoring customer needs – Every business will tell you that the customer is #1, but only a small percentage acts that way. Businesses that fail lose touch with their customers. Keep an eye on the trending values of your customers. Find out if they still love your products. Do they want new features? What are they saying? Are you listening? I once talked to the CEO of a training company who told me that they don’t respond to negative reviews because they are unimportant. What? Are you kidding me?

5 – Inability to  learn from failure  – We all know that failure is usually bad, yet it is rare that businesses learn from failure. Realistically, businesses that fail, fail for multiple reasons. Often entrepreneurs are oblivious about their mistakes. Learning from failures is difficult.

6 – Poor management – Examples of poor management are an inability to listen, micro-managing – AKA lack of trust – working without standards or systems, poor communication, and lack of feedback.

7 – Lack of capital – It can lead to the inability to attract investors. Lack of capital is an alarming sign. It shows that a business might not be able to pay its bills, loan, and other financial commitments. Lack of capital makes it difficult to grow the business and it may jeopardize day-to-day operations.

8 – Premature scaling – Scaling is a good thing if it is done at the right time.  To put it simply, if you scale your business prematurely, you will destroy it. For example, you could be hiring too many people too quickly, or spend too much on marketing. Don’t scale your business unless you are ready. Pets.com failed because it tried to grow too fast. They opened nationwide warehouses too soon, and it broke them. Even the great brand equity that they had built couldn’t save them. Within a few months, their stock went from $11 to $0.19.

According to a study of about 3200 high growth internet startups done by Startup Genome, about 70% of the startups in their dataset scaled prematurely.

9 – Poor location – Poor location is a disadvantage that might be too much to overcome. If your business relies on foot traffic, location is a strategic necessity. A poor location might make your customer acquisition costs too high.

10 – Lack of profit – Revenue is not the same as profit. As an entrepreneur, you must keep your eyes on profitability at all times. Profit allows for growth. According to Small Business Trends, only 40% of small businesses are profitable, 30% break even, and 30% are losing money.

11 – Inadequate inventory management – Too little inventory will hurt your sales. Too much inventory will hurt your profitability.

12 – Poor financial management – Use a professional accounting software like Freshbooks. Keep records of all financial records and always make decisions based on the information you get from real data. Know where you stand all the time. If numbers are not your thing, hire a financial professional to explain and train you to understand, at least the basics.

13 – Lack of focus – Without focus, your business will lose its competitive edge. It is impossible to have a broad strategy on a startup budget. What makes startups succeed is their ability to quickly pivot, and the lack of focus leads to the inability to make the necessary adjustments.

14 – Personal use of business funds – Your business is not your personal bank account.

15 – Overexpansion – It is easy to make the mistake of expanding your business into too many verticals. Before you enter new markets make sure you maximize your existing market.

16 – Macroeconomic factors – Entrepreneurs can’t control macroeconomic factors. Common macroeconomic factors are business cycles, recessions, wars, natural disasters, government debt, inflation, and business cycles. Your business can still succeed in bad times. Hyatt, Burger King, FedEx, Microsoft, CNN, MTV, Trader Joe’s, GE, HP are only a few examples of wildly successful companies that started during a tough economy.

17 – No succession plan – Future leaders should be identified in advance. Without an effective succession plan, your business is unprepared to fill openings created by retirements, unexpected departures, or death.

18 – Wrong partner – It’s no secret that it is easier to succeed in business with the right partners. The wrong business partner will, at the very least hurt, or, at worst, destroy your company.

THREE-PART SERIES: Part Two of “50 Reasons…” will appear in the next issue of the Southern Oregon Business Journal

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This is a good list. And I believe there is also another reason why most businesses fail – lack of desire to make/grow it.

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Government policy

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Great List! Very enjoyable read! However, there is another thing that might be of consideration; The CEO having self-awareness and being willing to change their management style and adjusting to situations, in short – CEO adaptability.

