business plan failures

8 Reasons Business Plans Fail That No One Wants to Talk About

Danielle Hendricks

7 min. read

Updated October 27, 2023

As a full-time editor and academic mentor at an academic writing service, I have read hundreds of business plans over the years. To help students and startups, I have compiled a list of reasons business plans are rejected or given a low grade.

Of course, there are obvious reasons that business plans fail. For example, missing crucial deadlines for finishing the business plan, or drawing hockey stick profit projections can repel potential investors.

However, there are also less nuanced and more subtle reasons that investors and banks lose interest. These tips can help you avoid the minute and often overlooked mistakes that people make when writing a business plan. When investors and banks see hundreds of business plans every month, a small mistake can lead to a business plan being thrown in the rejection pile.

• The top 8 reasons business plans fail

1. Bad business ideas

Nobody likes to talk about it, but the main reason why business plans fail is bad ideas. Most ideas look great on paper—but all too often, companies realize they have invested in a bad idea once it is too late.

To avoid this, smart businesses are using “user-driven development” (UDD) to build new businesses. Lots of ideas seem great until you figure out that the market doesn’t actually want your product. In order to ensure that a business idea is sound, entrepreneurs should search for product validation by reaching out to their target consumers before sinking huge amounts of time and money into the project.

At Stanford University’s d-school , the designers use UDD to develop products that are user-centered. Firms that want to innovate with a focus on customers often hold small meetings with the potential end users where they describe the project and then ask users for their opinions.

After the first round of discussion, the firm can go back to the drawing board to incorporate the helpful feedback. Second and even third rounds can enhance the final product’s popularity. For example, The Embrace Warmer was created by asking mothers with premature babies what they disliked about traditional infant incubators in hospital maternity wards.

The mothers responded that not being able to hold their baby was the worst part of the experience. By focusing on the needs of the end-user, the developers of The Embrace—who were also students at Stanford—were able to create a highly demanded and successful business plan. Avoid wasting time on a bad business plan by gauging the market sentiment toward your project before investing a significant amount of time and effort.

2. Employee compensation is not incentive compatible

Business plans can fail because employees are not compensated in a way that aligns the goal of the employee with the goals of the company. In game theory, a contract is an incentive compatible if “every participant can achieve the best outcome to him/herself just by acting according to his/her true preferences” (Nisan and Roughgarden, 2007). For example, if an employee is paid with annual or monthly bonuses then the employee will only do what is good for the company in the short run.

In 2015, Forbes released a nice article on different salary packages for different company goals. One option is to offer tailored benefits to the employee. Startups and small businesses can offer more customized salary packages than large multinational corporations.

For example, instead of offering a standard salary package of retirement plans, child-care assistance, savings program, determine what the employee wants the most. For example, elderly employees may not be motivated by child-care assistance, so don’t focus on that in their package. Secondly, instead of offering an upfront payment of 2 percent of the company’s stock, offer a salary that pays that 2 percent over several years to ensure that the employee stays committed in the long-run.

3. No exit strategy for firing lazy co-founders

Anyone who has started a company knows that team conflicts are inevitable. A good business plan should have a step-by-step procedure for handling internal disputes. First of all, each co-founder should have a specific set of responsibilities with deadlines and consequences for failing to meet those deadlines.

Choosing the right co-founder is as important as choosing the right spouse. During the first few years, you may end up spending more time with the co-founder than anyone else. First, you have to know what are your own strengths and weaknesses. Try to find a partner that diversifies your skill set. Also, ask for references. Try to find out who they worked for previously, how they got along with their coworkers, and why they left.

Another way to help alleviate this problem is by delineating roles and delegating tasks. However, if a team member just does not have the time or the competence to achieve the goals specific to their role, then the company should have a polite but quick method for ending the relationship. Mentioning how these types of situations will be handled in the business plan is important because hurt feelings and vindictive ex-owners can damage the firm’s reputation and profitability.

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4. The team is not balanced

Another problem that I often notice on business plans is that the team is not balanced.

Company culture is an often underestimated challenge. I have read several business plans that present a compelling argument for a new product; however, the majority of plans fail to put together a team that has the competencies required to actually execute the business plan.

For example, I recently read a tech business plan that was making a health application for smartphones. However, the team did not have a single developer or IT specialist involved. If the business idea requires 80 percent of the labor hours to be performed by a software programmer, then the team needs at least one developer onboard. It is important to keep in mind that venture capitalists sometimes refuse to fund companies that only have one founder or have unbalanced teams.

5. Detailed financial projections are missing

The majority of business plans that I have been asked to edit have conveniently left out the balance sheet, cash flow statement, profit and loss statement, and income statement . The “numbers” are actually the most interesting part of the entire document for most investors. Break-even and return-on-investment (ROI) calculations are also parts of a good business plan.

My favorite tool for ensuring that I have decent estimations and great charts are the business calculators here on Bplans . Make sure to consider how legal costs and taxes will deduct from the bottom line.

Do not forget to factor in future expenses. For example, if the company needs to purchase new office equipment every three years, then the discounted value of those expenses should be included in the forecasted financial projections. Of course, the figures are only estimates, but they are important benchmarks that can be used to measure the company’s progress toward achieving their goals.

6. Spelling and grammar mistakes

Every time that I read a new business plan, my first step is to read each sentence out loud. In order to stop my mind from automatically filling in the correct spelling and grammar, I start by reading the last sentence on the page and working my way backward to the first sentence on the page. If you want to be 100 percent certain that there are no spelling errors, then consider hiring a professional editor to review your business plan.

Although some people think hiring a professional editor is “over the top,” the reality is that the most competitive firms have a professional editor review all of their documents for accuracy. If a bank or investor reads a business plan with typos, they will start to wonder if the entrepreneur is competent enough to run a successful business.

7. False assumptions

One of the final mistakes that students and startups make is falsely assuming the values of their investors and the values of their end-users, with some of the most common false assumptions being about their political or religious affiliation. This can be game over for successful companies, so startups should be especially careful.

Several examples exist of people that falsely assumed that their opinions were not controversial or were held by the majority. For example, Matt Harrigan, CEO of the startup Packetsled, stepped down after his comments about President Trump .

One piece of advice that my dad gave me can be helpful for writing business plans: “Opinions are like armpits. Everybody’s got them, and they all stink.”

The main point is that entrepreneurs and students who are writing a business plan should do their own research about the background of their potential investors and lenders. This ensures that you will have as much information as possible before pitching or handing over a business plan.

8. Failure to improve business plan after receiving feedback

Once you have finished writing your business plan, it is a good idea to send it out to at least three people before showing it to potential investors.

Think of these three people as your board of advisors. Ask them to read the plan and look for logical gaps in the content. If one advisor recommends a change that you disagree with, do not ignore his advice. Instead, ask the other advisors for their opinions and then make a decision. Edit your plan according to their constructive criticism, and thank them for their help.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Danielle Hendricks is an academic mentor at ACAD WRITE . In her free time, she is known for writing outgoing and funky pieces about the startup scene in Santa Fe, New Mexico.

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Why do business plans fail?

Table of Contents

Bad product ideas

Poor partnerships , a lack of detail , unrealistic financial planning , how a simple app can help improve your business plan.

Unfortunately, not every business will be a success. The failure of businesses is usually due to some issue in their business plan, and there are hundreds of different issues a business plan could have.

This article will describe some of the most common reasons a business plan might fail and how you can avoid them. We’ll look at common pitfalls such as:

• Poor partnerships
• A lack of detail
• Unrealistic financial planning

Sometimes, a business plan fails simply because it focuses on bad product ideas. A bad product idea means that the product or service your business specialises in does not sell well, and the lack of sales leads to an income problem for your business.

Business plans containing bad product ideas usually come about due to a misunderstanding of the term ‘ unique selling point ’. A unique selling point is what makes your product stand out from the products of the competition. It’s a feature that makes the product better as well as being unique. 

Many bad product ideas come from individuals that focus too much on the ‘unique’ part of the term unique selling point. While it is important to have a different product from anything else on the market, make sure you also know what your customers want from a product .

While it’s nice to have help running your business, it’s important to find the right person for the job before you write a contract for a business partnership . If you create a business plan as a partnership and your partner fails to fulfil their responsibilities, your business will struggle to succeed.

There are three things you may want to consider if you’re trying to avoid poor partnerships. The first is your partner’s skill set: look for someone with talents related to your business idea as well as talents you don’t possess. It’s helpful to have a diverse collection of skills within your business. 

Secondly, make sure your potential partner is as passionate about the business as you are. If they aren’t, you may find that you end up doing most of the work or that they leave the business as soon as things become difficult. While measuring passion and emotional investment is challenging, finding a business partner that matches your feelings regarding your business plan is vital.

Finally, create an exit strategy. While you may have found a perfect business partner, you never know what difficulties you’ll encounter in the future. So make sure you know what to do if there is an internal conflict in your company that you can’t resolve peacefully.

When you write a business plan , you need to make sure that you plan for almost anything. One of the biggest reasons business plans fail is because they don’t account for certain situations.

It’s impossible to plan for truly unexpected problems, but a detailed business plan will account for most situations by listing off your company’s weaknesses during a SWOT analysis . SWOT stands for strengths, weaknesses, opportunities, and threats, and it’s a standard part of most business plans. 

By using SWOT to list weaknesses in your business plan and potential threats to your success, you can start planning ways to deal with problems. For instance, you might identify a lack of sales as a potential threat. To account for this, you could invest in marketing or reduce your prices. If your business plan doesn’t account for these sorts of situations, it increases its chances of failure. 

Another reason for lack of detail in a business plan is low-quality research or not performing research at all. Without researching the market and industry you operate in, you’ll struggle to learn about your competitors or understand your customers’ needs. Thorough research is an essential part of avoiding business plan failure.

Financial planning is essential in business. You might not know the future of your business, but with a decent financial plan, you’ll be able to avoid most obstacles to success. If your financial plan is poorly thought-out or unrealistic, though, it might not be as valuable.

Financial plans are all about mapping out your company’s growth. If you’re too optimistic about this growth, it can cause serious problems. Unrealistic expectations can cause unprepared businesses to go bankrupt very quickly.

For example, say you expect to be making £1,000 a week in sales revenue by your second week of business. Your financial plan relies on this for you to pay rent and buy supplies. If it gets to that week and you’re only making £500, you’ll not be able to pay the bills that allow your business to operate. 

To avoid these problems, try lowering your expectations. Even if you think you have a fantastic product idea, it’s better to prepare for the worst than plan for the best and run into trouble. If you create a conservative financial plan that expects some success but accounts for things like low sales, your business plan is much less likely to fail. 

One of the biggest parts of your business plan is the financial aspect. To create a business plan that’s unlikely to fail, you’ll need to make sure you have a good understanding of accounting and a way to track how you’re spending your money.

The Countingup app offers built-in accounting software with its business account so that you can manage all your financial data in one place. 

With additional features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here .

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5 Reasons Strategy Execution Fails

• 21 Dec 2023

If your organization struggles to keep up in an increasingly competitive market, it’s not alone. Successfully executing transformative strategies is a challenge for many businesses.

The benefits of effective strategy execution are immense. According to a PwC survey , companies that invest more time and effort into strategy execution are three times more likely to report above-average growth and twice as likely to report above-average profits than those that don’t.

However, strategic plans don’t always succeed.

Access your free e-book today.

Why Do Strategic Plans Fail?

