3 Common Reasons Why Businesses Fail & How to Avoid Them

According to statistics, almost eight out of ten new businesses fail within the first 18 months of starting. In fact, over a third of new businesses survive past ten years of business. Even with quality products and excellent services, how you first approach your market will play a long-standing effect and cause the failure in business.

In this guide, we will discuss the 3 most common reasons why businesses fail and how to avoid them.

Poor Leadership Skills

If you as the owner show poor leadership skills, especially in management, your business will ultimately fail. This is evident in owners who struggle as a leader due to the lack of experience and knowledge in running a business. Other reasons for leadership failure are also poor staff supervision and the vision to lead the business. Is your team in agreement on how you should run your business? Do you and your partner fail to see eye to eye or contradict instructions to the staff? Ultimately these poor issues will result in a failing business unless you learn to resolve the issues.

How to avoid this?

It is important for the leadership team to tackle down every aspect of the business that ranges from finances to employee discussion. Once your productivity begins to hinder, your business will continue to fall. It is important to learn, study, and do your research to enhance your skills in leadership.

Lack of Value and Creativity

Even the best products and services can lead to a failing business. Whether it may be the lack of value or approach, the demand will be the only thing that will keep you from failing. It is the creativity that helps your business stands out from your competitors.

How to avoid this?

Consider what sets your business apart from the rest? What would make your business all the more unique? It is important to develop a customized approach that no other competitor in the industry has done. You can publicize your brand by stepping up your marketing plan. Take advantage of the use of social media, cold calling, word of mouth, and other successful marketing techniques.

Poor Management in Finances

If your business fails due to the lack of financial planning, this puts businesses at the low end of success. It is important to prepare your finances wisely as poor accounting will prevent the brand from reaching further success.

How to avoid this?

You can use professional accounting software for your business to help keep track of all transactions that includes expenditure and revenue. This will help you to run your business proficiently and manage all financial affairs.


To help improve your chances of achieving a successful business, you must prepare not just the team but also the audience you plan to market. It is important to understand the strengths and weaknesses of your competitor and determine what makes they succeed and what they lack. Use this knowledge to take advantage of your business.