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  • Sunak accuses Starmer of 'rank hypocrisy'
  • Electoral Dysfunction:  Jess Phillips says Elphicke defection like 'being punched in gut'
  • UK exits recession | Economy 'returning to full health'
  • Faultlines:   Can British farming survive?
  • Live reporting by Tim Baker

Across the UK, anger is brewing amongst some farmers.  

Protests have already been held in London, Dover and Cardiff, with more planned - mirroring similar tensions seen across Europe in the last six months.     

They say they’re annoyed about cheap foreign imports and changes to subsidies forcing them to give up land in favour of environmental schemes.    

But what does this mean for the food on our table - and does British produce risk becoming a luxury product for the wealthy only?    

On the Sky News Daily , Niall Paterson is joined by West of England and Wales correspondent Dan Whitehead to find out why farmers are so concerned, and speaks to Liz Webster, the founder of Save British Farming, about why she believes eating British isn't just good for our farmers - it's good for the nation's health, too.   

In response to our report, Farming Minister Mark Spencer, said: "We firmly back our farmers. British farming is at the heart of British trade, and we put agriculture at the forefront of any deals we negotiate, prioritising new export opportunities, protecting UK food standards and removing market access barriers. 

"We've maintained the £2.4bn annual farming budget and recently set out the biggest ever package of grants which supports farmers to produce food profitably and sustainably."

The Welsh government said: "A successful future for Welsh farming should combine the best of our traditional farming alongside cutting-edge innovation and diversification. 

"It will produce the very best of Welsh food to the highest standards, while safeguarding our precious environment and addressing the urgent call of the climate and nature emergencies."

👉  Listen above then tap here to follow the Sky News Daily wherever you get your podcasts   👈

Following the defection of the Dover and Deal MP Natalie Elphicke to Labour, Beth, Ruth and Jess discuss the surprise move and whether it could have been handled differently by Sir Keir Starmer.

They also talk about Beth's interview with the former immigration minister Robert Jenrick and his warnings about Reform UK.

Plus, how significant was the defeat of former Conservative mayor of the West Midlands Andy Street? Beth and Jess were both there to tell the story.

And they answer a question on Labour and the Muslim vote, and what the party can do to restore confidence and trust.

Email Beth, Jess, and Ruth at [email protected] , post on X to @BethRigby, or send a WhatsApp voice note on 07934 200 444.     

👉 Listen above then tap here to follow Electoral Dysfunction wherever you get your podcasts 👈

In January 2023, Rishi Sunak made five promises.

Since then, he and his ministers have rarely missed an opportunity to list them. In case you haven't heard, he promised to:

• Halve inflation • Grow the economy • Reduce debt • Cut NHS waiting lists and times • Stop the boats

See below how he is doing on these goals:

The Sky News live poll tracker - collated and updated by our Data and Forensics team - aggregates various surveys to indicate how voters feel about the different political parties.

With the local elections complete, Labour is still sitting comfortably ahead, with the Tories trailing behind.

See the latest update below - and you can read more about the methodology behind the tracker  here .

Speaking to Sky political editor  Beth Rigby , Sir Keir Starmer has defended his decision to allow Tory MP Natalie Elphicke into Labour.

Ms Elphicke was on the right of the Conservative spectrum, and previously defended her sex-offender ex-husband, comments which she apologised for this week following her defection.

Addressing Tory voters, Sir Keir says he wants Labour to be a "place where they who have ambitions about their families, their communities, their country, can join and be part of what we are trying to build for their country".

Asked by Beth if he was ruthless, Sir Keir said: "Yes, I'm ruthless in trying to ensure we have a Labour government that can change this country for the better.

"Not ruthless for my own ambition, not ruthlessness particularly for the Labour Party - I'm ruthless for the country. 

"The only way we'll bring about a change in this country is if we're ruthless about winning that general election and putting in place a government of public service, that’ll be a major change.

"Politics, I believe, should be about public service, that's what I've been about all my life."

More now from political editor Beth Rigby's interview with Labour leader Sir Keir Starmer.

