10 Common Causes of Business Failure with Possible Solutions

Do you want to start a business but are afraid of business failure?

Have you started any business in time past but failed due to reasons not clear to you till now?

Well, you are not alone. In this article, you will find out what might have caused your new small business to fail as I will be putting you through the most common causes of business failure and how you can avoid them.

Any entrepreneur starting a new business venture have PROFIT at the back of their mind. Owning a business can be rewarding and at the same time very stressful and risky. Running a business is also not a child’s play.

Starting a business is not an easy task. You may wonder how many businesses fail in the short or long run. Business failure is very common in most climes. In the USA, about 20% of small businesses fail in their first year, 30% fail in their second year, 50% in their fifth year while 70% fail within their 10th year, this is according to US Bureau of Labor Statistics.

There are many reasons why entrepreneurs fail and it all comes down to a combination of preparation, strategies, and knowledge. Some of the common reasons why businesses fail include, financing hurdles, inadequate management, ineffective business planning, location, and marketing mishaps.”

Other factors can cause business failure and lack of proper research for a profitable market before venturing is one of the main causes of business failure.

Your new startup can fail irrespective of your country’s ease of doing business. A well-organized and structured business in South Africa, Nigeria, or Kenya for example can be very profitable and more successful than a poorly organized business in the USA, UK, Canada, or even China.

Major Causes of Business Failure

Also, no matter how passionate you are about an idea or a particular type of business you must research the business to ascertain if such type of business will be profitable in your chosen location.

As it is, there is no business that is not profitable, but if your business is not located at a place where the product/service is required, it will not fly or be profitable.

Passion is a key to success in business but it cannot guarantee profitability. If you are passionate about something but cannot monetize it, and yet you venture into offering such service, then you are more like a charity organization that provides a service for no or minimal reward.

Passion is a key factor in business but it does not always guarantee success.

It is pertinent that you do thorough market research, and consult before you venture into any business. Nobody wants a failed business. The pride of every entrepreneur is to see his/her business grow and make a steady profit.

Some entrepreneurs have started businesses but because of certain factors, the business fails after a short while. I will be discussing my top 10 selected underlying causes of business failure with you.

“Lack of proper research for profitable market before venturing is one of the main cause of business failure.” 

Outline of Most Common Causes of Business Failure

  1. Not Seeking Professional Advice
  2. Lack of Good Customer Care
  3. Copying Others
  4. Lack of Experience
  5. Unaccountability
  6. Lack of Personal Growth
  7. Poor Location
  8. Lack of Focus
  9. Wrong Expectation
  10. Quitting Too Soon


No matter how informed you feel you are, once you want to start up a new line of business, it is pertinent that you seek professional advice. This will help you ascertain whether or not the business is profitable as you thought. Most times, entrepreneurs start up a business because they find others doing the business and profiting. Yes, they might be profiting from the same business but there might be a secret behind the success. It might be location, good customer service, knowing the right source to get raw materials, etc.

It is good you have a mentor that will always put you through to avoid silly mistakes. Another advantage of seeking professional advice is that you are meeting people that have already done the business and they have made mistakes and know the best way of avoiding them.

The likes of Bill Gates and Sir Richard Branson have Warren Buffet and Sir Freddie Laker respectively as their mentors. If they had mentors, why shouldn’t you?

One of the best piece of advice I can give to anyone in business is to never stop learning. Read and learn about marketing not just about your industry but how other industries buy and sell products and services and how you can do things even better.

Avoid Negative People


It is very important that you make your customer care a priority. A business with good customer care grows. Good customer care brings return customers and these return customers bring referral customers. If you do not treat your customer well, they go to your competitors. Learn to show your customers that you appreciate them. Always ask them questions about the product and offer them some percentage when they give your product a review (either positive or negative review). If you are not close to your customers, if you treat them like every other seller, they will only come when there is no other option. Bad customer care has killed a lot of businesses.

Your Customer Care Unit Defines Your Brand


What worked for Mr. Francis must not work for Mr. Reader. Many people have gone into business or made a business choice because they see others doing it and think they can be successful in it if they try. It is good you add your own idea after proper consultation, as that will distinguish you from others. Copying without consultation leads to a dead end.

Do Not Copy, Initiate


Lack of experience is one of the common causes of business failure. If you are inexperienced or your management is made up of novices, then your business is as good as dead. When starting a new business, it is advised you get the services of people experienced in that field. They can be your partners or your employee. Get experienced marketers and well-trained customer service personnel.

Experience Count

Refinancing or Consolidation, business failure


You must be accountable for any dime your business makes. Most times, many entrepreneurs could not account for their daily sales. Once there is a sale, they spend the money on personal needs believing that they will make another sale. If you must succeed in business, you must be accountable for every dime that you make. Make sure you plan out your spending, for a business you plan to grow, 60% of your profit must go back into the business.

Be Accountable


Many entrepreneurs do not invest in themselves. They want to be great but they do not read nor research, neither do they attend seminars and workshops that can increase their knowledge base. Personal development of your attitude and communication skills is a must. It is hard work and it takes discipline. You will have a hard time succeeding without protecting and working on your attitude. No one gets ahead in life without building themselves with new knowledge.

