A Few Common Reasons for Startup Failure

When you first launch your small business, the last thing that you want to think about is it going wrong. Unfortunately, a big percentage of startup companies fail within the first year, so if you don’t want to join this group, it is worth understanding the most common reasons why this happens. Here, we will discuss a few of these so you can avoid repeating mistakes which others have made a thousand times in the past.

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Poor Management

First and foremost, we have poor management being a very common reason for the failure of small businesses. Many first-time entrepreneurs have limited experience in business and leadership, but they dive in head-first anyway. To solve this problem, you can educate yourself more on the skills that you lack, as well as hiring skilled employees and outsourcing complicated tasks to agencies which specialise in that area.

Bad Financial Planning

Another very common reason for small business problems is a lack of financial planning. To start off with, you need to have a clear plan in place that ensures that you have the right amount of funds in the first place. If you don’t understand cash flow or set yourself unrealistic expectations, there is every chance that you could close before you have had a fair chance to succeed. You also need to look into other details like the best business credit cards for new business. Get advice from a qualified financial professional or accountant if you feel like you need extra support.

Location Issues

Even though the internet is becoming an increasingly important tool for all kinds of business, many still rely on being in the right location. A few of the factors that are important to consider include where your customers are, accessibility, your supplier locations, and the receptiveness of the community for a new business. A bad location could result in disaster for even the best-managed business, so make sure you put plenty of thought into it.

Lack of Foresight

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Small businesses owners need to have a clear idea of their priorities and where they are heading. Initially, all small companies should have a detailed business plan. A few of the components of this plan include: company description, goals, workforce needs, competitor analysis, marketing and promotional activity, and budgeting. A business plan is also useful if you are trying to obtain additional capital for your business.


A lot of business owners are naturally impatient, but you need to avoid trying to expand your company before you are ready. Otherwise, you could end up overstretching your resources and putting yourself in financial difficulty. Slow and steady growth should be your best course of action. Of course, you also don’t want to repress growth once you have a solid customer base and a good cash flow. Striking the right balance is often the tricky part of running a small business.

Now that you know a few common reasons for startup failure, you are better placed to avoid repeating these.


Lynne Huysamen

Mommy to a pigeon pair, blogger and online marketer. Lover of chocolate, good books and buckets of coffee.

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