She reminded him that he previously ruled out doing a deal with the SNP - but has not done so for the Liberal Democrats.

Sir Keir again ruled out a coalition with the SNP - adding that he is aiming for a "majority Labour government".

He says Labour needs "to keep working hard, keep disciplined and getting our message across, which is something fundamental to me".

Pushed on his lack of ruling out a possible agreement with the Lib Dems, Sir Keir says: "I'm going for a majority.

"That's the answer I gave you a year ago. It's the same answer I'm giving you now."

Sir Keir Starmer was earlier today pushed on whether Rwanda deportation flights will take off if he was prime minister - although it was not clear if he would cancel flights which had already been organised.

Sky News understood that previously booked deportation flights to Rwanda would still go ahead if Sir Keir entered Number 10. 

But the Labour leader has now gone further.

Speaking to political editor Beth Rigby , Sir Keir has ruled out any flights taking off.

"There will be no flights scheduled or taking off after general election if Labour wins that general election," he says.

He says: "Every flight that takes off carries with it a cheque to the Rwanda government. 

"So I want to scrap the scheme - so that means the flights won't be going."

Sir Keir says he would rather spend the money on his own measures to counter small boats.

"No flights, no Rwanda scheme. It's a gimmick," he says.

By Alix Culbertson , political reporter

Scotland's new first minister has told Sky News that the controversial gender recognition reforms "cannot be implemented."

John Swinney,  who became first minister this week , has faced questions over his stance on gender recognition after MSPs voted in 2022 to pass a bill to make it simpler for people to change their gender without having to obtain a medical diagnosis.

The UK government blocked the bill from being made into law and the Supreme Court rejected a request by the Scottish government for a judicial review.

Asked if he would be fighting to push the bill through, Mr Swinney told Sky News: "The reality of the situation we face is that the Supreme Court has said that we can't legislate in that area. We can't take forward that legislation."

The UK economy is no longer in recession, according to official figures.

Gross domestic product (GDP) grew by a better-than-expected 0.6% between January and March, the Office for National Statistics (ONS) said.

Economists had predicted the figure would be 0.4%.

Prime Minister Rishi Sunak said it showed the economy had "turned a corner".

He told Sky News's Ed Conway: "I am pleased that while there's more work to do, today's figures show that the economy now has real momentum, and I'm confident that with time, people will start to feel the benefits of that.

"We've had multiple months now where wages are rising, energy bills have fallen, mortgage rates are down and taxes are being cut... I'm pleased with the progress that we're making."

Mr Sunak added: "I am confident the economy is getting healthier every week."

You can read more here:

Rishi Sunak has criticised Sir Keir Starmer's position on Rwanda as "rank hypocrisy".

Speaking to broadcasters, the prime minister says the Labour leader has announced things the government is "already doing".

He gives the example of "punching through the backlog, having more law enforcement officers do more, that's all happening already".

"We've announced all of that more than a year ago," the prime minister adds.

"The question for Keir Starmer if he cares so much about that, why did he vote against the new laws that we passed to give our law enforcement officers new powers? 

"They've now used those to arrest almost 8,000 people connected with illegal migration, sentenced them to hundreds of years in prison.

"And if it was up to him, all those people would be out on our streets, so I think it's rank hypocrisy property of his position."

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  • May 10, 2024   •   27:42 Stormy Daniels Takes the Stand
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Stormy Daniels Takes the Stand

The porn star testified for eight hours at donald trump’s hush-money trial. this is how it went..

Hosted by Michael Barbaro

Featuring Jonah E. Bromwich

Produced by Olivia Natt and Michael Simon Johnson

Edited by Lexie Diao

With Paige Cowett

Original music by Will Reid and Marion Lozano

Engineered by Alyssa Moxley

Listen and follow The Daily Apple Podcasts | Spotify | Amazon Music | YouTube

This episode contains descriptions of an alleged sexual liaison.

