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The Most Common Cause of Business Failure (And How To Avoid Them)

If you’re looking at the prospect of starting a business, then you also have to consider the prospect of that business failing. This isn’t out of pessimism, but necessity. If you’re not aware of the risks that could stop your business from making it, then you’re all the more likely to be blindsided by them. For that reason, we’re going to look at some of the most common causes of business failure, and what you can do to prevent them.

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Lack of planning

You may have an idea for a business, but that idea does not a running business make. The business plan is one of the most important documents, detailing what your business is going to provide, how it’s going to provide it, and what organisational structure is going to be working to make that possible. Planning your work processes, manpower needs, and especially your funding needs can help you ensure that you have everything in place that you need to keep the business running effectively and with an aim for profit.

Zero marketing buzz

Your business is more than just the goods and services that you provide, it’s the brand that people associate with it, as well. Failing to establish that brand, communicate it well, and invest in a marketing plan to make people aware of it can all lead to your business attracting very few customers indeed. Creating a strong brand from scratch can be difficult, so many entrepreneurs look for franchises for sale with proven branding and marketing plans. Aside from knowing that you’re buying into a marketing angle that works, you may well be able to run a brand that people are familiar with.


Even with the right business plan and brand, never underestimate the potential to run things into the ground through pure mismanagement.  A failure to effectively manage the finances of the business, poor communication and leadership of your team, and a lack of attention when it comes to risk amendment and compliance needs, all can lead to a poorly run business that’s going to run out of steam very quickly. Attending a business course can help you ensure that you’re aware of the needs of a business.

Failure to scale

Even if you get your business rolling on the tracks, making money, and winning and keeping customers, there’s still the chance for things to come to a sudden halt. Amongst the most common sources of failure in the first two years is the failure to scale. When your business has the opportunity to grow, it needs to take it, or it risks stagnation instead. This can happen by releasing new products, opening new locations, or even expanding your business overseas. Plan your path to scale and ensure you’re able to see it through.

Running a business is complex. There are potential dangers from all sides. However, keep investigating the potential sources of failure as mentioned above and you can uncover the safeguards to put in place, offering you a much better chance of escaping that grim fate.