Companies’ strategic plans often fail for the same reason: ineffective strategy execution. According to Harvard Business School Professor Robert Kaplan’s book, The Balanced Scorecard: Translating Strategy into Action , 90 percent of organizations fail to execute their strategies successfully.

“Studies have shown that execution is continually rated as one of the most significant challenges by executives,” says HBS Professor Robert Simons, who teaches the online course Strategy Execution .

For example, consider technology company IBM’s strategy execution mistakes . When personal computing became popular in the early 2000s, IBM managers continued to allocate resources to the business’s archaic aspects, like mainframes. As a result, IBM lost its industry standing once competitors began offering well-built, affordable PCs to consumers.

“There are many stories like this,” Simons says in Strategy Execution . “In each, we find a business strategy that was well formulated but poorly executed. And while you can find lots of advice on how to devise better strategies, there's very little guidance on how to execute those strategies.”

To help understand how to manage and implement strategy more effectively, here are five common reasons strategy execution fails.

1. Ineffective Resource Allocation

Resources are a powerful tool and provide the support to achieve strategic goals; businesses that fail to allocate them effectively rarely succeed.

For example, Circuit City was a successful electronics company that faced financial challenges caused by poor resource allocation. Instead of selling off risky business acquisitions , the company eliminated its most valuable resource: experienced sales staff. That decision proved detrimental when the company lost its competitive edge in providing quality customer service and industry knowledge.

One way to avoid similar outcomes is by designing high-performing jobs and understanding what roles require more resources and funding.

“Job design is a critical part of strategy execution,” Simons says in Strategy Execution . “If individuals don't have the resources they need and aren’t accountable in the right way, they won’t be able to work to their potential.”

To ensure your organization’s jobs align with its business strategy , Simons recommends using the Job Design Optimization Tool (JDOT) , which enables you to design or test any job by analyzing its balance of demands and resources.

The JDOT helps determine the following aspects of job design:

• Span of control: The resources for which you’re given decision rights and held accountable for performance.
• Span of accountability: The range of trade-offs affecting the performance measures used to evaluate employees—defined in both financial and non-financial terms.
• Span of influence: How many people you must reach out to when attempting to influence others’ work.
• Span of support: The support you can expect from those in other organizational units.

In terms of resource allocation, be mindful of who on your team needs wider spans of control. Those employees should directly support your business objectives and aid in strategy execution.

2. Ineffective Risk Management

One of the most common reasons strategy execution fails is ineffective risk management . While external factors like emerging disruptive technologies and evolving customer needs can negatively impact business strategy, many companies forget to mitigate internal risks.

Consider the downfall of energy company Enron. Due to a lack of internal monitoring, the company misled investors and stakeholders about its financial health for years through fraudulent accounting practices .

Effective oversight can help prevent such situations, but leaders are often expected to monitor too many aspects of their businesses simultaneously.

One of the best ways to prevent what Simons calls “bad employee behavior” is through internal controls —policies and procedures designed to ensure reliable accounting information and safeguard company assets.

“Managers use internal controls to limit the opportunities employees have to expose the business to risk,” Simons says in Strategy Execution .

There are three types of internal controls:

• Structural safeguards: Ensure a clear definition of authority for individuals who handle assets and record accounting transactions (for example, segregation of duties).
• Systems safeguards: Assure procedures for processing transactions and management reports are adequate and timely (for example, database security).
• Staff safeguards: Make sure accounting and transaction processing staff have the right levels of expertise, training, and resources (for example, job rotation).

Leveraging internal controls like these can help mitigate internal risks that could hurt your strategy execution.

“There's a lot of opportunities if we start thinking about internal controls and what it's trying to prevent,” HBS Professor Eugene Soltes says in Strategy Execution .

In addition to mitigating financial risks, internal controls can influence your company’s long-term operational and financial performance by safeguarding strategy execution.

Related: What Are Business Ethics & Why Are They Important?

3. Vague Strategic Goals

A common mistake when implementing strategy is underestimating the power of business goals and objectives .

According to a study by The Economist Intelligence Unit , 90 percent of senior executives say they failed to reach all their strategic goals because of poor implementation.

One example of a company impacted by poor strategy implementation is Target. Although a successful retail company, it had difficulty expanding into the Canadian market due to management’s inability to effectively communicate strategic goals, operational procedures, and differences in customer expectations to Canadian employees. As a result, Target had to close all Canadian operations .

You can help avoid such outcomes by using tools like the balanced scorecard .

“The balanced scorecard combines the traditional financial perspective with additional perspectives that focus on customers, internal business processes, and learning and development,” Simons says in Strategy Execution . “These additional perspectives help businesses measure all the activities essential to creating value.”

When paired with a strategy map —an outline of the cause-and-effect relationships that underpin your strategy—a balanced scorecard provides a roadmap for understanding the relationship between your business’s goals, measurements, and value creation .

Remember to define and outline your goals and objectives before implementing your strategy to ensure consistency and alignment throughout the execution process.

4. Lack of Organizational Support

No matter how great your strategic initiatives are, you can’t implement them alone. Successful strategy execution requires the support of employees, stakeholders, and customers.

One situation that exemplifies why it’s vital to gain employee buy-in before implementing high-level changes is JCPenny’s failed 2011 rebranding strategy . Under new leadership, the company tried to implement a strategy focused on modernizing stores and pricing models, which was met with internal resistance. Longtime staff and sales associates felt disconnected from the new direction. Many employees also didn’t understand the pricing strategy and weren’t adequately trained in the company’s latest sales tactics.

One of the most effective ways to earn your team’s support is by communicating your company’s core values —your business’s larger purpose that inspires and guides employee behavior—and how it aligns with your strategy.

“You may think of them as little more than window dressing or ticking a box without much real impact on the business,” Simons says Strategy Execution . “But I've learned that the best companies—the ones that are most competitive and lead their industries decade after decade—put enormous emphasis on their core values and beliefs.”

Examples of core values include:

• Diversity and inclusion
• Sustainability

By aligning strategy with purpose, employees won’t just support your strategic initiatives but be engaged in their work .

Related: 6 Strategies for Engaging Your Employees

5. Imbalance of Innovation and Control

Innovation is essential to your organization’s long-term success. However, it’s critical that innovative products and services don’t hinder your business strategy’s execution.

For example, Uber has historically struggled with balancing innovation and internal controls. While the ride-hailing company has transformed the transportation industry, its need for innovation has led to several instances of misconduct due to insufficient internal controls . In response to public criticism and regulatory scrutiny, Uber has taken steps to address those issues and placed greater restrictions on what employees should and shouldn’t do.

You can help balance innovation and control by setting strategic boundaries , which define your business’s desired market position by identifying opportunities it should avoid and pursue.

You might be overwhelmed by such decisions. In choosing what to do and not do, you might worry about stalling innovation throughout your organization. However, restrictions are more guidelines than constraints. Instead, they should ensure innovation aligns with your business strategy’s direction.

How to Succeed in Strategy Execution

Strategy execution doesn’t need to be intimidating. While many businesses have failed to execute their strategic initiatives, you can help ensure yours succeed by developing strategy execution skills .

By taking an online strategy course , you can build the knowledge and skills to reach your strategic goals. Through an interactive learning experience, Strategy Execution allows you to learn from real-world business examples to better understand the strengths and weaknesses of your organization’s strategy execution approach.

Want to discover more tools you can use to implement strategy? Explore Strategy Execution —one of our online strategy courses —and download our free strategy e-book to continue learning about how to avoid common execution mistakes.

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The 6 Reasons for Business Failure, and How to Address Them From a lack of customer awareness to loss of execution focus, how failure happens, and why you should never shy away from analyzing it.

By Lak Ananth • Jan 6, 2022

Opinions expressed by Entrepreneur contributors are their own.

In my work with startups and company founders, I have found that the possibility of failure is a constant companion: it's always there, waiting around the corner. However, instead of fearing failure and doing everything we can to avoid it, I've found that a much more effective strategy is to anticipate and prepare for it, do everything we can to establish the reasons for it when it happens, then learn methods of improving.

While there are many ways to fail in business, let's consider some of the most common and what we can do as leaders to transform them into success.

1. Customer failure

After then-Tata Group Chairman Ratan Tata witnessed a family of four crash to the pavement as they rode an overloaded two-wheeled scooter through a slippery intersection in Bengaluru, India, he was moved to create a $2,500 "people's car": the Nano. Tata's vision for this vehicle was to democratize transportation — providing a safe and affordable way for potentially hundreds of millions of people to drive from villages to cities where higher-paying jobs were available.

Ultimately, the Nano was a failure. Only about 300,000 of the cars were sold during its 2008-to-2018 production run, most within the first few years after it was introduced, then sales quickly tailed off. The cause was a failure to fully understand the needs of its customers, and a marketing overemphasis on "cheapest", which is a reliable customer turnoff in this industry.

So, to avoid this brand of customer failure, have a destination in mind, a vision for the destination and the conviction that the journey is worthwhile. But beyond that, you need to know who the customers are for a new product, and that it needs to solve a problem that's sufficiently important to them. Without a customer, you have nothing.

Related: Determining Your Ideal Customer

2. Technology failure

Who can forget the Segway PT stand-up electric scooter, introduced to the world in 2001? It was a marvel of technology, incorporating a groundbreaking network of five gyroscopic and two acceleration sensors with the ability to analyze the environment and the rider's position 100 times per second.

Segway anticipated sales of up to 100,000 units a year starting in 2003. By mid-2006, however, only 23,500 had been sold and the company was acquired by the Chinese electric kick scooter manufacturer Ninebot in 2015.

An enduring lesson here is that it takes more than great technology to make a product successful. There also needs to be an ecosystem to support the adoption of the technology and the support of innovations. What's needed is to take a wider view of the entire innovation realm instead of narrowly focusing on execution. This can be done by focusing on two specific types of risk: co-innovation risk (what else needs to improve for my innovation to matter?) and adoption chain risk (who else needs to adopt my innovation before the end customer can assess the full value proposition?).

3. Product failure

In part using funds generated by sales of records by The Beatles, UK technology company Electric and Musical Industries Ltd. (EMI) first conceived the revolutionary computed tomography (CT) scanner and began selling units in 1972. Demand turned out to be off the charts, growing at more than 100 percent per year, and EMI had all the advantages: it was the first mover, it owned the patents and intellectual property, it had plenty of cash in the bank and it employed the technology's inventor.

Eventually, EMI's first-mover advantage eroded. The same year the company sold its first three scanners (which were limited to imaging human heads), Siemens started its own CT research and development unit, and in 1974 began hospital trials of a CT head-scanning machine. Siemens quickly realized, however, that the next big thing was going to be whole-body scans, and in 1977 it was the first to introduce a CT scanner capable of doing them. Sales for EMI units plunged, and the company exited the medical imaging business entirely in 1980.

EMI's failure was not expanding into the many available product adjacencies it could have tapped for second and third acts. Interestingly, and seemingly ounterintuitively, the first mover may have a higher risk of product failure than a fast follower, which has the opportunity to learn from the first's mistakes. A lack of speed kills, so maximize the pace of translating ideas into action, seeing results and getting feedback, then feeding what you've learned into your hypothesis — making required changes along the way.