What happened when Stormy Daniels took the stand for eight hours in the first criminal trial of former President Donald J. Trump?

Jonah Bromwich, one of the lead reporters covering the trial for The Times, was in the room.

On today’s episode

why some business plans fail to succeed

Jonah E. Bromwich , who covers criminal justice in New York for The New York Times.

A woman is walking down some stairs. She is wearing a black suit. Behind her stands a man wearing a uniform.

Background reading

In a second day of cross-examination, Stormy Daniels resisted the implication she had tried to shake down Donald J. Trump by selling her story of a sexual liaison.

Here are six takeaways from Ms. Daniels’s earlier testimony.

There are a lot of ways to listen to The Daily. Here’s how.

We aim to make transcripts available the next workday after an episode’s publication. You can find them at the top of the page.

The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

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Jonah E. Bromwich covers criminal justice in New York, with a focus on the Manhattan district attorney’s office and state criminal courts in Manhattan. More about Jonah E. Bromwich

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COMMENTS

  1. 8 Reasons Why Business Plans Fail and Hinder Growth

    The top 8 reasons business plans fail. 1. Bad business ideas. Nobody likes to talk about it, but the main reason why business plans fail is bad ideas. Most ideas look great on paper—but all too often, companies realize they have invested in a bad idea once it is too late. To avoid this, smart businesses are using "user-driven development ...

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  4. Why Businesses Fail: 6 Common Reasons Explained

    It costs businesses revenue and people their jobs and gives rival businesses opportunities to move ahead in the market. 5. Unsuitable company culture and losing the talent war. About 94% of entrepreneurs and 88% of job seekers say that a healthy culture at work is vital for success.

  5. 5 Reasons Strategy Execution Fails

    Why Do Strategic Plans Fail? Companies' strategic plans often fail for the same reason: ineffective strategy execution. According to Harvard Business School Professor Robert Kaplan's book, The Balanced Scorecard: Translating Strategy into Action, 90 percent of organizations fail to execute their strategies successfully. "Studies have shown that execution is continually rated as one of ...

  6. 20 Reasons Why Small Businesses Fail And How To Avoid Them

    Common financial reasons include poor pricing strategies, insufficient funds, and cash flow. Creating a clear business plan can help small business owners avoid common failures. Understanding your target market is key to creating a good business strategy. Table of Contents. Lack of Planning. Choice of Location. Lack of Research.

  7. Why Do So Many Strategies Fail?

    A lot of young ventures, on the other hand, raise vast sums of money and attract tens of millions of customers, only to collapse when they can't figure out how to fend off imitators. In these ...

  8. Why Do Businesses Fail? Solutions for 10 Common Causes

    8. Not Managing Inventory. Balancing acts are hard enough for any person, which is why those who perform on the trapeze are referred to as "artists.". But business owners must control the inventory so they don't lose sales from insufficient numbers or burn through capital by allowing too much inventory to pile up.

  9. 9 Major Reasons Why Businesses Fail by Year 2 & How to Avoid Them

    1. Insufficient funds due to weak forecasting. Without a doubt, poor financial forecasting is the main reason businesses fail. It is relatively easy to plan fixed costs such as rent, payroll, utilities, hardware, etc. Entrepreneurs should vet this out extensively when writing their initial business plan.

  10. 50 Reasons Why Some Businesses Fail While Others Succeed

    The following list includes some of the most common reasons: 1 - Lack of planning - Businesses fail because of the lack of short-term and long-term planning. Your plan should include where your business will be in the next few months to the next few years. Include measurable goals and results. The right plan will include specific to-do ...

  11. The Top 10 Reasons Why Businesses Will Fail Over The Next 10 Years

    Adobe Stock. Let's explore the top 10 reasons why businesses fail - plus one important bonus tip. 1. Complacency. Arrogance is a company killer. As soon as leaders become complacent, their ...