Never Stop Learning


There was an entrepreneur who had a coffee shop in a local area. His coffees are nice and affordable. He relates very well with his customers. But over the years, his coffee shop was not growing and he could hardly maintain the place so he decided to sell the shop. Another 29-year-old entrepreneur with enough capital felt he can make the coffee shop profitable by injecting cash into the business and making it classier. He also could not make the coffee business profitable. Why? Because of the business location.

The bottom Line, you cannot start a business where the service is not required. Making it classy will not make people to patronize you. A good market survey is required before a business location is chosen.

Poor Location Equals Reduced Patronage


Entrepreneurs can easily be distracted by too many minor tasks. Every day that their focus tends to shift, their thinking shrinks. A good entrepreneur or business person will never lose focus on what’s important and where their priorities are. The weakness is when they get caught up in trivial perfectionism in the tasks which can and should be left to others. Entrepreneurs should learn to delegate tasks. The short-sightedness becomes obvious when DOING rather than BECOMING becomes an obsession.

Being busy does not mean being productive


Some startups were being sold the idea that all they need to do is get into business and the money starts rolling in without doing anything. Sometimes it is the person’s fault because they only hear what they want to hear or they think they know better. The bottom line is, building a successful business is not a 60-yard dash but a marathon. If you don’t want to die in poverty or see your business collapse, then you must be diligent.

Do Not Expect What You Didn’t Work For

If You're Not Making Impact, You Are Not Living


This is the biggest reason why many businesses fail. If you do not persevere, enquire, research, fail, and try and try again, you might not be successful in business. First, you should know that any business done halfway can never be a success. You must strive against all odds to make a business stand. Another problem that has close many businesses almost as soon as they start is inadequate funding or paucity of funds. Many entrepreneurs make the fatal mistake of commencing business with inadequate operating funds. Such businesses don’t last as the initiators will easily be discouraged especially when there are big competitors.

I advise, before you start any business, to have the mindset of I will do whatever (Positive) it will take to succeed, that alone is the beginning of your success. See why startups need to develop a positive mindset.  That mindset will help you broaden your business scope.

Try and Try and Try until you Succeed, Never Give Up

For Online Related Business

If you’re looking at starting an online business, you need an SEO strategy that will work for you, a good online marketing strategy, and be certain you’re with a host that won’t fail you. You need your online business to be accessible all the time, site mobile-friendly, and very fast.


There are other factors or reasons an entrepreneur might experience business failure but the above 10 from my years of experience in business are the major causes of business failure. If you can overcome the listed causes, you are not far from being a success in any chosen field in business.

As I wish you well in your business, it will be good if you share this article with your family and friends using the social media buttons below, maybe they will learn a thing or two that can change their business or mindset towards business.

Ponder on this quote from one of my mentors;

Success is a lousy teacher. It seduces smart people into thinking they can’t loose” – Bill Gates


Francis Nwokike

Francis Nwokike is a Social Entrepreneur and an experienced Disaster Manager. I love discussing new business trends and marketing tips. I share ideas and tips that will help you grow your business.

26 Responses

  1. ssemwanga esther says:

    This is helpful.

  2. Johnclark Alamieyesigha says:

    Can I have more advice from you my leader in businesses?

  3. Larona Boemo says:

    Good day.Can i please get a copy of your book or the url to cite you on my research please

  4. Jedidia Celliers says:

    Francis Nwokike this is good information. may I get permission to use this information in my school work?

  5. jeffery steven stone says:

    Great Content! Really Helpful And Informative. Thanks For Sharing.

  6. Paul Sunday says:

    Hello Francis
    I read your article & one point in particular is a concern for me. That is no. 1 point. I have in the past heard that we should be careful sharing our dreams & goals with other people, as they might (try to) shoot it down. The question is this, do I balance that caveat with seeking professional advice? I will be grateful for a prompt reply

    • Hi Paul, you are getting it all wrong. That line is simply stating the importance of mentorship in business.

      If you’re starting a new business and you decide not to seek professional advice especially from people already in the business because you don’t want someone to “shoot you down” then you will end up making several avoidable mistakes had it been you seek advice?

      Professional advice or clearly seeking mentorship is very important if you want to start right and minimize mistakes while setting up a business.

  7. Patlyster says:

    Have you ever considered writing an ebook or guest authoring on other sites?
    I have a blog based upon on the same ideas you discuss and would really like to have you share some stories/information.
    I know my audience would value your work. If you’re even remotely interested, feel free to shoot me an e-mail.

  8. kamera says:

    Do you mind if I quote a few of your articles as long as I provide credit and sources back to your blog?
    My website is in the exact same niche as yours and my users would genuinely benefit from a lot of the information you provide here.

    Please let me know if this okay with you. Appreciate it!

  9. Wilda says:

    Hello, it’s actually a cool and helpful piece of information. I’m happy that you shared this useful information with us.

  10. Raphael says:

    This is indeed great, one may never know all till he associates with like minds. Setting up a business is one thing, another is keeping it up and sustainable.

    Intending and existing business owners ought to take a shot at this, really inpactful. Francis thank you for doing this and do keep it up.

  11. Ayebare Dominique says:

    thanks for giving us solution to begin business

  12. Agbontaen says:

    Thanks for sharing. Keep up the good work.

  13. Ifeoma says:

    I hate being around negative people, that’s the beginning of anyone’s failure. Thank you for the list Francis. Love your articles, they are impacting and life changing.

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