Related: 7 Ways to Build Hype Months Before Your Business Launches

4. Timing failure

The Essential Phone, invented by Andy Rubin (founding father of Android), had everything going for it. After leaving Google, Rubin created Playground, a venture fund and startup studio, which he envisioned as a place where remarkable hardware, software, artificial intelligence and design would be merged to create great products. To this end, he attracted $300 million in investment and put together an enviable coalition of partner companies. The result was an innovative smartphone launched in 2017.

According to press reports, only 5,000 Essential Phones were sold through exclusive partner Sprint in its first month, just 88,000 units in the whole of 2017 (after delays, the phone started shipping in August 2017). Compare this with Apple's iPhone, which sold a million units within 74 days of its release. The Essential Phone was too little too late, and its exclusive partnership with Sprint limited visibility in the marketplace.

When introducing a new product, there is a golden window: that optimum period when a product will be adopted quickly. If you're too early, but most will ignore it. If too late, the market will already be overly saturated, and your product won't be sufficiently differentiated to spur people to buy. The key is to identify market transitions and take advantage of them before the competition does.

5. Business model failure

If you live or work in most any large city, you have no doubt seen the proliferation of electric ride-sharing scooters. Bird was the first electric scooter sharing company out of the gate, placing them on Santa Monica streets in September of 2017. After one year, Bird had sold more than 10 million e-scooter rides and was the fastest startup ever to achieve a valuation of $2 billion. However, in 2020, scooter usage dropped significantly (between 60 and 70%) jeopardizing the industry, which by that time included a slew of companies.

It is simply not enough to have a great product, amazing technology and customers whose problems you are going to solve. To succeed, you must also develop and focus on implementing a sustainable business model that will provide you with sufficient revenue and profit to grow your venture. This depends on getting unit economics right — creating profitable transactions for the company that solve a customer problem. As you work to get these economics right, you have three levers to work with: revenue, cost and differentiation. Each must make positive contributions for you to succeed.

Related: Follow the Laws of Business Building to Secure Your Startup's Success

6. Execution failure

Fully 99% of a business's success is based on just one thing: getting execution right. Amazon learned a very important lesson in this when, in 2013, UPS failed to deliver numerous packages in time for Christmas. The latter company was overwhelmed by an unprecedented volume of packages and wasn't prepared for the surge. To ensure that this would never happen again, Amazon set out to build its own in-house delivery system — transforming UPS's execution failure into a stunning example of execution at scale. By 2020, Amazon delivered more than half of its own packages to customers, and it is anticipated that both UPS and FedEx will deliver fewer packages than Amazon within the next few years.

One of my favorite sayings is, "A vision without execution is just hallucination". I believe that, ultimately, just 1% of a business's success is based on getting the things discussed above right: the customer, the technology, the product, the team, the timing and the business model. Fully 99% of success is based on one thing: getting execution right.

Applying lessons for success

So, it's important to get the basics done, including having sound unit economics, building a team with purpose, understanding customers' pain points, getting timing right and executing well. Unfortunately, companies often remain in the failure zone for some time — especially when they have the funds to keep them afloat, but the best find their way out as quickly as they can. So, when failure knocks at the door, and it will, don't shy away: take it on and break through to the other side… to your long-term success.

CEO & Managing Partner, Next47

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1. Financing Hurdles

2. inadequate management, 3. ineffective business planning, 4. marketing mishaps.

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• Small Business
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The 4 Most Common Reasons a Small Business Fails

Running a small business is not for the faint of heart

Running a business is not for the faint of heart; entrepreneurship is inherently risky. Successful business owners must possess the ability to mitigate company-specific risks while simultaneously bringing a product or service to market at a price point that meets consumer demand levels.

While there are a number of small businesses in a broad range of industries that perform well and are continuously profitable, about 33% of small businesses fail in the first two years, around 50% go belly up after five years, and roughly 33% make it to 10 years or longer, according to the Small Business Administration (SBA) .

To safeguard a new or established business, it is necessary to understand what can lead to business failure and how each obstacle can be managed or avoided altogether. The most common reasons small businesses fail include a lack of capital or funding, retaining an inadequate management team, a faulty infrastructure or business model, and unsuccessful marketing initiatives.

Key Takeaways

• Running out of money is a small business’s biggest risk. Owners often know what funds are needed day to day but are unclear as to how much revenue is being generated, and the disconnect can be disastrous.
• Inexperience managing a business—or an unwillingness to delegate—can negatively impact small businesses, as can a poorly visualized business plan, which can lead to ongoing problems once the firm is operational.
• Poorly planned or executed marketing campaigns, or a lack of adequate marketing and publicity, are among the other issues that drag down small businesses.

A primary reason why small businesses fail is a lack of funding or working capital . In most instances a business owner is intimately aware of how much money is needed to keep operations running on a day-to-day basis, including funding payroll; paying fixed and varied overhead expenses, such as rent and utilities; and ensuring that outside vendors are paid on time; however, owners of failing companies are less in tune with how much revenue is generated by sales of products or services. This disconnect leads to funding shortfalls that can quickly put a small business out of operation.

A second reason is business owners who miss the mark on pricing products and services. To beat out the competition in highly saturated industries , companies may price a product or service far lower than similar offerings, with the intent to entice new customers.

While the strategy is successful in some cases, businesses that end up closing their doors are those that keep the price of a product or service too low for too long. When the costs of production, marketing, and delivery outweigh the revenue generated from new sales, small businesses have little choice but to close down.

The Small Business Administration (SBA) helps small businesses find loans for different needs, offering a variety of loan programs.

Small companies in the startup phase can face challenges in terms of obtaining financing in order to bring a new product to market, fund an expansion, or pay for ongoing marketing costs. While angel investors, venture capitalists, and conventional bank loans are among the funding sources available to small businesses, not every company has the revenue stream or growth trajectory needed to secure major financing from them. Without an influx of funding for large projects or ongoing working capital needs, small businesses are forced to close their doors.

To help a small business manage common financing hurdles, business owners should first establish a realistic budget for company operations and be willing to provide some capital from their own coffers during the startup or expansion phase.

It is imperative to research and secure financing options from multiple outlets before the funding is actually necessary. When the time comes to obtain funding, business owners should already have a variety of sources they can tap for capital.

Another common reason small businesses fail is a lack of business acumen on the part of the management team or business owner. In some instances, a business owner is the only senior-level person within a company, especially when a business is in its first year or two of operation.

While the owner may have the skills necessary to create and sell a viable product or service, they often lack the attributes of a strong manager and don't have the time to successfully oversee other employees. Without a dedicated management team, a business owner has greater potential to mismanage certain aspects of the business, whether it be finances, hiring, or marketing.

Most small businesses start out with the entrepreneur's savings or money from friends and family and then look for outside financing to grow.

Smart business owners outsource the activities they do not perform well or have little time to successfully carry through. A strong management team is one of the first additions a small business needs to continue operations well into the future. It is important for business owners to feel comfortable with the level of understanding each manager has regarding the business’ operations, current and future employees, and products or services.

Small businesses often overlook the importance of effective business planning prior to opening their doors. A sound business plan should include, at a minimum:

• A clear description of the business
• Current and future employee and management needs
• Opportunities and threats within the broader market
• Capital needs, including projected cash flow and various budgets
• Marketing initiatives
• Competitor analysis

Business owners who fail to address the needs of the business through a well-laid-out plan before operations begin are setting up their companies for serious challenges. Similarly, a business that does not regularly review an initial business plan—or one that is not prepared to adapt to changes in the market or industry—meets potentially insurmountable obstacles throughout the course of its lifetime.

To avoid pitfalls associated with business plans, entrepreneurs should have a solid understanding of their industry and competition before starting a company. A company’s specific business model and infrastructure should be established long before products or services are offered to customers, and potential revenue streams should be realistically projected well in advance. Creating and maintaining a business plan is key to running a successful company for the long term.

Business owners often fail to prepare for the marketing needs of a company in terms of capital required, prospect reach, and accurate conversion-ratio projections. When companies underestimate the total cost of early marketing campaigns , it can be difficult to secure financing or redirect capital from other business departments to make up for the shortfall.

Getting your company's name in front of your customers is a crucial aspect of any early-stage business. It is necessary for companies to ensure that they have established realistic budgets for current and future marketing needs.

Similarly, having realistic projections in terms of target audience reach and sales conversion ratios is critical to marketing campaign success. Businesses that do not understand these aspects of sound marketing strategies are more likely to fail than companies that take the time to create and implement cost-effective, successful campaigns.

What Is the Small Business Failure Rate?

Approximately 33% of small businesses fail in the first two years, 50% fail within five years, and 33% make it to 10 years and further.

What Are Some Signs That Your Business Is Failing?

Signs that a business is failing include small levels or lack of cash, inability to pay back loans on time, inability to pay suppliers on time, customers that pay late, loss of clientele, and an unclear business strategy.

Small Business Administration. " Frequently Asked Questions ," Page 2.

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How a great business plan will maximize your risk of failure

The business plan is a great execution tool. Yet, requiring a business plan during the early stages of idea development might maximize the risk of failure. Large organizations in particular still require business plans. That is an error. In this post we outline three reasons why companies should drop business plans in favor of a more rapid and iterative approach.

While business plans are less and less common in the startup world, they persist in large corporations. In large companies it’s not uncommon that a team of several people spends a couple of weeks developing a business plan. They will first spend time on market research. Then they will craft a detailed plan with an impressive financial spreadsheet looking 3-5 years ahead. Finally, all of this will be summarized in a beautiful slide deck to convince top leadership or investors of the brilliance of the idea.

Great business plans can look so good and have such convincing arguments that it becomes hard to doubt them. Unfortunately this false illusion of security may also maximize the risk of failure (or waste time and money at the very least). No company wants that. Let’s look at three reasons why requiring business plans is a bad idea.

1) Getting too granular too early = you risk wasting time

One of the dangers of writing a business plan is to spend too much time refining an idea before it is really proven. Unfortunately, “no business plan (however smart it looks) survives first contact with customers”, as Steve Blank the initiator of the Lean Startup movement likes to say.

Rather than refining an idea at the early stages, you should test it immediately and evolve it based on market feedback. Otherwise you risk wasting time working on refining an idea that nobody cares about. The problem is that you’ll only realize that much, much later. 

TIP: Keep your early ideas very rough (e.g. on one page with the Business Model and/or Value Proposition Canvas) and immediately test them. Gradually refine your ideas with increasing  evidence.

2) Selling an idea & plan to leadership or investors  = You risk getting locked-in

Where it starts getting dangerous is when a team sells their top leadership or investors a polished and refined business plan - before rigorously testing the underlying business model and value proposition(s) in the market.

When leadership or investors buy and finance a plan they expect that success is a mere execution problem. They expect that beautiful and detailed spreadsheet in the business plan to materialize exactly how you projected it. In other words, you just got locked into a plan that was entirely made up. You are forced to execute an idea that is yet to be proven. If you want to change direction later on, it will be difficult to convince leadership because you sold them something else.

TIP: Don't sell leadership a polished and refined business plan. Sell them an opportunity and a rigorous process that will turn your idea into an executable business model by producing market evidence. Show them how this approach will minimize the risk of failure, as opposed to a business plan which maximizes the risk of getting locked into one direction that is yet to be proven.

3) Hiring based on an idea & plan = you risk premature scaling

The biggest risk of business plans is that they may lead to premature scaling. This happens when you hire people and spend money on key resources based on a plan rather than market evidence. In other words, you get into "execution mode" before you fully finished the "search" for the right business model and value proposition(s). We wrote about this in a recent post on how Great Execution of Bad Ideas Kills Businesses . 

