Reasons Businesses Fail

Updated: Dec 6, 2020

Entrepreneurship can change people's lives for the better; and I have witnessed a lot of it. However, advocacy for entrepreneurship also means integrating the value of honesty and transparency.

Businesses could fail, and that's a hard truth. Here are a few reasons why:


You have insufficient capital to start and run the business. Planning a business is one of the most exciting pursuit a person can do. And oftentimes, we are so zoned in calculating how much profit we could reap that we tend to underestimate proper financial planning.

A common knowledge is that you must be prepared to cover all kinds of business expenses for at least six (6) months without draining your entrepreneurial wallet. Furthermore, there could be unexpected expenses that might come along the way and sales or profit cannot be guaranteed in business. These are just some of the major downsides of owning a business.

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You lack competent leadership and management knowledge and skills-- a vast concept which requires proper education and training.

It takes more than sufficient money to grow a business. It requires efficient planning, proper risk management, people skills, power, effective marketing strategies, and many more.

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You got the wrong business location.

Unless you primarily run an online or a home-based business, no traffic plus less visibility for potential customers equals business failure. It's a sure way!

Your location and office/ store atmosphere must fit the type of business you are offering to people. Give high priority to convenience not for you but for your clients or consumers because it creates lasting effects.

So choose the best location for your business. Do not sacrifice long-term success potentials over cheap rental fees with poor location. That isn't a wise step to control your expenses and bump up your profit.


Remember the adage,

"If you fail to plan, you plan to fail."

Business planning, although a strenuous and rigorous task, increases your odds to succeed. It is something that must be done ahead before operating the business.

And as an entrepreneur, you ought not say "I'll cross the bridge when I get there." Otherwise, you can easily be knocked down by wearisome and unexpected business challenges.

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Successful entrepreneurs understand the importance of a written business plan because it serves as a road map of the business' future. A good business plan includes your operational and financial details; goals and objectives; business strengths, weaknesses, opportunities, and threats (SWOT); resources; marketing strategies; and others.

Adequate research precedes careful planning. It would be practical to learn as much as you can about your business before sitting down to draft your business plan. It will make your task easier.


You have been poorly managing your resources.

Successful business managers are able to effectively manage all these types of resources: material, human, financial, and information.

Related Post: 3 Major Characteristics of a Successful Business

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