  12. 14 proven reasons why businesses fail

    6. Lack of innovation. Peter Drucker and Jay Abraham, among the greatest business minds of our time, maintain that business failure - and success ­- all starts with two key factors: innovation and marketing. Innovation means finding a better way to meet your clients' needs than anybody else.

  13. Why Start-ups Fail

    The Light Bulb. Most start-ups don't succeed. A foremost expert on entrepreneurship realized he didn't understand why. The Autopsy. An examination of start-up failures revealed two common ...

  14. Why do business plans fail?

    Unfortunately, not every business will be a success. The failure of businesses is usually due to some issue in their business plan, and there are hundreds of different issues a business plan could have. This article will describe some of the most common reasons a business plan might fail and how you can avoid them.

  15. The 4 Most Common Reasons a Small Business Fails

    Poorly planned or executed marketing campaigns, or a lack of adequate marketing and publicity, are among the other issues that drag down small businesses. 1. Financing Hurdles. A primary reason ...

  16. Why Entrepreneurs Ignore A Formal Plan, The Root Cause Of Business Failure

    The findings suggest that they often have three perceptions: (1) they feel optimistic that they will make a good decision, (2) they feel that they have the decision under control, and (3) they are ...

  17. Why Businesses Fail and How To Succeed Instead

    These are the top reasons why some businesses fail. Learn from their mistakes so you can be a small business success story. Good news. Business failure statistics are less likely to fail in their first year than previously thought - as reported by the SBA Small Business Administration. Top 10 Reasons for Businesses Failures

  18. 11 Reasons Companies Succeed & 5 Reasons Businesses Fail

    Here are 11 reasons why businesses succeed. 1. Passionate leadership and a strong "why". A key component in why a small business will succeed is its leadership and their vision. A well-defined vision is a skill or gift that every company leader needs in order to cross the finish line. It will be the major force behind an entrepreneur's ...

  19. Top 6 Reasons New Businesses Fail

    5. Remaining Rigid. Once you've done the planning, established your business, and gained a customer base, don't become complacent. The need that you're fulfilling may not always be there. Monitor ...

  20. 8 reasons why businesses fail

    Relying too heavily on one customer. 7. Getting beaten by competition. 8. Picking the wrong location. About four out of five small businesses survive their first year. After that, the statistics aren't so encouraging. Only about 50 percent of small businesses make it for five years or more. The reasons they fail can be complicated—or ...

  21. 5 reasons small businesses fail (and how to succeed)

    4. Bad management. Poor leadership is one of the top reasons small businesses fail. While leadership is critical for every business, it's even more so for smaller businesses.

  22. 5 Consequences of Skipping a Business Plan

    TLDR: If you're seeking outside funding, a formal business plan isn't just helpful—it's essential. While a more detailed plan is likely necessary, the one-page plan we've discussed will form the foundation. Failing to plan is planning to fail. Writing a business plan will make you a better business owner.

  23. 11 Reasons Why Most Entrepreneurs Fail

    3. Lack Of Vision. The mark of a good leader is not only having a vision but imparting that vision to others in a way that makes them want to come with you on the journey. Businesses without well ...

  24. Why Small Businesses Fail And How To Beat The Odds

    To understand why more than half of small businesses fail within five years, we'll look at small business statistics, failure reasons and what you can do to keep your business up and running ...

  25. 50 Reasons Why Some Businesses Fail While Others Succeed

    Businesses fail for many reasons. The following list includes some of the most common reasons: 1 - Lack of planning - Businesses fail because of the lack of short-term and long-term planning. Your plan should include where your business will be in the next few months to the next few years. Include measurable goals and results.

  26. Politics latest: Keir Starmer sets out what he'll do to tackle small

    Asked if he has a plan to deter people, Sir Keir says his primary goal is to stop the people-smuggling gangs. He says that saying a deterrence like Rwanda works is not borne out by the evidence ...

  27. Stormy Daniels Takes the Stand

    This episode contains descriptions of an alleged sexual liaison. What happened when Stormy Daniels took the stand for eight hours in the first criminal trial of former President Donald J. Trump?