Top Reasons for Business Failure

Failure to Anticipate Market Trends

An entrepreneur doesn't recognize changes in demand, customer preferences or the economic situation.

Insufficient Working Capital

An entrepreneur expects, and requires, immediate, positive cash flow that doesn't occur, leading to the failure of the business.

Bad or Nonexistant Budgeting

An entrepreneur fails to develop written budgets for operations that include all possible expenses.

Inadequate Financial Records

An entrepreneur fails to set up a bookkeeping or accounting system from the beginning.

Indecisiveness

An entrepreneur is unable to make key decisions in the face of difficulties, or decisions are delayed or improperly made because of concern for the opinions or feelings of other people.

Poor Cost Control

An entrepreneur spends too much, especially in the early stages, and spends all their startup capital money before achieving profitability.

Diffusion of Effort

An entrepreneur tries to do too many things, thus failing to set priorities and focus on high-value tasks.

Bad Human Relations

Personal problems and conflict with staff, suppliers, creditors and customers can easily lead to business failure.

Loss of Momentum in Sales

This leads to a decline in cash flow and the eventual collapse of the enterprise.

Hasty Decision Making

An entrepreneur acts impetuously and makes costly mistakes that eventually cause the business to fail.

Lack of Managerial Ability or Experience

An entrepreneur doesn't know or understand the important skills it takes to run a business.

Lack of Direction

Business owners often fail to establish clear goals and create plans to achieve these goals, especially before starting out, when they fail to develop a complete business plan before launching their company.

Top 15 Reasons for Business Failure

Lack of Direction, Impatience, Greed, Hasty Decision Making, Poor Cost Control, Poor Product Quality, Insufficient Working Capital, Bad or Nonexistent Budgeting, Inadequate Financial Records, Loss of Momentum in Sales, Failure to Anticipate Market Trends, Lack of Managerial Ability or Experience, Indecisiveness, Bad Human Relations, and Diffusion of Effort

Poor Product Quality

This makes it difficult to sell and difficult to get repeat business.

Impatience

This occurs when business owners try to accomplish too much too soon, or expect to get results far faster than is truly possible. A good rule to remember is that everything costs twice as much and takes three times as long as expected.

Greed

When entrepreneurs try to charge too much to make a lot of money in a short period of time, failure isn't far behind.