By September 10, 2012 Read More →

5 Reasons Why Most Start Ups Fail

And How To Make Yours Succeed!

A large number of business start ups are launched every day, yet so many of them fail for one reason or another. Research shows that around 80 % of new businesses fail within their first year. Here are 5 common reasons why most start-ups fail, and some tips on how you can really make yours succeed.

1. Poor Business Planning

A solid business plan is the very key to a business’ success and stability. Many new business owners get so caught up in their ‘idea’ that they fail to recognize the importance of a solid business plan. They just can’t wait to see their new business get up and running. For your business to be a success, you must create a well thought out business plan that includes important points such as financials, milestones, strategy and goals. It doesn’t have to be an essay – noting the key points and having foresight of your product or service is often the make or break when launching.

2. Lack of Funding

Not having enough funds is another reason most businesses fail. Many start ups overlook the need for keeping enough funds available to sustain the business in its early stages. A lack funds will hinder the growth and stability of your business. To avoid this, point out your business’ needs (and your personal) and estimate the funding required for everything including all future costs and expenses. You must seek professional advice if you’re not sure how to do it. Never guess, always map out your exact needs for at least the first 12 months, Although consulting a professional may seem an additional expense – it will most definitely pay off in the future.

3. Not Knowing “The Industry”

One of the reasons for failure of many small businesses is their owner’s lack of knowledge about the business industry.  Many new entrepreneurs don’t feel it necessary to educate themselves about the industry in which they are about to start. They don’t have any practical experience or connections and think that with minimum investment and a get-quick-rich formula their dreams will turn into reality overnight. This is a common but dangerous approach.  You must familiarize yourself with the basics of your industry or niche before you take the plunge! Make solid connections, attend networking events, workshops, conferences and immerse yourself in your subject before you begin!

4. Poor Marketing Strategy

Many small businesses fail to successfully market their products or services. They spend money on advertising their products but without any real plan or strategy in place. New start ups need marketing for a number of areas;  identifying target markets, focusing attention towards the product and of course positioning and branding.  Spending money on advertising here and there without a well-detailed and well-constructed advertising strategy will do little good. So identify your target market, design an advertising plan and wait for it to grab your customers’ attention.

5. Lack of Competent Employees

Many new businesses compromise on human resources due to their comparatively small size. Choosing the right people as your employees is essential to the success of your business. Having an incompetent team of employees means that they will waste your time and you will not be able to reach your desired goals in the time-frame that you have planned. Remember to choose the best people you can afford for the different tasks that need to be attended to. Try and find a little extra money if you can, as you will benefit far more from a job well done.  Don’t save money in the short run only to lose it in the long run!

In Summary

Gain up to date and fine tuned knowledge about the business you are going to start. Prepare a well laid-out plan and focus on your future goals. Estimate and arrange the funds you need for your business. Hire the best people available. Develop an effective marketing strategy and don’t wait for business success to land in your lap!

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Posted in: Business Blog

About the Author:

Caroline Baxter is a serial Entrepreneur, Business Start Up Coach, and recent bestselling author on Amazon. Having started her first business aged 24, she now has multiple businesses in property, the motor trade and online and offline business consultancy. Caroline is now starting a series of live training events to support entrepreneurs looking to plan launch and grow their business

5 Comments on "5 Reasons Why Most Start Ups Fail"

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  1. Cake Pops Recipes says:

    Thank you very much for that wonderful article

  2. Richard says:


    I don’t understand how someone can spend their money on a business idea in an industry which they haven’t researched or got a keen interest in. I think the hardest thing I have found is reaching your target customer. Being a car detailer and car valeter I am targeting people who have an avid interest in cars, high income groups, families and the elderly.

    • I agree Richard, but sadly, I see it every day. Most commonly in retail. Someone loves a product and opens a related store. No idea about the industry, had no contacts, no real way in for trade discounts, leaving very little profit and a half empty shop once the start up capital dried up. Your site is great by the way!

  3. Priyam says:

    I would say, the main reason for a start up to fail is ‘not knowing your customers’ and not talking to them. Following an inside out approach of business when you put yourself in customer’s shoes and try to predict what would they want, it would be better if you go with outside in approach, talk to customers and design your business for them

  4. booking a holiday in florida says:

    Having read this I believed it was extremely enlightening.
    I appreciate you finding the time and effort
    to put this article together. I once again find myself spending a lot of
    time both reading and commenting. But so what, it was still worth it!