Know Why Startup Business Falls and How to Rise Above Failure

“Failure doesn't mean you are a failure it just means you haven't succeeded yet”, says Robert H. Schuller.

Startups seem to work at its best for its value equation with enthusiasm while acquiring new markets and customers. But the harsh reality is several startups fail within a few years. As per statistics published in 2019 by the Small Business Administration, 20% of business startups fail in the very first year, 50% fail within five years and about 33% survive after ten years. The numbers are alarming.

There may be a multitude of reasons for failure, but there are a few common mistakes that most of the companies commit. The painful part is that the entrepreneur is unaware of it until it is too late. The life of an entrepreneur is challenging and can put out of business anytime.

The solution to overcome business failure is deep-rooted in the mindset. It is how we deal with the failure that determines success. Having a flexible, positive, and strategic leadership attitude and a willingness to change is critical. Everyone has heard of Colonel David Sanders, the founder of Kentucky Fried Chicken. At 65, he was financially unstable, faced rejection, but at 74, he sold his company for two million.

Read on to know a few of the common reasons for failure and important business tips to overcome them.

Top reasons for the failure of a business

There are several reasons for business failure. A few of them are highlighted here with solutions as a way forward to a successful business.

Failure to deliver real value

Successful businesses deliver value. If you are looking for earning money in a short time, you may find yourself at a dead-end soon. The real value proposition in business takes you a long way. Value creates a buzz in the market. If a customer feels happy with your products or services, the customer will talk about the company with his friends. Mouth publicity is like wildfire and alerts everyone within a short period.

Business success tips:

  • Conduct thorough market interviews and surveys, know what customer wants
  • Research the product or service in such a way that it addresses the real pain point or problem
  • Test the first version of the product with a small group of a new audience to get honest feedback

When you can understand what customers want, you can fulfill their wants, and thus add value to the business.

Lack of Planning

Businesses must have a strategic plan. You may hire a business strategist to create a realistic plan based on data and projections for the future. Moreover, if you want to secure capital for the company, many bankers ask for the business plan.

Business success tips:

  • Know business goals, vision, and success key
  • Analyze market and workforce
  • Identify potential problems and ways to solve it
  • Maintain a financial balance sheet
  • Have the right team on board
  • Analyze competition, marketing, advertising, and promotional activities

Have smart people to translate ideas into reality. Find the right people, provide them with the right tools, and keep them motivates to enable business growth.

Poor management

Many reports suggest poor management as one of the top reasons for failure. It is reasonable that new owners lack business and management expertise in areas like finance, purchasing, marketing, hiring, or managing employees. As a business owner, if you cannot recognize what does not hold good, then it is time to implement a strong business strategy.

Business success tips:

  • Learn the skills you are lacking at an early stage
  • Hire skilled professionals to deliver successful business strategies
  • Outsource important work to competent professionals
  • Learn to delegate

Good management involves the creation of encouraging work environment, training people, making transitions, confronting change, and envision novel opportunities for business success.

Failure to generate revenue

A business cannot operate without funds. It is necessary to identify the right monetization strategy for the business. Once a business runs out of cash, the investors may not come forward to invest their money which leads to shrinkage of money and resources. Using capital money for other reasons liquidates the fund and in due course may lead to business shut down.

Business success tips:

  • Devise a winning sales and marketing strategy
  • Identify the elements of your product or service you can charge
  • Determine the best revenue model that suits your business
  • Plan resources to execute the strategy successfully
  • Manage finance efficiently

You cannot use business funds for personal use. Proper management of resources, funds, and profitability facilitates business growth.

Bonus tips

As a startup, you may have a number of problems already to look into. Still, the most basic thing is to make your business ‘recession-proof’.

  • Do not involve in scrambling throughout the day
  • Delegate responsibilities and develop employees
  • Planning should become the culture of your business
  • Create an organizational flowchart
  • Adopt the best business strategy framework to witness success
  • Create systems in place
  • Be the differentiator to gain ‘customer intimacy’
  • Do not over-expand the business
  • Have a succession plan
  • Core values should be part of the culture

A successful business does not need a 100-page business plan. There is no need for revolutionary ideas, but an improved business product or service is the need. You need action to succeed.

Change the statement ‘many businesses fail’ to ‘many businesses succeed’. The glory lies not in ‘never falling’, but in rising every time you fall.


Guest post courtesy of Michael Lyam

Mercy - CBNation

This is a post from a CBNation writer. CBNation is a Business to Business (B2B) Brand focusing on increasing the visibility of and providing resources for CEOs, entrepreneurs and business owners. CBNation consists of blogs(, podcasts ( and videos ( CBNation is proudly powered by Blue 16 Media.

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