Why Businesses Fail?

One of the most exciting conversations I had was this fascinating one with a friend who started up a business.

- Roshan Thiran

The proprietor is well-educated and has a sharp mind when it comes to data analytics, and they had been “dying to start a business” as soon as the opportunity arose. There was only one problem: the business bombed before it got off the ground.

But this is not uncommon. Studies in the country shows that more than 90 percent of small and medium enterprises (SMEs) fail generally. It is estimated that around 30 percent of new businesses fail within the first two years; 50 percent during the first five years; and 66 percent within 10 years. Regardless of the statistics and whom you prefer to believe, if you start a business, there is a bigger probability that you would fail than succeed.

The reasons why startups fail:

• Lack of necessary skills or business nous within the founding team

• Little or no understanding of the market of operation

• Weak leadership and/or unmotivated team

• Poor business model

• Poor promotional, digital, and marketing strategies

• No understanding of customers and what they really need or want

• Weak organisational structure or processes

What was interesting about my conversation with this “failed” start-up owner is that they also showed incredible awareness about the lessons they had learned from “diving in, too quick too soon”.