This type of premature scaling of great looking business plans can lead to enormous financial losses. My "favorite" examples are Flo TV by Qualcomm ($1+ billion loss) or  Better Place , a startup that aimed at getting people to use electric vehicles ($850 million loss).

TIP: Don't invest in execution until you have strong evidence that your idea will work. Otherwise you risk premature scaling and running out of money.

Burn your business plan before it burns you

At Strategyzer, we are no enemies of business plans if they are used purely for execution purposes. Unfortunately we've seen too much damage from business plans used during the early stages of idea development - particularly at large organizations.

There is no place for a business plan when you are still searching for the right business model and value proposition for your idea. It's simply the wrong tool for the task and it might even lead to maximizing your risk of failure.

Business plans should be replaced by a more dynamic approach until you have sufficient evidence that your idea will work. Only then should you consider crafting a business plan. Until then, we suggest you burn your business plan before it burns you.  

Does your organization still require business plans? What's the impact?

About the speakers

Dr. Alexander (Alex) Osterwalder is one of the world’s most influential innovation experts, a leading author, entrepreneur and in-demand speaker whose work has changed the way established companies do business and how new ventures get started.

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Strategic Planning Failure: Why It Happens and How to Avoid It

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There are more than  30 million small businesses  in the U.S. If I asked you to divide these companies into categories based on annual revenue, how many would fall into the $1-10 million revenue tier? How about $10-50 million or above $50 million?

These businesses comprise only about 4% of those in the U.S. The remaining 96% have less than $1 million in annual revenue. Unfortunately, only a small number of them will grow into the next tier. In fact, it’s so hard to move between categories, there are only 17,000 businesses with more than $50 million in annual revenue. Only 17,000 out of more than 30 million!

It leads you to wonder — why do some companies struggle while others blast through the ceiling and achieve phenomenal growth? What are common barriers that prevent companies from achieving this level of growth? The secret often lies in strategic planning.

In this article:

Top 28 Fatal Strategic Planning Program Flaws 

How to overcome strategic planning failure.

• Start Executing Your Strategic Plan With AchieveIt 

For some companies, strategic planning seems to be a rhetorical exercise in which everyone fills out a form at the beginning of each year listing the things they are going to accomplish. The forms are assembled into a tidy document and updated quarterly. It’s all very task-oriented. And while, yes, strategic plans contain tasks, without goals, objectives, and strategies to provide context, the tasks are meaningless. A strategic plan without measurable objectives is no strategic plan at all. 

Successful strategic planning means business elements are working together agreeably to contribute to these goals. For strategic planning to be successful, you need to understand the factors that play a role in strategic plan failure. We’ve gathered a list of the top 28 reasons why strategic plans fail. 

1. Premature Upscaling

Pushing your business outside of its limit is known as premature upscaling and may occur if you are impatient to implement a business venture, project, or strategy. Preparing your team to take on any kind of expansion before anticipating possible consequences can lead to disaster. Managing the effectiveness of your strategic plan means not taking it  beyond the reality  of what your business can handle. 

A practical internal organization should focus on a steady upscale by defining specialized roles, strengthening management structure, planning, forecasting, and sustaining culture.

2. Poor Managerial Skills or Lack of Leadership

Managers and leaders can heavily influence productivity, revenue, innovation, and turnover. Management that contributes to a lack of trust or low expectations can decrease employees’ motivation or performance, which can affect strategic planning. Managers can assist in creating a proactive environment by learning from their failures and encouraging experimentation. Promoting open communication and exchange of ideas may also help with improvement opportunities. 

Managers should be aware that  employees may not always come to them  when problems arise, so anticipating problems and engaging with employees to create solutions for strategic plans lets your team know they are a priority. Having suitable leadership can ensure your team’s commitment and buy-in to the process.

3. Zero Succession Plan

Many strategic plans are not executed well because the business doesn’t have a succession plan. A succession plan ensures the necessary resources and skills are available when needed for a business plan or transition. The absence of succession planning may leave your business exposed to  inefficient replacement options  for positions that need to be filled, as well as fewer training and opportunities for your hard-working employees.

Businesses with a  strong succession plan  may see more resolved conflicts, effective decision-making and a boost in employees’ qualifications to take over specific roles. 

4. Overwhelming Strategic Plan

A strategic plan that is too overwhelming may be just as ineffective as having no plan at all. Too many vague goals or action steps — such as “growth” or “increased revenue” — can create confusion and dilute specific instructions or paths to accomplishment. This lack of precision could make employees  less likely to make progress  on goals. A strategic plan can also seem overwhelming if it aims to accomplish too many objectives at once, making it more difficult to translate them into useful measures. 

Creating a specific plan with goals and means of achieving them may reduce the likelihood of concerns or the need for clarification in the future. Using specific objectives can help you develop a reasonable timeline for intended success. It may also assist your employees in feeling confident in their respective roles and positions.

5. Unrealistic Goals: All Vision, No Direction

Setting unrealistic goals may explain why your business strategy fails. Unrealistic,  immeasurable, or unquantifiable  aspirations can be difficult to put into action and contribute to a lack of organizational focus because employees may find it unmanageable to meet the requirements. Employees are more motivated by challenging but attainable and incremental goals that align with business resources and productivity. 

Aside from envisioning your goals, you need a plan for implementing them. So, after ensuring all the essential elements of your mission are accounted for in your goals, develop a plan for implementing them. This ensures your plan has a focused vision and a sense of direction. 

6. Focus on Structural Changes

A business that puts too much focus on structural changes may lose the opportunity to direct its energy toward decision-making and meeting goals. Rather than building new structures, it is important to work on developing effective processes for strategies. Structural changes may bring about more issues and conflicts that take away attention and time from the strategies that can help your business succeed. 

There are often limits to structural changes in organizational design, as it can take a long time to get everyone on board with the process to run smoothly. 

7. Lack of Empowerment

The formulation and execution of your business strategy may depend heavily on your employee’s confidence and positive thinking. Empowered employees may feel more motivated to collaborate and achieve a goal, which can have a direct impact on your strategic planning success. Leaders who implement empowerment may see an increase in connection and creativity. Developing an inspiring and innovative environment can increase adaptation to different work styles, which may lead to success.

8. Wrong Timing

A solid business plan considers when the time is right to administer action. Your business strategy may be equipped with the proper resources, planning, goals, and actionable measures. But if the timing in your market or industry is not optimal, it may be wise to contemplate implementing it at a different time. The timing of your  project often directly relates to success , so finding the ideal moment to bring your plan to life is important. 

9. Short-Term Planning and Losing Sight of Goals

In the hustle of day-to-day operations, employees may easily lose sight of the mission. This attention can hinder short-term goal planning when your employees only focus on daily activities rather than their purpose in the overall goal. 

Before establishing your business strategy, think about the big picture and general direction of where you want to grow. If you don’t set long-term goals, you may lose the ability to envision sustainability. Setting long-term plans and objectives can improve your short-term goals’ structures because you may be able to  narrow the focus  toward what you are trying to achieve. 

Most of the time, your business’s short-term goals will be very different compared to its long-term strategy, so you and your team should revisit goals regularly to keep everyone on track. Planning for your business’s future and adapting your daily actions to your strategic plan’s goals can strengthen your employees’ ability to maintain a broader perspective. 

10. Choosing the Wrong People or Relying Too Much on External Consultants

In any business, the employees and team members are the most important asset. Every business strategy, plan, and execution stage requires different skills, personalities, and capabilities. Choosing the wrong people to fill specific roles in your business plan may decrease productive methods and success.

A team of  external consultants  is almost always a good idea for collaborating on a business plan and ensuring success because strategic management decisions can be very challenging. However, strictly relying on external consultants, meaning those who are not a part of your business, may lead you to lose sight of your business goals and purpose. After all, no one knows your business better than the people involved in your internal organization.

The external structure, also known as the environmental subsystem, should interconnect with the internal structure of your business to maintain consistency and work to improve intended progress. Internal consultants may be more beneficial for your business, depending on the size of your project or business plan. They may have a better idea of how to allocate resources and take a specific approach.

11. Lack of Communication or Lack of Clarity on Actions Required

When strategies fail, it is often because of a lack of communication. Communication keeps everyone on the same page. To communicate effectively, you must understand what information is relevant and important when notifying your team of updates, issues, or changes on a project. 

In businesses where a lack of communication contributes to the limitations of strategic planning, employees may feel confused about their roles and responsibilities. They may also feel disconnected when attempting to collaborate, which can lead to poor execution and confusion on context and outcomes. A method of storytelling can be effective in this case to put facts, strategies, missions, or  operational planning  directives into a structure that people can relate to and understand. 

Another crucial part of communication is accountability. Around  91% of employees  would say effective accountability implementation is one of their company’s top leadership development needs. Clearly communicating what employers are accountable for is essential, considering  60% of workers  report higher levels of mistrust with leadership when faced with a lack of communication surrounding accountability.

12. Inadequate Monitoring

Monitoring the development of planning and progress for any strategy can keep you aware of when changes need to be made. Determine which factors will have a significant impact on the success of your business to create a timeline of when critical tasks need to be completed. Proper monitoring allows for the opportunity to notice alternative solutions and predict long-term performance. Keeping your strategies and objectives on track may help prevent problems and enable you to revise or update plans as necessary. 

Monitoring your financial key performance indicators (KPIs) is another great way to be proactive and add value to your daily activities. 

13. No Progress Reporting

Reporting progress is another effective means of communication that contributes to staying on track with meeting your goals. A progress report updates the right people on the status of certain projects or task completion. Without it, there can be confusion and concern surrounding productivity. 

Progress reporting can also provide an overview of your team’s accomplishments and areas that need improvement. Constructing a regular analysis of your team’s performance, spending and profits can provide insight into how you compare with competitors. 

14. Lack of Alignment

Strategic alignment means that all crucial elements of a business are working together to support long-term goals. If employee performance is not aligned with your company goals and important strategic plans, it may present another obstacle to success. Misalignment in your business can create a disruption in focus, unclear goals, and conflicting tasks. 

Employees need to understand how their responsibilities fit into the success of a strategic plan or mission. Creating clear, established intentions may help you develop alignment with what your business aims to accomplish. 

15. Strategy You Can’t Execute

Before wasting time, energy, and resources on a strategic plan, consider if it is truly worth executing. Vague ideas or goals won’t usually produce anything successfully, so analyze your plan to see if it is capable of creating real change. Your strategy should be flexible and leave little opportunity for disruption. 

Your business may be too focused on seeing rapid results that it may not take the time to develop capabilities and innovation techniques. A worthy, solid strategy will take time to develop and may even require fundamental changes to your business. 

16. Unforeseen External Circumstances

Unpredictable occurrences should, ironically, be expected. If your company is not comfortable with confronting unforeseen external circumstances, it may explain why your strategies fail. Learning to anticipate risks or unfavorable opportunities can strengthen your ability to prepare a more secure strategy in the future. It is wise for your business to continually adapt its resources to suit a changing environment. 

Leaders and managers should devise a plan that highlights any uncertainties or possibilities for changing demands and competition to reduce the chance of failure from an external source.

17. Flawed Strategy

Implementing an incomplete or inconsistent plan is another possible reason why your strategic plans fail. A poor match between strategy and organizational  core competencies  may prevent you from seeing the growth and success that you desire. Testing your strategy with logic and a discernable vision can help determine if there are flaws in your strategy and how to address them.

