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Why business fail ? Some other succeed

Girlfridayz came across a LinkedIn post saying 10 reasons why small businesses fail in their first year.

We though of doing a blog post about why business fail, not only in their first year but second, third or 10 to 20 years down the line.

Below are listed some of reasons why your business can fail in the 80% of the category of business failure and why some are in the 20% of successful business.

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.

Leadership failure

Businesses fail because of poor leadership. The leadership must be able to make the right decisions most of the time. From fiscal 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.

No diversity

It is not enough to have an excellent product. You also must develop a unique value proposition, without one 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.

Ignoring customer needs

Every business will tell you that the customer is first, 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? Hence it means to love feedback either negative or positive as it shapes your business direction.

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 but it not unobtainable, Self-reflection is key, looking back at your plan and saying what could we do better is essential for survival. If you enter a bad deal look at why you fail and do not make the same mistake, review your processes, discontinue a product or service, re-adjust your product or service, Failure is success turn inside out remember that and the only way is up, send a survey or questionnaire asked your customers what they want, need, review pricing strategy or distribution process.

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. Trust your staff, co-worker, associate and stakeholder, asked feedback they necessary for business growth.

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 jeopardise day-to-day operations. Hence reduce cost where possible to save money, found cheaper supplier still supplying excellent quality product or services, do not take on too many business loan, review your finances regularly, set budget for everything and stick to it do not go over your budget. Find cheap advertisement, discontinue what not working for you. Segment your market are you sure you are marketing yourself to the right customers for your niche.

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. Opening too many branch quickly can be detrimental for your business. Do a market research and compile finding search for the best location for you, find where your service or product are needed in which area and if your customers are there. Ensure you have the fund to expend and the staff available before you do so ensure that your business is profitable by a large margin.

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 planning-business customer acquisition costs too high or even no customers or the odd one, it might cost you lots of money in marketing to attract the right crowd.

Even online location is important, think of the type of customers you want to get, look at environmental data, Geo-location, and see population density, age group, income bracket, distribution. A business set up in a rural area off the motorway might have difficulties to acquire customers. Look at which country you can set up or provide service/ product.

Example of poor choose of location: a new posh café upper class modern and high price open in Brixton Coldharbour lane where most of the population are either unemployed and on welfare benefit, couple with that Brixton is full of restaurant, café and chip shop.

Hence this café look out of place not part of the area, over price for the area and is never busy. The owner obviously did not think that location and looking at environmental data and completed a market research plus competitor analysis before setting up the café. Should he have gone further in Brixton where the posh upper class people live and set up is café there he would be busy.

Lack of profit

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

Inadequate inventory management

Too little inventory will hurt your sales. Too much inventory will hurt your profitability. Poor fiscal management – Use a professional accounting software like Stripe or Sage, Freshbook. 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.

Lack of focus

Without focus, your business will lose it the competitive edge. It is impossible to have a broad strategy on a start-up budget. What makes start-ups a succeed is their ability to quickly pivot, and the lack of focus leads to the inability to make the necessary adjustments. Lack of consistency too harm your business.

Personal use of business funds

Your business is not your personal bank account. Keep your business money separate from your personal fund. If you cannot pay yourself yet ensure you have other fund available for your personal use.


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

Macroeconomic factors – Entrepreneurs can’t control macroeconomic factors. Common macroeconomic factors are recessions, wars, natural disasters, government debt, inflation, and business cycles. Your business can still succeed in tough 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.

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.

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.


Here some of the reasons your business might fail, they are all very important equally and should not be brush off if you remotely want a successful business. Girlfridayz can help you with your plan to remain on top -

In your mind right now you'll be like

I am thinking hum Girlfridayz - Shall we asked her to do our plan she is excellent and impressive.

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