Why Do Most Businesses Fail? Exploring the Common Reasons and How to Avoid Them

February 27, 2023


For many people, it is a lifelong dream to start a business and see it grow and become successful. Working on an idea that starts to take shape and becomes a reality from each concrete step you take can be exciting, and being a business owner gives you the flexibility and independence to live life on your own terms.

Freedom is such a valuable thing to have these days, but sadly, starting a successful business is not as easy as people imagine. It can be disappointing and heartbreaking when your business isn’t working out, and you might need to return to a mundane 9-5 job. This can be a huge shock to many entrepreneurs. 

Statistics tell us that most businesses tend to collapse within the first five years. Why does this happen so often? What can business owners do about this? Well, let’s look at three major reasons why a business is likely to fail and what you can do about it.


1. Not Having a Clear Marketing Strategy


The first area where entrepreneurs make a mistake is their marketing strategy. Easy access to knowledge via the internet has given people the impression that the skills to run a successful business can be learned through guides and articles online. 

To be fair, you can learn quite a bit on your own these days, but there is a limit. There are some things that only experience can teach you.

Designing a good marketing strategy is one such situation where having experience and seeing what strategies have worked and what haven’t is vital. Knowing how to create a marketing plan is the foundation of any business, and without it, your potential for growth during every stage of business expansion is at risk. 

If you are unsure how to go about making a good marketing plan, consider reaching out to third-party services that have experience in doing so. Try to find an expert that can understand your business objectives, help find target audiences and execute comprehensive marketing plans. 

They will handle aspects like SEO, email marketing, content creation, and other techniques that you or your team may not be well-versed in. 


2. Poor Market Research


Say you managed to hit gold and have created a great marketing strategy. It would be pointless if the market research that you did was shoddy and incomplete. But why even conduct market research? You may think, “If I open up my business in this busy location, surely I will have lots of customers, right? After all, I read online that location is important.” 

Anyone who starts a business with this sort of attitude is in for a shock. Market research does not involve sitting around with your friends over a few evenings and discussing how you are going to make your business successful (Discussions like that can be very much helpful, though.)

Proper insight involves the use of detailed market research on the consumer needs of your locality, niche, customer demographics, age, and so much more.

Market research relies on information collected from surveys, interviews, and other data collection methods. Digital tools are then used to analyze and interpret the data collected to gain a clear picture of what the market currently needs. 

So yes, any business that wants a good chance of success should be investing in services that have a reputation for thorough market research.


3. A Lack of Clear Vision and Leadership


Sometimes, even if every other aspect is executed well, poor leadership and a lack of a clear vision have the ability to sink any business. This doesn’t occur intentionally. Too often, entrepreneurs have one clear idea that they start off with, but then, after seeing a bit of success, they decide to try their luck and expand into new areas. 

Areas that they haven’t researched.

If poor decision-making is something that can kill even a successful company, you can imagine how devastating it can be to a brand-new one. A lack of clarity on a business’s long-term goals can lead to confusion among the team and cause you to be reactive and impulsive with decision-making, especially when faced with sudden challenges. 

Business owners forget that real-world conditions are not going to be set up perfectly for them to succeed. It can be a brutal and competitive world out there where even those that do everything right still need a lot of hard work and luck to succeed. Skilling up and learning how to be an effective leader and entrepreneur significantly increase the odds of your success.



Entrepreneurs get used to seeing only the success stories and forget that for every business that makes it big, countless others fail. This doesn’t mean that people need to be discouraged. No. Instead, people should understand the amount of effort that needs to be put into every stage of starting and running a business. 

The initial stages are crucial, of course, and maintaining the fire, energy, and leadership every single day is what truly keeps a business afloat and makes it successful. 

There are exceptions to this. You may see some who luck out and enjoy ridiculous amounts of growth with half the effort you put in. Don’t let that get to you. Keep hustling and put in smart work. 

Results will follow.


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