Why Do Small Businesses Fail? Steps to Being a Successful Entrepreneur

Why Do Small Businesses Fail? Steps to Being a Successful Entrepreneur


   Starting a small business is not enough. It requires proper time and attention, otherwise many small businesses fail. According to the Small Business Administration (SBA), only 20% of businesses endure their 1st year.

At the start, businesses have to face different typical challenges. However, without proper planning or idea, small businesses are unable to complete even their first year.

The key factors in the failing small business are the lack of financial expenses. Moreover, not planning properly or idea to start a small business, deprived marketing campaigns, uneducated staff.

These are few trials through which a small business end in their start. I will explain those reasons, why small businesses fail in the following:

Deficiency of ideas or Poor Planning

Proper planning and different motivational ideas are very important for the starting of a small business. Unique and professional planning forces you to make your own place in the market.

Without proper planning, about 50% of businesses face loss and unable to complete even a year with this loss. Later, it becomes the reason for their business closure.

Everything needs proper planning and ideas and without it, it just a dream of an ideal person. Business with a deficiency of ideas and planning is like a waste of money. Even though a marriage without any planning may destroy your life.

So, you should have to make proper planning and ideas to run your business and to compete with others. This is the only way to save you’re your business from crises. Always stay up to date with your customers and make changes when needed.

Lack of Sales and Starting Capital

 The basic reason why small businesses fail is not familiar with the condition of a business. Also, business owners unaware of the money required to run a business, including different funds. Due to insufficient funds to run a business, it closes in months

Moreover, not reaching the sales goals also become the closure of a small business. The only way to extricate from this loss is to make a better quality of the product than the existing product. Also makes your sales strategy for the future.

Furthermore, makes the budget for a business to manage financing hurdles. Then, you’ll be able to run your business properly without any loss. Otherwise, no one will be able to save you from the loss. Almost 40% of businesses closed due to a lack of money.

Management Lack of Subject Knowledge

 Another reason for the failure of the business is staff and management lack the subject knowledge to be effective . They do not know about their tasks and have no strategy to run a business. Poor management is also the cause of business failure.

Staff have not enough sources to run their business and this highly becomes the cause of financing problems.

The people with a lack of knowledge are unable to understand different techniques. They were unable to compete with well-established businesses. However, because of this business can incapable to run even, it closed in years.

The need of fact is the business owners should choose educated management and make his strategy to run business. By doing this, they will easily run their business in current charges. You should regularly study, plan, and perform all business activities.

Location of Business

The location of businesses also matters for small businesses. If the business started in any detested area that would also the cause of business failure. So, the location and area matter for small businesses, it attracts the people towards it.

However, it is essential to organize business in the right community places to save your business from tragedy. You have to check some factors before starting of business include other competitors’ location, condition of a building.

If the business is any convenient place it helps to increase the growth, sales, and visibility of your brand. Also, an attractive building for business helps to get the best customers.

People are not familiar with those disadvantages of businesses’ location which causes the failure of their businesses. So, you should avoid these things to run your business peacefully.

Poor Leadership

Your business can destroy because of your poor leadership and management skills. A leader is the one who leads the whole community and becomes successful. So, the owner has to make strategies and strong plans to run a business.

Leadership failure would affect every aspect of your business from financial management to employee counseling. In the end, you would be stuck and you wouldn’t know what to do; and your business would never stand anymore.

If you want to rid of this failure, you have to study new ideas and check the profiles of other reputed businesses. By doing this, you can understand different aspects to run your business.

Also, don’t distract from your work, and do work with strategies, motivate your employee to work for the betterment of the business.

Lack of Marketing Efforts

 Website and social media marketing play a vital role while running a small business. Many customers find your services by visiting your website and by visiting your ads on different social media.

Different social media platforms like Facebook, Instagram, and Twitter are prominent in this case. Many businesses are aroused from such social media networks. Sometimes, not making any website and doing social media activities can become the cause of small businesses fail.

If you want to save your business from any disaster. You have to make a website for your business and promote your content on different social media platforms. It’s a good practice to arise your business otherwise it will cause the failure of your business.

It is always better to have attractive websites and social media accounts, also attractive ads for promotion.

Fails to Understand Customer’s Interest

 Sometimes, the owner fails to understand the desire of customers. He sells those products that he wants to sell instead of looking at the requirements of the customers. This sort of thing causes the failure of businesses.

Before starting any business, you have to look at what the customers want then you start your business. Also, make a platform on which you’ll talk with your customers. And make your content attractive it will help customers to interact with your channel.

Moreover, if you don’t want any loss then you should interact with your customers on some platforms. Also, allows your customers to give their reviews about your services and content. It’ll attract other people to connect with your content.

Always focus on the choice of customers for the effective growth and popularity of your businesses.

Over Extending the Business

 Over expanding of any business after reaching one step to success can also be the cause of business failure. Because the business becomes over-confident after attains its first success and starts expanding the business.

This can be the cause of business failure because the business owner doesn’t have enough resources. Also, don’t have enough financial support to run all parts of your business. This may cause the failure of your businesses.

Over expansion of businesses without proper planning at the start of business mostly become the cause of small businesses fail.

You should always focus on the slow and steady growth of your business. Otherwise, the burden of your businesses will take your calmness and also be the cause of business failure. So, make your progress step by step and avoid the over-expansion of businesses.

Lack of Partners Interest

Among the top points of business failures, non-serious partners are also a huge cause of business failures. Those are busy in other non-serious activities and do less focus on business. This will become also the cause of business failure.