Look to past situations and failures to see where you might notice defects in your current business strategies. You may jeopardize your business’s advancement if you rush to execute a strategy that hasn’t been well thought out.

18. Allowing Planning to Kill Strategy

The planning process allows you and your employees to demonstrate the goals you have in mind and how they can be achieved. However, too much planning — or too much focus on it — might dilute the importance of your strategy execution. At some point, you need to shift the overall focus to the strategy itself and how it will be executed to meet the desired growth.

Many managers and leaders may take too much time during the planning process trying to perfect every tiny detail. While this is admirable, it can also cause a delay in getting your anticipated results. Strategy execution should not be confused with planning, as they are completely different parts of the process of strategic analysis. Planning usually consists of an organized list of initiatives with associated budgets, resources, and deadlines. The strategy involves implementing specific decisions that lead to sustainable competitive and financial advantages.

19. Disorganized or Poorly Written Plan

A poorly designed plan will most likely lead to poor execution, which may cause strategic plan failure. Sufficient research and development of a plan with expertise and direction can be a part of the process of refining and organizing it. A jumble of to-do lists that are not coordinated and have no stated objectives may only cause your team to take longer to come up with a proper arrangement. This is also where accountability comes in — Ensure team members understand their responsibilities. 

20. Incremental Thinking

While incremental goals and growth may be a positive aspect of strategic planning, incremental thinking is usually not. This method of thinking usually consists of waiting for immediate, linear results and is generally unrealistic. It’s a more traditional process that may cause you to expect progress because you think you are making the right decisions.

Before implementing your business strategy, consider practicing an exponential mindset. Exponential thinking allows you to assess your growth in terms of its journey rather than overnight results. Exponential projections are not always certain and may not always meet your expectations as reliably as incremental thinking, but they  focus on working differently instead of working better . You can practice patience and alignment in your business, bringing about the opportunity for innovation.

21. Insufficient Focus

Another fatal flaw in strategic planning is insufficient focus. Employees who have too many widespread tasks may not know what to prioritize or what objectives are most relevant. Staying consistent with communication and reflecting on your business’s values and mission can be a helpful reminder that keeps team members on track.

Leadership may also focus too much on internal issues that don’t relate to their goals, such as resolving conflicts and sustaining performance. Too much internal attention can mean leaders fail to acknowledge competition markets and trends in technology. Focusing on the necessary elements of your strategic plan is key to maintaining the dynamic in your business, but  70% of leaders review their strategy  on an average of only one day a month. Spending too little time focusing on your prime concerns may lead to strategic failure.

22. Prioritizing the Wrong Things

While outlining specific priorities and goals is essential for strategic planning, it is crucial to prioritize the right things. Your priorities should directly align with your strategic business plan and have an obvious connection to how your company will succeed through particular steps and tasks. Explaining your priority objectives in detail and why they matter to your organization can help you understand if they truly are important.

It’s also normal for priorities to change throughout the process of implementing your strategic plan. Your goals may occasionally need to be restructured due to industry changes or financial impediments, so it’s a good idea to revisit your primary concerns regularly to see if they still match up with your current progress.

23. Insufficient Research

A lack of proper research may present problems down the line when executing your strategy. This type of research may include competitive industry markets, a review of your company’s resources or a look at your company’s financial performance. It is important to consider all possible elements of your strategic plan so you can better predict challenges and obstacles.

Strategic research planning can also be helpful to  define the resource and budget needs and possible outcomes before beginning a project. Leaders who prioritize research help ensure that all the important elements of a plan are accurately measured and completed. Emerging industry trends and changes can also be identified and updated according to your business plans with appropriate research. A lack of research could lead to a deficient comprehensive strategic plan because of failure to highlight related interactions, pressure points, and dependencies.

24. Putting Financials Ahead of Ideas

Improper use of resources is another factor in the list of fatal flaws. Tracking financial performance keeps you prepared for unexpected or unplanned events. However, being so concerned with your cash flow that you neglect ideas that could grow your business can cause you to pause your business plan or scrap it altogether.

Consistent poor cash flow management can also prevent you from making impactful decisions, finding resolutions, and predicting a prospective financial outlook for your business. It may also keep you from being able to participate in new business opportunities. Staying on track with your finances and managing them sensibly may make it easier for you to take on new tasks and projects without seeing a depletion of resources.

25. Failing to Make Trade-Offs

Strategies require making decisions that are difficult but necessary. Making trade-offs is very common and essential in most businesses and involves choosing one option or action over another. This ensures that your revenue, time, energy, and resources are going to the tasks where they can make the most impact.

For example, if your employees work toward many different, widespread goals or missions, there may not be much progress on your primary strategic plan. Failing to make trade-offs can prevent you from being able to allocate your resources to your most important key projects and objectives. Trade-offs also allow you to  determine which goals may conflict with each other , which risks you are willing to take, and which ones are not worth the possible loss.

26. Putting Too Much Value on Your Central Idea

Putting too much emphasis on one goal also has drawbacks. While it’s important that your team keeps your central idea or goal in mind, it should be flexible and adaptable. Having a backup plan can help add some security to your strategy and address concerns from your team.

It is also crucial to remember that strategies cannot be perfect, and leaders and managers can’t know every conceivable aspect of what may occur in the future. Putting all of your focus into one central idea will not give you much room to modify or adjust when issues arise or variables change.

27. Using Unrealistic Models

Setting unrealistic goals is another reason why strategic plans fail. Goals or models that seem unattainable may decrease motivation in your employees and slow productivity performance. Setting actionable, measurable goals can make your team feel like they can accomplish something while being challenged at the same time.

Your strategic planning models should be aligned with your intentions, but they should also be flexible. Your employees should be able to develop these ideas and results upfront and be equipped to face unexpected obstacles. Use common sense and intuition in the decision-making process to create realistic models and goals.

28. Failing to Link Strategic Planning to Strategic Execution

A solid strategy usually consists of adequate planning, organization, and delegation of tasks. To see success, you need to connect your strategic plan to your strategic execution. When managers or leaders become strictly reliant on their strategic plans, it may become more difficult to adapt to the external environment due to increased rigidity and inability to emphasize action.

Failing to link strategic planning to strategic execution may also decrease innovation. Innovation is a common link between strategy and performance, which may help you keep that connection when moving from the planning to the execution stage. Another part of this link may incorporate reviewing expected results and ensuring everyone stays engaged with the procedure and implementation process.

Combatting any obstacle can feel like a challenge, but it can also show you how to strengthen your abilities and become more successful. Seeing your plans develop may reinforce your feelings of accomplishment, making you more confident and secure in your future strategies. Here are a few methods on how to overcome strategic failure and improve overall problem-solving in your business.

1. Reflect on the Failure

The trial and error process is vital to learning, growth, and success. In business specifically, it’s normal to encounter failure, and it’s something you’ll have to accept. Think of failure as an opportunity to learn, recover, and shift your mindset to your next steps. 

Experiencing failure can supply you with the ability to become  stronger and more knowledgeable  throughout the entrepreneurial learning process. Research suggests that failure can give you a better lens for future-orientated learning outcomes. Applying and utilizing what you have learned from your past mistakes can help you generate an early warning system that allows you to anticipate ways to correct your actions.

2. Take Responsibility

As a leader, admitting you have made a mistake or could have done something better is not always easy. But owning up to the situation instead of blaming outside factors will make you appear more responsible. Being willing to embrace accountability rather than focusing on a victim mentality can make you more resilient in the future. 

Taking accountability may even  produce positive results , such as:

• Improved solutions.
• A boost in creativity.
• Employee commitment and participation.
• Employee morale and satisfaction.

If you struggle with taking responsibility, think about the impact it may have on your employees. Setting a good example and enforcing the importance of accountability will provide a more solution-oriented environment, especially in the wake of a strategic failure. 

3. Create Feedback Loops and Get Feedback

It’s not always easy to hear or accept feedback from your peers. However, the value of feedback proves to be quite the opposite. If you struggle to appreciate the feedback process, know it can be essential for learning and developing at any stage of your career. When you receive knowledge and opinions from others, it can help you think of a new perspective or idea you hadn’t previously considered. 

Creating an environment that encourages friendly but constructive criticism can have many benefits, including:

• Providing clarity for employees.
• Acknowledging the hard work and effort of others.
• Communicating what can be changed.
• Reinforcing and motivating employees with innovative ideas.
• Encouraging employees to review and adjust their goals.

Receiving advice should be seen as an opportunity to overcome areas of weakness. The Pendleton Model suggests that an action plan or specific goal  should be the top priority  when giving or receiving feedback. This model can refine the communication process — the more feedback you receive, the more you can think and reflect on the most efficient improvement methods. 

4. Use Your Support Network

Building connections with people who have different opinions and perspectives is a great way to feel supported and manage stress. A study revealed that  social support can improve psychological resilience when you are faced with stress, adversity, or failure. With a positive social support network around you, you may be less likely to:

• Engage in risk-taking behaviors.
• Feel socially isolated, which can lead to depression.
• Use or rely on negative coping mechanisms.
• Have negative thoughts about yourself or your abilities.

A team of motivational peers, friends, coworkers, or family members equips you with a sturdy structure for authenticity and encouragement. 

5. Recognize That Strategies and Plans Can Change

The willingness to accept change is also something that requires effort and patience. To improve the culture of your business, organization, or practice, you must be open to change. This concept may seem difficult to implement if you are used to a specific structure, direction, or position. However, change is almost always a perfect opportunity to enhance productivity and efficiency.

When approaching change, it’s a good idea to think of it as you and your team conquering a challenge or creating a vision together. Celebrating the small wins, maintaining a positive attitude and staying focused on your goals will make embracing new and intimidating changes easier.

Venturing out into a new strategy or business initiative may cause you to long for the comfort of predictability and the traditional way of doing things. But change can also make you feel more empowered, strengthening your ability to adapt to your environment and make more conscious choices. 

6. Manage Business Expenses

Staying on top of your business expenses can prevent you from dealing with financial problems in the future. Creating a  money management plan  can keep your payments and charges organized. Having control over your finances will save you time and energy that you can instead devote to your business strategy. Examples of managing your business expenses can include:

• Having a dependable payroll system.
• Hiring a reliable accountant to assess financial performance.
• Having an accounting or bookkeeping system.
• Regularly check your financial reports, such as income statements and balance sheets.
• Ensuring you are adhering to federal, state, and local tax regulations.
• Managing cash flow.

You will have one less thing to manage if your business expenses are handled by a credible, trustworthy professional. 

7. Create an Improved Execution Process

Learning from past mistakes is a powerful tool for improving your future plans and initiatives. Individuals often  resist change , which may present problems such as counterproductivity and ineffective job performance, which is why many strategy implementations fail. 

Once you decide on your next step toward a goal, following up with attentive communication and follow-through is essential to staying on top of a successful strategy. A few steps to  creating an improved execution process  may include:

• Identifying critical vulnerabilities.
• Communicating priorities and success factors.
• Creating an outside perspective of your business.
• Considering financial impacts.
• Acknowledging competitors.

These steps may help clear up any miscommunication and create transparency within your business or organization. Knowing how to properly delegate and implement your vision and direction can be one of the most successful methods for overcoming failure. 

