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Reasons Why Startup Businesses Fail

By William Forson – May 21, 2024

There are causes, consequences, and fixes, if needed, in almost every situation in life; the same is obvious when it comes to identifying reasons that hinder and, in most cases (according to statistics), collapse the emergence of startups.
Not ranked in any particular order, these are symptoms whose co-existence could ultimately ensure the demise of your business.

1. Lack of Sales

There is no denying that all the other reasons why new businesses fail will be “useless” if your business makes a profit from sales. Good sales mean good business; it’s as simple as that.

A small firm cannot generate money without sales, which is required to pay staff, cover operational expenses, and make investments in expansion.

To avoid this, small businesses must concentrate on producing revenue through efficient marketing and sales techniques, cultivating enduring client relationships, and offering high-quality goods and services that satisfy customers in order to minimize these unfavorable effects.

Also, it’s critical for small businesses to properly manage their finances and prepare for unforeseen events like slumps in sales.

2. Little or No Social Presence Today

The importance of social media can’t be overstated. From multinational cooperation to the least funded setups, the effective use of social media platforms can be seen as the low-cost marketing goose that lays the golden eggs.

Consider this: while you have immensely benefited from traditional media advertising over the past decades, its use is declining at an alarming rate.

Studies show that 4.65 billion people from the 7.9 billion people on earth used social media as at April 2022. Amongst the numerous advantages that businesses miss out on when they don’t engage in the use of social media are; building brand awareness, nurturing and generating leads, growing an audience, and measuring marketing efforts.

It’s no coincidence. Investopedia says, “Social media is an indispensable tool.” Companies use the platform to find and engage with customers, drive sales through advertising and promotion, gauge consumer trends, and offer customer service or support.

3. Poor Planning

When it comes to all the possible causes of why businesses fail, much attention should be paid to this.

Amongst all the sectors you can control as a business owner, getting this one right can and will possibly avert 70% of the other factors that will crush your business.

Careful planning will take into consideration factors like; setting clear objectives, allocating resources effectively, identifying potential problems, staying competitive etc.

Failure to plan, as can be seen, is actually a noticeable contributing factor that cannot be overlooked, and it justifies why a business plan is worth its weight in gold.

4. Lack of Capital

The optimism regarding your ideas, plans, execution, and the like won’t see the light of day if you don’t have enough money to start your business and, more importantly, keep it running.

Be it investments, capital, after-sales profits, cash donations, etc. the fact remains that its basic form is money.

Given this, entrepreneurs who fail to acknowledge that money is needed to begin, run and stay in business are in for a rude awakening.

No further write-ups are needed to emphasize the indispensable role capital plays in the commencement and sustainability of a business, or that, hitherto, the lack of it will spell doom for your business.

In the end, it is vital to state other reasons why small businesses fail;
5. Wrong Location
6. Poor Management
7. Failing to adopt
8. Failing to recruit and maintain the right people

These and many others (not listed here) are part of the numerous reasons why businesses fail.

It also calls for a broader assessment, research, and consultation before a “want to be entrepreneur” ventures into starting a business.


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