The 3 Most Common Reasons Why Your Startup May Fail

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Failure is a necessary learning experience on the pathway to success. If you don’t fail, then you may not succeed either. Failure can be costly, however.

In order to succeed, you need the exact perspective on failure, understanding why it is useful, and using it as a launching pad.

It may be helpful to you to read the narratives of other entrepreneurs and to see just how many times they failed before they reached a point of sustainable success.

While there isn’t a fool-proof plan to reach small business startup success, there are several common and dangerous mistakes many new business owners make, that can negatively impact their businesses.

If you understand these 3 most common reasons why businesses fail, there will be nothing left to stop you from living your dream business:


1. Expertise

business expertise

Being good at what you do, doesn’t mean that you are necessarily good at running a business.

There are things you just don’t know as a first-time entrepreneur.

When you’re starting a business, suddenly you’ll discover that you need to be good at:

  • Cashflow and taxes (financial and fiscal issues);
  • Marketing and sales (communicating the value of your product) ;
  • Network building and IT (business system development);
  • Legal aspects of your activity (legal issues and compliance);
  • Product design and creation(unique benefits and problems that it solved).

So, obviously, a more relevant experience in running a business or in the business’ industry will always make the difference in competing and succeeding.

But, the good news is, that a consistent availability of learning and implementing will put you in the appropriate position to overcome any setbacks, that you’ll encounter on your way to success.

In the end, there is nothing you’ll need to do, that hasn’t been done already. You’ll just have to figure out for yourself what this is, and how you can make it work for your business.


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2. Team & Mission


A business entity is not something that will serve you or just a limited group of people. It is a system that will set-up and grow into something bigger than any one of you.

So, in order to build such a system, you’ll need a clearly stated mission, and a team truly committed to it.

What gives you the most chance of success is the culture of your company, which brings together all the common values and believes of a team.

You’re going to want your cofounders to have integrity, be smart, be passionate about the company, and be culturally fitted.

You need to foster this inclusive culture every step of the way. Every new person you add to the company either reinforces your commitment culture or hurts your commitment culture.

That’s why you want to be very careful about who you bring into the company.

3. Financial issues


Usually, the lack of a financial plan or a poorly constructed financial plan may run a lot of startups into financial issues.

This is a classic pitfall for optimists. The problem is that most of the people are optimists when they are excited to start their own business.

When a business runs out of money it fails. Obviously.

You should know exactly how much money you are spending every month, and exactly how much money your product costs to make.

Failing in this case, is a combination of two, three or all of the following  factors:

  • unable to conduct adequate market research to understand whether at all there’s a market for your product;
  • unable to market your products, attract customers and close sales;
  • unable to deliver your product at a reasonable price that covers the cost of producing it;
  • unable to build a customer-oriented business with poor customer service and feedback;
  • unable to offer enough value to their customers, or to meet their continuously increasing level of needs and wants.


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Being an entrepreneur is no easy job. It requires passion, perseverance, people management skills, and a great deal of patience. The most important thing you need to remember is that everything takes a certain time to bear fruits.

Don’t be in a hurry to see results and if you’re seeing them, don’t be in a hurry to expand. In business, slow isn’t bad as long as you’re steadily making progress.

Failure is not a reason to stop. Running out of resources is a reason to stop temporarily so that you can regroup and recover (financially, emotionally, mentally).

We all make mistakes. The key is being aware of them and consistently working to make smart, well-informed decisions in your business. 

Give yourself the credit for starting, facing failure head-on, and starting again. Keep going, but learn from your mistakes and be smart about it.  And don’t forget that…

Winners Never Give Up!


So, what do you think about taking advantage of your failures?


Irinel Bogdan

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