10 Main Reasons Why Business Start-ups Fail

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There are 10 main reasons why business start-ups fail. According to statistics, 90 percent of business start-ups end up folding within the first three years of establishment. 80 percent don't make it past the first year. And only a very little number of business start-ups make it to the 10th year.

10 main reasons why business start-ups fail

Many entrepreneurs start their businesses with great goals and a dedicated attitude, but they end up failing. This is due to a number of reasons ranging from insufficient funds, to improper market research.

Why do business startups fail?

This is no doubt one of the most frequently asked questions among entrepreneurs and small business owners. The statistics of failed businesses can be a scary sight, but if you know the common reasons why start-ups fail, you can avoid being a victim yourself.

Below are 10 main reasons why business start-ups fail

1. Lack of Funds

“If you don't have money, DO NOT start a business” said millionaire entrepreneur, Dan Lok.

One of the most common causes of failure in business is not having enough capital to invest into the business.

A small start-up will need funds to care for the both the owner and the business. The common mistake entrepreneurs make is taking the little profit they have managed to earn, and sharing it between themselves and the business. Doing this will end up starving the business, and inevitably cause it to fold.

A proper businesses start-up should have all the profit earned from it invested back into it. This should continue for the first three to six years, before the owner starts profiting from it. During this period, you'll need to have enough money to cater for your personal needs.

2. Lack of Demand

Many business start-ups believe that once their business kicks off, the demand for their product or service will increase. This is a sentimental belief that makes them end up not making proper market research before lunching their business. At the end of the day, their business ends up lacking in demand, and inevitably folds. It is important to do a proper market research before lunching a business.

3. Lack of Adequate Skill

Lots of business owners have excellent ideas for their businesses, but they lack the required skills to help their business take off. This is why it is important to invest in acquiring the right amount of knowledge needed for the business. Identify the skills needed, study, and learn them. You might want to work for someone who is already into your line of business. This will give you first hand practical knowledge that will grant you an edge over your competitors.

4. Early Hired Hands

Getting hired help can be very good for a business. You certainly can't do everything on your own as the work starts to build up. However, getting hired help should be done at the right time. Many start-ups that get hired help do so prematurely and end up folding.

You should only get help when demand is on the rise, and you need help to reduce the workload. Hiring at the wrong time can be very dangerous and wasteful for a business start-up. Identify what your goals are and weigh the pros and cons before deciding to get that hired hand.

5. Bad Marketing

Knowing how to market and sell is the most important skill any business owner could learn. Unfortunately, many business start-ups focus only on innovation and quality, neglecting the marketing aspect of business. As long as you are an entrepreneur, you must be a salesperson.

Learn how to identity your target audience, and turn them into potential clients. This is one thing most business start-ups fail to realize. In the end, they end up crashing because they cannot make a sale.

6. Poor customer service

Taking good care of your customers cannot be overemphasized. They are the very life of any business. Customers will leave reviews on your business and those reviews are your ticket to more prospective customers. Any business that doesn't pay attention to its customers cannot thrive and will die naturally.

7. Improper Planning

There are many businesses that have failed due to lack of proper strategy. Before you start a business, there should be a long term business strategy available. This strategy is the map that will guide your business through to success.

8. Copying Others

Originality is key to any business start-up. Any business start-up that copies other businesses is on a pathway to failure. What works for one often times doesn't work for the other. A business start-up should never try to make decisions based on what other like businesses are doing. This usually does more harm than good and could ultimately lead to the business crashing.

9. Being too expensive

Many businesses have run into the ground because they over hyped their products. A business start-up should know the value of their product and price it accordingly. If a new product is too expensive, many prospective customers will lose interest and go for the next best alternative.

It is important to first build customer trust in your product and ensure there are adequate benefits before hiking the price. That way, they know the quality and worth of your product and will patronize you regardless of the cost.

10. Lack of focus

Just like a newborn baby, every business start-up requires a lot of time and dedication. Many businesses have failed because the attention of the owner is divided. They try to do too many things at the same time, and end up giving priority to the wrong things. A good business owner shouldn't lose focus on what's important. A newly established business will starve and slowly die if proper attention isn't given to it.


There are many other factors that influence the success or failure of a business. It is the responsibility of the business owner to make proper research and acquire adequate knowledge for their businesses. Starting a business isn't always easy, but if you avoid the mistakes mentioned above, your chances of failure will be greatly reduced.

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