Prioritize Your Business’s Success With AchieveIt’s Strategic Planning Solutions

Any successful business understands the importance of a well-constructed strategic plan. At AchieveIt, we want to help you increase visibility, improve accountability, and establish uniformity with our strategic planning software. Our strategic planning management platform will allow you to turn your strategic plans into reality by providing tools that ensure your key plans and projects progress. With our software, you can spend less time collecting updates and more time making decisions to move your organization forward.

If you want to improve the way you execute your strategic business plans, contact us today or schedule a free demo to see how we can help you achieve more.

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More Like this

Ten common causes of business failure.

Failure is a topic most of us would rather avoid. But ignoring obvious (and subtle) warning signs of business trouble is a surefire way to end up on the wrong side of business survival statistics.

What’s the survival rate of new businesses? Statistically, roughly 66 percent of new businesses survive two years or more, 50 percent survive at least four years, and just 40 percent survive six years or more. This is according to the study “Redefining Small Business Success” by the U.S. Small Business Administration.

Does Your Strategy Suck? Get this Free Guide to Find Out.

Learn how to avoid the most common pitfalls in strategic planning here .

With this information as a backdrop, we’ve put together a list of 10 common reasons businesses close their doors:

• Failure to understand your market and customers. We often ask our clients, “Where will you play and how will you win?”. In short, it’s vital to understand your competitive marketspace and your customers’ buying habits. Answering questions about who your customers are and how much they’re willing to spend is a huge step in putting your best foot forward.
• Opening a business in an industry that isn’t profitable. Sometimes, even the best ideas can’t be turned into a high-profit business. It’s important to choose an industry where you can achieve sustained growth. We all learned the dot-com lesson – to survive, you must have positive cash flow. It takes more than a good idea and passion to stay in business.
• Failure to understand and communicate what you are selling. You must clearly define your value proposition. What is the value I am providing to my customer? Once you understand it, ask yourself if you are communicating it effectively. Does your market connect with what you are saying?
• Inadequate financing . Businesses need cash flow to float them through the sales cycles and the natural ebb and flow of business. Running the bank accounts dry is responsible for a good portion of business failure. Cash is king, and many quickly find that borrowing money from lenders can be difficult.
• Reactive attitudes . Failure to anticipate or react to competition, technology, or marketplace changes can lead a business into the danger zone. Staying innovative and aware will keep your business competitive.
• Overdependence on a single customer. If your biggest customer walked out the door and never returned, would your organization be ok? If that answer is no, you might consider diversifying your customer base a strategic objective in your strategic plan.
• No customer strategy . Be aware of how customers influence your business. Are you in touch with them? Do you know what they like or dislike about you? Understanding your customer forwards and backwards can play a big role in the development of your strategy.
• Not knowing when to say “No.” To serve your customers well, you have to focus on quality, delivery, follow-through, and follow-up. Going after all the business you can get drains your cash and actually reduces overall profitability. Sometimes it’s okay to say no to projects or business so you can focus on quality, not quantity.
• Poor management. Management of a business encompasses a number of activities: planning, organizing, controlling, directing and communicating. The cardinal rule of small business management is to know exactly where you stand at all times. A common problem faced by successful companies is growing beyond management resources or skills.
• No planning. As the saying goes, failing to plan is planning to fail. If you don’t know where you are going, you will never get there. Having a comprehensive and actionable strategy allows you to create engagement, alignment, and ownership within your organization. It’s a clear roadmap that shows where you’ve been, where you are, and where you’re going next.

Running an organization is no easy task. Being aware of common downfalls in business can help you proactively avoid them. It’s a constant challenge. We know, but it’s also a continuous opportunity to avoid becoming one of the statistics.

36 Comments

This article is apt for everyone who’s planning to make a business, i admire this article so much ths more clear, understandable and realistic. I really appreciate this information, thanks for those people behind this informative thing. thumbs up!!!!!!!!!!

I have been looking at countless articles on why businesses fail. This one seems to make the most sense.

Thanks! David

Wonderful article thank to those behind this am really happy to read this article,u will be blessed in Jesus name (amen).

Awesome article

The article is very helpful and I have been assisted by it keep posting helpful thing.

I found this useful to us in Africa; especially Uganda

why is small business fail

Item number 8 is an eye opener for me thanks. More grace!

I found this useful to us in Africa; especially Uganda lol

mind opening article keep on posting

Cash flow or lack thereof is the #1 thing I evaluate when helping a company turn their business around. I am not disagreeing with any one of the 10 but unless you have enough cash you may not have enough runway to fix any one of the other 9 items to turn the situation around.

I thought I would have a look at the article and then add something that was missed as I have good understanding of these issues. Well darn and hats off Todd Ballowe. You have covered all the issues in a very tightly worded manner. Well done.

your article is good. keep on posting such important stuff. the information is helpful. thank you very much.

Right on point about why some businesses fail??

This is the richest article I have ever read while doing my research on the cause of business failure.

thank to the author, Keep up.

am very grateful about this article

The points are well put and straight to the point.

Thanks to the author we are now aware of whats causes our business to fail .

Sir/Madam! The article is fine. If you don’t mind, please specify the internal and external factors that influence a business to success or to failure. Because, in this modern world, specification i every field is appreciated. The tips are good, but quite mixed, please categorize them, thankyou

woo ,this article is awesome.I have found what i was looking for

what must a manager do to sustain a business growth?

this article is so helpful cause it contains sense why bussineses fail

Great article! Covered a lot of perspectives. Most owners believe that “knowledge is power” however they should understand that only “applied knowledge” is only the power that works! -great point. Came across a blog on Buymaster.co which really compliments and adds to this article. Take a look http://blog.buymaster.co/why-small-businesses-fail-or-fail-to-thrive/

thanks this artical is very helpful

Wow , great article. it touches an interesting field that i’m studying “Strategic management Accounting” This field seeks to involve the marketing environment with accounting as the strategy to gain sustainable competitive Advantage in the market. Thus , this articles highlights the importance of strategic tools in the market.

I am just a new comer in business, but I think this article can be a help for me.

Its a nice article but its just that we read these kind of articles only after failing in business and there are mistakes that we do again and again..as much as your articles helps me to understand the common reasons for failure I would like to point out some major reasons in my own way:

1) Lack of Capital- This is by far the most major reason for any business to fail although I am not saying this is the only reason. But it is often seen that people have capital to start up a business but in a long run they are not able to fulfil the internal and external demands of the business like salaries of staff, rent, raw materials etc. 2) Lack of Managerial expertise: This is also a major reason. It is often seen first time entrepreneurs lack management skills like planning, organizing, controlling etc. 3) Competition: This also plays in the success or failure of any business. Before or even after starting a business one must know who there competitors are and what are there strategy like what is the price of the products that they are offering, similarly quality,finish etc. Know your competition. 4) Random: There are many other reasons like understanding the needs and mentality of the customer. Know their likes and dislikes, their paying capacity, handling raw materials, keeping proper money/cash flow and accounting the same at regular intervals, having an open thinking and attitude, and their could be many that might not be present in what all I have stated. Please do give a feedback on this one

i found this article very useful , i have 40 years experiance in managing various business . thank you

Thaxs I loved the article since it opens up peoples’ minds.

Must say, this is an excellent article.

Covers the most important point in perfect details with no extra fluff.

It’s a great article and very knowledgable here are some pointers hope this could help you 1) Lack of Capital- This is by far the most major reason for any business to fail although I am not saying this is the only reason. But it is often seen that people have capital to start up a business but in a long run they are not able to fulfil the internal and external demands of the business like salaries of staff, rent, raw materials etc. 2) Lack of Managerial expertise: This is also a major reason. It is often seen first time entrepreneurs lack management skills like planning, organizing, controlling etc. 3) Competition: This also plays in the success or failure of any business. Before or even after starting a business one must know who there competitors are and what are there strategy like what is the price of the products that they are offering, similarly quality,finish etc. Know your competition. 4) Random: There are many other reasons like understanding the needs and mentality of the customer. Know their likes and dislikes, their paying capacity, handling raw materials, keeping proper money/cash flow and accounting the same at regular intervals, having an open thinking and attitude, and their could be many that might not be present in what all I have stated. Please do give a feedback on this one https://www.meshcowork.com/en/blog/read/620446883/failure-in-entrepreneurship

Thanks I have enjoyed the article ,,, very sensitive to understand especially to students who study financial management

It’s really very helpful. Thanks for sharing this amazing strategy

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Written by Grant Olsen | February 2, 2022

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There are all kinds of conflicting statistics and opinions for why businesses fail . The headline of one report might proclaim that “90% of businesses fail in the first 3 years,” while another asserts that by following their tips, “You can enjoy a 90% chance of success.”

It’s difficult to accurately aggregate the numbers and find global statistics on business failures, so we’ll use the United States as a microcosm for trends that are also relevant in Australia, New Zealand, Canada, the UK, and other parts of the world.

Here’s a look at survival rates when viewed at the end of the first, fifth, and tenth years:

• 80% of businesses survive their first year
• 50% of businesses survive 5 years or longer
• 33% of businesses survive 10 years or longer

While these statistics highlight the fact that there’s certainly a risk of failure, they’re higher than some of us might expect. Anytime you’re looking at a vast collection of disparate individuals attempting something difficult, you’re going to see similar trends.

For example, let’s look at how many first-time college students seeking a 4-year degree stay the course all the way to graduation day:

• 33% of students graduate with a bachelor’s degree in 4 years
• 57% of students have graduated with a bachelor’s degree by 6 years

Some of the remaining 43% of students who didn’t graduate within 6 years will likely go on to attain their degree in later years, but it’s too inconsistent of a number to show up in most studies. For thousands of different reasons, hundreds of thousands of students fail to attain their bachelor’s degrees.

So the percentage of businesses that survive 5 years or more is strikingly similar to the percentage of students who earn a degree by 6 years. Sure, things happen that derail many of the businesses and students. But at least half of them are still standing after 5-6 years.

Why Small Businesses Fail to Change

Just as many of those students who earned degrees switched majors during their college experience, it’s critical for business owners to maintain flexibility in their structure and operations. If the COVID-19 pandemic has taught us anything, it’s the immense value of a well-time pivot. Whether your change is compelled by a new idea or the pressures of the times, never hesitate to innovate.

As Dan Fries explains :

Sometimes a crisis, while always tragic, can force some positive effects. It might not feel like that right now, but by responding to COVID-19 will teach you some valuable skills. In other words, this is not the only crisis you are going to face as your business grows, and the lessons you learn in the next few months will be extremely useful when it comes to scaling your startup further down the road. In fact, some of the tools and processes above are likely to be relevant long after the current pandemic has passed.

When businesses embrace this open-minded approach, they usually find themselves among the 50% that are still strong after 5-10 years. As the old saying goes, “If you’re flexible, you’ll never get bent out of shape.”

Yet many business owners remain rooted in their old ways. It’s understandable that they believe in their products or services, and are attached to the business model. After all, it was these elements that inspired them to take entrepreneurial risks in the first place.

But if you love something, you need to take care of it. And part of nurturing your business is being willing to change directions when outside pressures are threatening it. Stubbornness can be mildly amusing in childhood friends or cranky great-uncles, but it can be devastating for a business.

