So the dream is to have your own business. The mentioned dream has two parts, one is starting a business and the other is running it successfully.

According to the survey based on business failures, about 20% of the business do not survive the first year, about 50% of the business won’t survive the first 5 years. So the business failure rate is fairly large.

Mistakes are part of life and we all fall at some point. But, like the man asked, “Why do we fall, Bruce?”. I know you know the answer to it. So come on, let’s take a look at the factors that lead to business failure and learn how we can avoid them.

1. Skipping the planning process

Skipping planning process

“Planning is the first step to success”

You can’t reach your destination when you don’t have a map to guide you through the journey.

Likewise, to reach success in your business, you must need business planning to guide you. Many business owners think that planning is an expensive process. But in reality, not planning is more expensive than planning.

Skipping the planning process in business is very dangerous. Without a business plan, you will never get a clear picture of your budget, growth strategy, customer acquisition, and scaling up.

Also, a business plan shows whether your idea works or not. Plan your daily work and set measurable goals to analyse your success. So before starting a business or a project in your ongoing business, never skip the planning process.

Check the Benefits of Agile Methodology in Software Development.

2. Lack of Cash Flow

Lack of cash flow

“It takes money to make money”

Business runs on money. It is profit-driven.

Some businesses achieve profit in very few months. But others take a while like years to make a profit. Until then, you need cash to run your business. Many business failures happen due to a lack of money.

Apparently, the goal of business is to increase sales and profit. But sometimes your business takes a hit due to some uncertain circumstances like recession, changing market trends and so on.

Also, there is a possibility of having a lot of customers taking your services on a credit basis. Whatever it is, you have to pay your bills and the employees.

While planning the business at first, you should clearly estimate the amount of cash flow needed to run your business.

So look for ways to reduce your expenses like:

      • Having a home office before hitting a professional one.
      • Hiring college interns or freelancers rather than full-time employees.

Also, increase the cash flow to your business by taking calculated risks such as taking loans or convincing the investors to invest more.

Increasing cash flow can also be done by doing some actions that lead to getting the payment from customers.

      • Sending invoices on time
      • Taking deposits before getting started with the work
      • Promptly following up with credit customers

So try to maintain a contingency fund to face difficulties in unforeseen circumstances.

Take a look at the 17 Vital Factors Venture Capitalists Evaluate when deciding to invest in your startup.

3. Poor Market Research

Poor market research lead to business failure

Lack of proper market research may lead to business failure.

Poor research may end at marketing the product to the wrong people and in the incorrect marketplace.

Think of developing a product, setting up a marketing campaign, spending money, and coming to know there is another business providing the same product for a cheaper price. It’s terrible, right?

So speaking of research, it is as important as planning in business.

By researching, you will get a clear picture of

      • Your customers
      • Your competitors
      • Target audience
      • Product demand

If you understand your customers and their needs according to your product or service, then you can see:

      • Increased sales
      • Effective marketing
      • Quick expansion

So do proper research before starting a business and provide your own unique solution that your competitor doesn’t give. So that you won’t end up in business failure like the 50% of others.

Also Read: What Are the Types of Research Methods to Launch a Successful Startup?

4. Failing to Get Expert Advice

“A mentor is someone who allows you to see the hope inside yourself” -Oprah winfrey

Running a business is a team sport.

Being the captain, you have the responsibility to coordinate and manage your team. But no team is whole without a coach. Coach has the experience a captain lacks. Likewise, there are experts whom you can reach out to for advice. Their expertise and experience will guide you and help you avoid business failure.

Many successful startups invest in mentors and acknowledge them for their success. So, leave your ego at the door and ask for help which will end in fruitful results.

While running a business entrepreneurs need encouragement, guidance, and support when faced with difficulties. Mentors can help you by giving priceless advice, providing you with constructive feedback, and connecting you with the right people.

Getting a mentor is essential in business to avoid mistakes and overcome obstacles.

Read about the 5 Most Common Tech Startup Challenges and How to Overcome Them.

5. Fear of Failure

Many business failures are due to fear of failure

“Failure is not the opposite of success, it’s part of success”

Small failures or big failures, all of them haunt us. Many successful entrepreneurs once were afraid of failures.

Tony Robbins states that “We’ll do more to avoid pain than we will to gain pleasure”. As we know, No pain, No gain – applies, as it is, in business. We are always afraid to face the consequences of failure rather than gaining the lesson from the mistakes.

Many business failures are due to fear of failure. Yes, when you think of running away from failure, it catches you faster.

A good business runs for a long time after every small failure. When you have a small stumble in the startup, never get negative, be positive. Learn from the mistake and move forward.

Every small failure teaches lessons that can’t be taught theoretically.

Fear of failure is more powerful. It may restrict you from expanding your business to the next level. Also, fear of failure will:

      • Force you to play safe – Restrict the growth of business.
      • Block you from moving in an abundant path which leads to new opportunities.
      • Limit your chance to scale your business – limits expansion.
      • Make you regret in the future.

Don’t be afraid of failure – be afraid of making the same mistake again.

So never fear failure, every huge company at some point has faced failure. But they never stopped there, they learned, they improved, and they conquered. Likewise, stand with your business, welcome failures, learn and improve for better success.

Know if you are ready to be a business owner.

6. Ignoring Marketing and Sales

“I do believe modern sales leader has to be a good marketer”
-Matt Gornaik

Marketing and sales are the heart of the business. Improper execution of marketing will lead to reduced sales or no sales, which ultimately leads to business failures.

We start businesses with the motive to enhance the customer’s life and make a profit. This motive will be incomplete without marketing and sales.

Whatever the core of your business or product is, marketing and sales will take it correctly to the potential customer.

Marketing and sales need a completely different skill set than developing the product or service. If you own a tech startup, developing the software is entirely different from marketing and sales. So, if you are not familiar with marketing, then you should hire a marketing specialist.

Many business owners or startup owners try to execute marketing campaigns without proper knowledge. And these marketing strategies will pave the way to failure in marketing, which ultimately results in overall business failure.

Understand the app marketing strategies for your startup business.


As Henry Ford states, failure is simply the opportunity to begin again, this time more intelligently.

Running a startup business is not an easy task. It’s a continuous challenge.

Try to avoid mistakes. And when they happen, welcome them with a smile. Get some expert advice, analyse the mistake, learn what went wrong, and try never to make the same mistake again. Learn how to deal with business failure.

We usually get surrounded by successful business stories but remember, it incubates some good numbers of failure stories.

So be aware of the mistakes that are already made and be proactive to avoid them.  By research, planning, and flexibility, you can avoid many of the pitfalls of a new business. Also, when you make a mistake learn the lesson, evolve and win.

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