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Top Reasons Why Businesses Fail

By Edited Nov 13, 2013 2 2

Businesses fail for numerous reasons. Most successful businessmen have had at least 1 failure within the business world. Do not look at a failed business as a losing opportunity but instead look at a failed business as a learning opportunity. This is what successful business people do. If you have a business that fails then simply use it as a learning experience, chalk it up to an expensive education, and then start mapping out your next business.

Although a failed business is a great way to learn and help make yourself more successful in the future, it does not mean that you should try and make your business fail. Do everything you can to keep you business afloat. Here are some of the top reasons why businesses fail.

Poor Numbers

Hermit Crab(121157)

You may have thought you had the next great product, but it simply does not work out once you try it in the real life world of Business. Maybe the hermit crab business you started at the mall seemed like a great idea because when you see a different hermit crab operation in a mall elsewhere it was slammed pack with customers. A business such as selling hermit crabs at the mall in a kiosk is initially a lucrative business where people are attracted to the newness and the cuteness of the hermit crabs. In reality this is a failed business prospect for you because you can only sell so many crabs before your customer get bored with them.

Repeat Customers

Coca Cola Raspberry
How many repeat customers do you have coming back into the mall to buy another shell for their hermit crab from you? Regardless of what your business is you need steady and repeat customers. If you have a business where there is no repeat business then you can never build up brand loyalty. Brand loyalty sells more products every year then the best advertising will. A loyal customer base can literally make or break your business. Keep your customers happy and coming back for more. If your business does not have a product designed for repeat business then you need to tread carefully.

It’s Just Business

We often look at successful businessmen who seem to be a jerk and mean to all people. We criticize these businessmen because they will constantly be eating up a competitor and running them out of business. It appears that they have no morals or business ethics. If you have ever looked at another business owner in this manner then you need to take a serious look at yourself because you may be doing just the opposite, and that is even worse.

If you are a business person who craves to be liked by people then you will fail. If you try and make all your employees and customers happy at all times no matter the cost then your business will probably fail. This is not to say you need to be a jerk to everybody, but you also need to keep in mind that you need to have the expectations of your business to come first before anything else.

If you are extremely nice and go out of your way to keep from upsetting your employees, clients, and customers then you can expect that they can and will walk all over you and take major advantage of you. You are the boss and you need to run your business by putting your business first.

Growing Too Fast

Many businesses have started of successful and then grew super-fast. Many of these companies had trouble staying up with demand and ultimately failed. Fast growth can be great for your business but it can also cause you business to fail if not managed properly. If you cannot meet demand and your loyal customers are getting shafted by missed shipments then that will harm the reputation of your company and also send those clients to other companies that can meet their shipping and delivering needs.

Hire Experts

You not only need to hire experts when the time comes, but you need to get out of the way and let them do their job. If you hire for example an experienced warehouse manager to manage your warehouse then you need to get out of their way. You definitely want to keep an eye on them and make sure that you are both on the “same page”, but do not micro-manage. He is the warehouse expert and you need to let him do his job as he sees fit to do it.

Many times a business owner will hire someone such as the experienced warehouse manager and micro-manage the heck out of the poor guy. The business eventually fails and the warehouse manager gets the full blame from the business owner. The problem though is that the warehouse manager was never able to do the job the way he wanted to and knew it needed to be done because you as the business owner constantly told him exactly what to do and how, even though he knew it was not the best way. He was more interested in pleasing you and keeping his job then angering you by telling you that you were wrong. You need to allow your employees to do their job.

Bad Accounting

Whether you do the accounting yourself or hire an expert, it is vital that your accounting be done properly and accurately. Generally it is better for the accounting to be outsourced to a local company that specializes in accounting, even if you are a very small 1 man company. The reason for this is so that you can have an expert overseeing the books and allow you to concentrate and getting new customers and keeping current customers happy. If you do not manage your books properly then your business is bound to fail. If you hire an accountant you need to keep an eye on them, but let them do their job. It is rare when an accountant will rip-off a business owner, but it still happens on a regular basis.



Nov 23, 2012 6:21pm
Excellent article. 2 thumbs up from me.
Nov 26, 2012 4:59am
This really got me thinking, thanks.
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