Why do businesses fail when they resist change? Because they’re refusing to acknowledge the primacy of the customer. Let’s review a few examples of roadblocks to success that arose during the pandemic, and how they all connected back to the role of the customer:

• Lockdown prevents a restaurant from serving customers inside the building. This scenario has played out again and again in nations around the world. It presents many dilemmas, but none larger than the inability of a business to directly serve its customers. Successful restaurants found ways to provide new pickup and delivery options, serve their communities, and even send meal kits by mail. They kept providing a quality product, though it might’ve looked much different.
• The supply chain is disrupted. The inability to source the materials or ingredients necessary for your current model is problematic. But the main issue is that it prevents you from delivering what your customers are seeking. If replacements couldn’t be found for the supply chain, a pivot was required. For example, a bakery that couldn’t source eggs might stop selling baked goods and begin selling dry mixes to customers.
• Depleted finances make it harder for customers to make purchases. With customers in many areas struggling to meet financial obligations such as rent and mortgages, it’s no wonder that some had to curtail purchases. By finding ways to lower costs so you can lower your prices, introducing tiered pricing, or creating new product options altogether to meet your customers’ needs, successful businesses continued to meet the needs of those who historically had depended on them.

Whether you’re struggling with cash flow issues or have a broken supply chain, your ability to deliver for your customers will always be the real issue. And discovering new ways to meet their needs will always be the real solution.

The fact is that pandemics will emerge, trends will evolve, and economies will fluctuate. So if you insist on moving your business forward in the exact same way regardless of these external factors, you’ll instead find your trajectory rapidly nosing downward.

The alternative is to commit to meeting your customers’ needs no matter what occurs. While it won’t guarantee a smooth journey, this North Star will guide you through all manner of catastrophes and downturns.

9 More Reasons Why Businesses Fail

We’ve identified the inability to adapt to their customers’ needs as a major contributor to businesses that go under before reaching their 1-year, 5-year, and 10-year anniversaries. When your customer is kept at the forefront, all your other efforts will steer you in the right direction.

But there are many other specific risks facing young businesses. These are risks that you should anticipate early and be on the alert for as time goes on.

With that in mind, let’s now look at 9 other reasons why businesses fail:

1. Poor Planning

Coming up with a great business idea is only the first step because it can’t go anywhere unless it’s supported by a solid plan . Outline where you’ll go in your first month, first 3 months, first year, and first 3 years. Make the milestones measurable so that you’ll know if you’re on track.

Of course, things will occur that necessitate updates to your plan. But the point is that you have a master document that outlines how you’re going to stand out from the competition, how you’re going to deliver value to customers, how you’re going to build your culture, and how you’re going to ultimately thrive.

2. Hiring the Wrong People

We get it—there’s a lot of pressure to build your team in a timely manner so that you can launch a business. But rushing this stage can kill your chances for long-term success.

You need to find people who believe in what you’re doing and have the skills to improve the ways you’re doing it. In the crucial early stages of a business, negative employees can quickly sink morale and overall performance.

3. Failing to Foster a Good Culture

As you assemble your team, communicate openly about the culture you’re seeking to build. Ask their opinions and make a point of incorporating new ideas from your team. The businesses that prioritize profits over people or have a leaders-versus-employees dynamic often fall by the wayside because their toxicity trickles right out of the office and can be sensed by suppliers, partners, and ultimately, customers.

4. Growing Pains

Plenty of defunct companies launched with a strong culture but lost it as the company scaled. There’s obviously no way to maintain all your team’s perks and traditions as new employees swell the ranks, but you can keep the heart of who you are.

Make sure that you continue seeking your team’s input and act on their ideas. New hires will bring innovative suggestions to make things better, while the old guard can share the things that you should most think about retaining.

5. Failure to Stand Out

Even if your business idea is a gem, you’ve still got to communicate it effectively to your audience. Otherwise, you’ll just get lost in the shuffle.

Using the market research from your business plan, craft a unique selling proposition that boldly articulates what makes you different from the rest. Questions to answer include:

• What unique value do I offer?
• Why is my solution better for customers?
• How can I communicate these important differences?

The more you can differentiate your brand, the better your chances for success.

6. Not Focusing on the Essentials

Plenty of businesses lose their way in the first year as distractions pull them from the very things that give them a competitive edge. For example, if your quirky product packaging is beloved by customers, don’t ditch it as your business grows. Instead, find ways to make the packaging more efficient so that it complements your efforts to scale.

When your business stays focused, you’re better able to deliver on your unique selling proposition and to adapt to unforeseen bumps in the road.

7. Not Controlling Expenses

Launching a business is expensive. And growing that business involves a whole new set of financial demands. So it’s understandable that many businesses struggle to keep up with the pace.

You’ll put yourself in a much stronger position by carefully watching your expenses . If something doesn’t help you deliver an even better experience to your customers, it might not warrant the cost. This goes for everything from Netflix on the breakroom television to the vehicles you rent on business trips.

8. Not Managing Inventory

Balancing acts are hard enough for any person, which is why those who perform on the trapeze are referred to as “artists.” But business owners must control the inventory so they don’t lose sales from insufficient numbers or burn through capital by allowing too much inventory to pile up.

You can avoid these fates by investing in inventory management software that helps you track items through the supply chain, in your warehouse, and all the way to final deliveries .

9. Inadequate Profit Margins

It’s possible to bring in substantial revenue and still find yourself in financial danger. One of the factors that have claimed many young businesses is inefficient processes and poor pricing strategies that lead to low profits.

Your business provides distinct value to customers, so you should feel confident setting prices that reflect this fact.

Get the Skills That Won’t Let Your Business Fail

Want more strategies to help your business excel? We’ve prepared a library of free business courses that cover everything from finance to negotiations to advertising. Taught by proven entrepreneurs from a range of industries, they provide the type of insights that usually take years to acquire. In this way, you can fast-track your success and avoid many of the threats that impact other businesses in their early years.

About Grant Olsen

Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on FitSmallBusiness.com and ModernHealthcare.com. Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

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The 3 biggest reasons startups failed in 2022, according to a poll of almost 500 founders

Knowing the biggest risks that most commonly cause new startups to fail could make the difference between whether your own business sinks or swims.

Whether it's bad luck, bad timing or a half-baked business model, there are any number of ways a startup can go wrong. And roughly 20% of new businesses fail within their first year, according to data from the U.S. Bureau of Labor Statistics .

Luckily, some new research can shed some light on the biggest recent obstacles that have thwarted startups.

Skynova, which makes invoicing software for small businesses, surveyed 492 startup founders in November 2022 and analyzed startup data from CB Insights for the new study that looks at the most common reasons behind startup failures in 2022.

• Lack of financing or investors. The study notes that 47% of startup failures in 2022 were due to a lack of financing, nearly double the percentage that failed for the same reason in 2021, based on CB Insight's data.
• Running out of cash was behind 44% of failures. While that can be the result of poor financial planning , it can also point to a dearth of available funding. Capital issues aren't surprising, considering that fears of a potential recession , among other factors, have caused investments in North American startups to plunge 63% in 2022 compared to the previous year, according to a recent Crunchbase report . Anyone looking to start a new business in 2023 might face similar obstacles to securing funding, so long as economic uncertainty persists.
• The impact of the ongoing Covid-19 pandemic. While 33% of startup failures were attributed to the pandemic's wide-ranging effects on business and the broader economy, CB Insight's data shows that number was down from 59% a year earlier — a sign that many small businesses recovered from the worst of the pandemic in 2022, even as some continued to struggle to return to normal . 

Startup success advice from founders

While no entrepreneur can guarantee success, the founders surveyed by Skynova had plenty of advice to offer to anyone looking to take the leap and launch their own business. 

When asked what they wished they'd done differently when starting their own businesses, 58% of the founders polled said they would have done more market research prior to launching. The same percentage said they wished they had put together a stronger business plan.

That's in line with advice from the U.S. Small Business Administration , which notes on its website that a solid business plan is central to your startup's success and can function "like a GPS for how to structure, run, and grow your new business."

Also extremely important is the ability to think on your feet and make necessary changes should your plans not work out as well as you'd hoped. When asked for their top advice to aspiring founders, 79% of those surveyed by Skynova told those hopeful entrepreneurs to "learn from your mistakes."

It seems they speak from experience, as 40% of the founders polled said they had previously pivoted their startups in some fashion to avoid failure. And 75% of them said pivoting helped lead to success.

The most common types of pivoting noted by the founders were making changes to their business plans and either launching a new product or improving upon an existing one.

Realizing your startup is on course for failure and successfully pivoting to avoid disaster is a skill that any successful entrepreneur could use. Indeed, a failure to pivot is one of the most common reasons that startups fail, according to CB Insights . 

"Shark Tank" investor Kevin O'Leary previously told CNBC Make It that his own money-losing investments often have the same thing in common: startup founders who either can't, or won't, make changes when necessary. In many cases, those founders simply refuse to admit that their original business plan needs updating in order to survive.

"They can't get out of their own way," O'Leary said. "They won't listen to anybody else."

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Why Business Plans Fail and Why Projects Fail

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Thousands of business plans are created every year and only a small fraction of these businesses will succeed. While these business plans may contain solid ideas, they fail for specific reasons and their creators are forced back to the drawing board. The same is true of projects within a company. Big plans are drawn up, ideas are conceived, but when it comes to the real world application of making the project work, it falls apart. If you understand some common reasons why business plans fail and why projects fail, you can be prepared to face these issues and surmount them.

Unachievable Goals and Aspirations

Setting high goals and having the best of intentions of making a business plan or a project work doesn’t always turn out well in the real world. While it is important to have lofty goals, the path to achieving these goals needs to be realistic and attainable. It is one thing to want to sell a million gadgets; it is quite another to market those gadgets to the public and have them actually sell. In order to have a business plan or a project succeed, it is necessary to have achievable goals and aspirations that can be met, ideally within the first year or first few months of operation. If you have a lofty goal, that doesn’t mean you have to scrap your plan – just that you need to set attainable goals along the way and be realistic with your planning.

Lack of Market Research

Market research is a vital part of starting a new business or project. If you don’t fully understand the competition and the current situation of your marketplace, you don’t have enough information to go forward. Before a business plan is drawn up or a project is begun, thorough market research needs to take place and the results need to be viewed realistically. If your niche is saturated, then you need to come up with a plan that will set your business or project apart and help it succeed. Otherwise, your voice will simply be drowned out in the crowd or never heard because there just isn’t a market for it.

Productivity and Motivation Issues

Entrepreneurs are known for their ambition and their drive to succeed. It is these two points that can turn someone without a cent to their name into a multi-millionaire. But along the way determination to succeed, and the ability to stay motivated even when the tide is turned against you, are vital to success in the business world. This motivation needs to extend to employees of your business or members of your team on a project. If they are not productive and motivated, the best idea in the world will not succeed.

Improper Budgeting

Lack of real world budgeting is another important reason why business plans fail and why projects fail. You won’t always be able to go to the bank for another loan to get your business or project off the ground. Eventually, your funding may dry up if you cannot get your idea going in the right direction. Research needs to be conducted ahead of time on the approximate cost of starting a business or a project and keeping it running through the first year and through growing pains. Funding sources need to be found ahead of time and eventualities need to be planned for before you get in too deep.

• Coley Consulting: Why Projects Fail
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Kate McFarlin is a licensed insurance agent with extensive experience in covering topics related to marketing, small business, personal finance and home improvement. She began her career as a Web designer and also specializes in audio/video mixing and design.

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13 Types Of Business Failure With 9 Real-Life Examples

Every business starts with a eureka moment.

It’s the sudden realization that your idea could, indeed, become a business.

Having a good idea, however, doesn’t happen overnight. It takes a lot of time, a lot of bouncing back and forth in your mind before finally, it starts making sense.