At least one partner should be the focus on his objectives and works with heart. Otherwise, no one can save the business from failure. According to Attorney William Piercy, “Unlike a marriage, business partnerships are supposed to end”.

By focusing on these words, we came to know that businesses never stand too long if partners are not suitable. Even the marriage partner can also be not suitable for businesses. It is also a too critical part of every business to choose a better partner.

So, you should choose a better and interesting partner for your business to be secure from any failure.

Unrealistic or Over Confident

Overconfidence can also become the failure of businesses to fail. The business owner may be overconfident at the start of the business as he can do this quite easily. Also, he doesn’t pay proper attention to his work.

This non-serious behavior of the business owner will become the cause of his disaster. Every business needs proper attention without it, it starts going towards the disaster and in last it ends. Confidence always becomes the cause of failure.

The arousal of the business and the disaster of business, all depends upon the owner. If he works hard and pays proper attention to his, he would compete with other popular businesses.

So, you should be serious towards your businesses otherwise no one will be able to save you from failure. And make your content suitable for the public.

Unappealing Content

 Attractive content can always become the popularity and success of businesses. On the other hand, unappealing content causes failure, people always attract towards something new and attractive.

Most of the business owners only focus on their products and pay less focus on their content and services. This causes the failure of their businesses. Firstly, all people check the content and services providing by the company then they check the product.

People don’t pay any attention to unappealing content or have zero uniqueness in the content. So, to make your business successful make your content pleasing for others. Also, do focus on your services otherwise you may face different unpleasing small businesses fail.

If you do focus and make your content unique, attractive then you will be able to get the focus of others.

To Start with Heavy Loans

Almost every small business owner needs a loan to start his business. To start a business in effective manner loans, help to start a business peacefully. But some persons take too many loans to start their businesses.

This may cause the failure of their businesses as they don’t get huge profits from their businesses at the start. And the pressure of loans presses them. However, such acts become the cause of their failure.

On the other hand, those who start a business with not too many loans can successfully increase its business. Because such persons haven’t the pressure of heavy loads.

So, it’s better to take not too heavy loans for your businesses. Otherwise, you would stick in such things, and this causes the failure. You should be aware of heavy loans and starts your business peacefully.


In conclusion, you have to focus on business and stay away from other miscellaneous activities. Also, use your money carefully, complete your all tasks within the current financial amount.

Moreover, make your content attractive and advertise your content properly on different social media platforms. Keep in touch with your customers, also follow their interest, provides them with special services this allows others to attract with your services.

Also, choose the best and strategic partners for your work that helps to increase your business. And stay away from all those activities that are risky for your business or will cause small businesses to fail.

Always have a focus on your business, make proper planning to earn the best position, and to compete with other businesses.

  1. Hello,

    This is the first time I have visited Montfichet & Company site , and I don’t know how I’m going to use this share my experience exactly. so I guess I’ll just start from introducing myself.

    I am Akansha, from India..I’m a 25 year old and I recently shut down my business (started at the age of 23) cause I was bearing heavy loses. I do not have a formal business degree, and only learned from my various experiences in some short terms jobs or free services I used to provide to companies in form of internships.

    I recognized at an early age that I wish to start my own business and the reason I gave to myself for doing so was (cause I can’t take order from bosses) I have always been a rebellious student/employee, my naive behavior took me on a troll for the next two years…I was fortunate to have financial support from my parents and went ahead with the idea of a “successful business” without proper planning.

    what MJ now calls entrepreneurial masturbation…yeah I was succumbed to that. I rented an office, hired people…started my fashion manufacturing unit…and started producing merchandise.. (I was good at my core knowledge) …but I couldn’t sell anything…not as much as I was paying on a monthly basis..

    I kept giving myself time ( and my comfort zones of not being able to pay salaries never really helped me with my hard work either) …so as to when came a point, I had to finally realize that the success of this idea was just in my head and it was nowhere scene in numbers. I was able to shape it quite average because of my skill, but it failed because of lack of hardworking and focus.

    I shut down my fashion brand in February’2020, something that I had dreamt of from the first day I joined college… have taken time by myself from past 5 months..have discovered spirituality and have questioned all my actions post my graduation, did self retrospection and stumbled upon UNSCRIPTED.

    I am still working on the idea of how do I add value with the kind of skills and knowledge I have..I sometimes question if I have enough and have had thoughts to pursue a business degree to learn more then I remind myself that its just me spending more and more money..so I decided to learn it myself…

    I give myself online classes, I have started to work on producing new ideas now….

    Life has its own ways of teaching you things, I’m learning everyday in my own way..
    I guess I’ll be back in a month or so and have something tangible in my hand.

    Thanks for letting me share

    1. Akansha,

      What an amazing store. I feel the passion and strength pouring from your words. I wish you would have found us sooner to help you on your journey. No matter, the key here is you have not given up. Failure makes us stronger and reveals the truth of economics.

      Stay encouraged as this is just a chapter of your life that will fuel the big success coming.

  2. Hi James,

    I was wonder if you could comment on learning webflow in terms of a platform to build from for making a living from Web Development? Is it worthwhile? Can you use it to build sites for clients? Is it better to go down the full UX angle? Even HTML coding (although never been overly interested in coding). I am trying to figure out if this tool would set me up for success of lead to failure.

    1. Hi Brian,

      Let me let one of my web development experts currently using webflow share their experience.

      I have to say the Facebook ads are fun and a pleasure to watch.

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