Indeed, there is no such thing as going to bed one night and waking up the next morning with a killer idea. It’s a long process during which you question your belief yourself; you discuss your inspiration with friends at the risk of them mocking you – after all, criticism helps your idea to grow.

Therefore, it’s not uncommon for enthusiastic first-time entrepreneurs to assume that once they’ve finally sorted out the business idea or services they could offer , they can just let it roll and hope for the best.

I remember as a kid, I witnessed my parents struggle with many businesses.

Although they were always quite enthusiastic to try new things, I still wondered why we were always changing shops and goods almost every three months.

Well, as I grew older I began to see why we were always changing from one shop to the other – our business kept on failing. We would accumulate so much profit in the first two months and in the third month, we would fold up due to some really bad management.

I began to wonder why we couldn’t just stick to one business and expand in due time, just like the businesses I see on the business newspapers that rake in millions in gross profit.

We obviously missed some steps. Let me shock you – your brilliant business idea is unlikely to be successful if you miss any of these essential building steps. T he truth is, a significant percentage of new businesses are bound to fail after the first three months or one year of operation. Here are the reasons some businesses fail.

#1. Lack of Planning

Your idea is only the beginning of your business journey. However, if you truly want to navigate safely to the market, you need to have a business plan .

Indeed, your plan includes the estimated costs of launching your company and the forecast revenues. By using these two figures, you can define when and where to spend money to establish your presence. More importantly, you can know how to recoup your investment.

Without a plan, you’re unlikely to be able to monitor your profits or control losses.

Why? Because losses happen during the first few years as you’re building a brand new presence in the market. 

#2. Poor Management

Most times, businesses fail as a result of bad management; it is usually the most common culprit for failed businesses. However, bad management isn’t the only cause of business closure. 

In my JSS2 or 8 th grade in high school, I was a very keen student of agriculture and would have gone for it as a major in university if I hadn’t gone for engineering. Well, I learnt in my agricultural studies class that so much care is given to crops when they are in their early stages.

For instance, rice plants are nurtured and cared for twenty-four hours as seedlings until they reach a mature stage of their growth. This is pretty much the same process in business. You need to pay special attention to your business at its early stages. A popular misconception is that when the business begins to grow, you should begin to monitor things with a UV microscope.

On the other hand, when a business has matured, it would take a mighty hit to bring it down unlike when you are still struggling to make enough profit and pay rent. Smaller children need more care and attention – smaller businesses also need that same care and attention.

#3. Lack of financial backing

Lastly, without funding, you’re going to struggle to bring your business idea to life.

A commercial loan can be tricky to obtain when you’re a new entrepreneur, but you can consider crowdfunding platforms, local investors and even bootstrapping.

The risk is less if you go for the latter. You can also save for a while using a secure money-saving platform like Piggyvest and use your accumulated funds to start or support your business whenever there’s a temporary challenge.

From knowing how to establish your business to understanding the limitations, there are questions you need to answer before your idea can be a successful company.

Don’t be tempted to rush through the steps; your future success depends on your patience and strategic approach. 

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#4 Lack of location research

Back to my story. While my parents changed businesses, we also moved locations.

Believe me, relocation is not my thing – I hate moving. It gives me this unnecessary awkward nervousness of what the future holds. Now, you can imagine what it feels like to change businesses. I am sure I am not the only one that shares this predisposition.

Nothing beats settling down in one industry and growing your business to become a leading brand.  However, unless you know why each business fails in such a short time, you will be in the dark and will continue to jump from one business to another like a bird whose forest is on fire.

Where should you establish your business idea?

For new entrepreneurs keen to have an office instead of working from home, the cheapest option is typically better. In fact, it’s not uncommon for startups to establish themselves in rural areas or on the outskirts of large cities.

Unfortunately, the location can have an impact on the facilities available to your everyday processes. Water supplies, for instance, could be limited when you’re away from the town.

Small manufacturers, agricultural businesses, or even industrial firms that have not planned for a large water tank to harvest rainwater as a backup might find themselves unable to work for long periods of time.

Additionally, rural broadband access also plays a significant role in everyday business. Rural locations can dramatically affect your activities if you haven’t weighed your options well.

#5. Businesses not suited to customers

Who are the customers of your business idea? If you can’t answer the question, you may not know how to target the right target.

Your first step as a new business on the market is to study your customer personas .

Use keyword tools, social media information, Facebook Insights, and data-driven surveys and feedback. Then you can gradually build a realistic customer view that encompasses many audience types. 

#6. Poor Customer Services

When it comes to customer service, big businesses tend to have an upper hand in a lot of things compared to small start-ups. They usually have a functioning marketing/customer relations department that is tasked with following up on new trends and policies.

However, there are little things these big businesses fail to do and small businesses like yours can use them to their advantage.  Most big companies, after a while, are not able to create that familiarity with their customers the way smaller businesses can.

When you cannot point out at least one unique thing or a selling point, there is no way you can attract the customers enduring poor customer service from big names. Most times, what start-ups do is create an environment where your customers can feel like they are all getting special attention .

Psychology has proven that everyone loves to be noticed and treated specially. Actually, I feel that knowing your customers on a first-name basis is very important for startups, it creates a serious sense of familiarity and care.

#7. Poor Business Plan

It is true that some businessmen, investors and entrepreneurs may not see the full importance of a business plan. This is due to the common misconception that a business plan is only needed when seeking investments from sponsors and can be abandoned once gotten.

I beg to disagree that business plans not only serve as the foundation of your business but also serves as a reference book to future developments, management and possible expansion.

I can bet that Apple Inc. still has its business plan in possession. In fact, most major or established businesses have their rigid initial business plan that only needs to be amended based on industry policy changes.

With that in mind, one must take serious care to build a good business plan. According to Wikipedia, a business plan is a written document that contains business goals, the method of attaining those goals and the time frame within which the goals need to be achieved.

In other words, a business plan is a guiding light on your business journey.  Before you start building a house, you need an architect to draw a plan. Similarly, before you start any business you must structure your business plan in a way that it can be edited, invested into and achieved.

#8. Employing Too Many Staff

This is a mistake some small business owners make especially when they’re just starting out. The excitement of little leaps might get into the heads of some  startups which could tempt them to employ ten persons for a job that five people can do comfortably.

It’s fine to do this if you can afford it but if you can’t, it’s better to grow slowly until you can do bigger things. Else, the high running costs may start weighing down on the business and lead to failure.

#9. Poor leadership

This is another low-key problem that many businesses experience. Many business owners hate to admit that they lack the right skills to grow and expand a business properly.

This is why we have businesses that are struggling especially when it comes to making key business decisions. Just like the music industry, a lot of preparation is done before the actual music recording such as studio time, album sales, digital sales, show bookings, security and appearances.

Similarly, there are certain traits you need to possess to sustain your clients and customers. Business is not for everyone and that is a fact. I have seen boys that were given a whooping 5 million naira to start a business and because they have never been in a leadership position or know what it takes to be a leader , the business came crashing.

#10. Poor Financial Management

Yes, this is a problem that plagues many small startups and inexperienced managers. Usually at the early stage of a business, balancing profit and running costs can be quite frustrating. Most times businesses find it hard to separate capital from profit.

In business, turnover is very important, however, if you aren’t getting any profits, it is almost impossible to continue in the business. Depending on the level of financial problem, you might need to get a solution as fast as possible to keep your head up.

It is easy to sell products at a good cost price but the whole thing boils down to whether you can still afford your operating expenses after your inventory is exhausted.

#11. Bad accounting

If you can remember the company Eron, then you probably understand where I am going with this particular one. Well, for those of you who don’t know this story, Eron was a company whose name is now synonymous with falsifying profits.

Eron executives will post misleading profits of millions of dollars and meanwhile, they were in debt and barely floating. On the contrary, a source has reported that they had even been looking for iva help in the UK because executives from Moorcroft debt recovery companies were in pursuit.

If Eron succeeded in erecting a facility, they will post the projected income rather than the actual income of that facility. The result was a 63 billion dollars debt tied in assets which is one of the largest corporate bankruptcy. 

There are men with supposedly large enterprises that sit in their penthouse offices. If care is not taken, bankruptcy will creep in on them because they don’t take their time to find out whether any published money is real or not.

To make sure something like this doesn’t happen in your company, ensure you use a reputable audit firm to help do a proper and detailed account of your business. You can also get some accounting skills to have the basic knowledge.

#12. Incompetence and over expansion

This may be synonymous with bad leadership. However, incompetence might be on the side of everybody in the business which can also lead to a lack of productivity.

There are times when businesses experience the kind of incompetence only seen in African government institutions and it may become a problem for them.

Just like complacency, an expansion at the wrong time can be dangerous to the business. Expanding when you shouldn’t, puts a strain on your business.

#13. External factors

In a few cases, when a business crumbles, it is not due to incompetence or lack of funding. Sometimes, external factors might be the culprit.

The business market is a very unpredictable environment and small changes like a change in the government policy or what you might presume as small changes (competition) might affect your business adversely.

Read 20 businesses you can start with 10,000 naira or less in Nigeria

Real examples of failed businesses

1. gowell supermarket.

Gowell was a supermarket about two blocks from my old house in Lagos State, Nigeria. The supermarket was established by a couple who perhaps decided that running a supermarket was a profitable venture, and were keen to exploit the opportunity. The supermarket was large; one of the biggest in that area at that time.  

However, this couple was fully employed pharmacists who barely had time for their children let alone run a business. My sister was a regular babysitter for their kids when she concluded her junior WAEC examination.

Due to their busy time schedule, this couple handed the daily operations and management of Gowell to a church member and presumed friend. The business seemed to be doing well in the first six months. However, all hell broke loose by the last quarter of the year. My parents were close to this couple who were already laying serious complaints.

According to them, they were getting very little returns from their manager and goods were always missing from shelves. When queried, the manager usually blamed it on staff members and shoplifters.

My parents were shocked to hear that they were finding it difficult to pay their shop rent of just two million naira. Given the kind of crowd we see every day in that supermarket, one would think this couple was already on their way to success . My father, being an experienced person, was quick to point out that they made a terrible mistake by handing the care of such a large business  to a non-investor.

If you want to do something or you want to start a project, make sure you establish top-notch management especially at its early stage.

Compaq used to be one of the major suppliers of PC in the past bus they experienced business failure because they failed to predict the market shift and were unable to keep up.

Competition soon became tense and the company was bought for about 24.5 billion dollars by Hewlett-Packard.

3. A&P Construction

A&P was a construction firm that collapsed before it even started. The firm was established by two inexperienced fresh graduates of civil engineering and architecture. I was opportune to meet one of them during a seminar.  

These men were very skilled, nice and very polite. They started the company with what I would call a very faulty business plan.

First of all, they decided it would be the best idea to go for the big jobs rather than building their foundation from the underground. Trust the bigger construction companies , they had the reputation and could easily get jobs. It was not long before A&P couldn’t maintain running costs and the small business collapsed. 

4. Blockbuster

In 2004, blockbuster employed over 80,000 people worldwide with over 9,000 rental shops. Even though the company was at its peak, I think it was poor foresight and a terrible strategy that led to a decision like that.

In short, blockbuster filed for bankruptcy in 2010 due to a debt of over eight hundred and fifty million dollars. It did not help that a small struggling company called Netflix posed a very serious competition. It was just accepted that blockbuster paved the way for other movie streaming sites like Netflix.

5. Tommy Clothings

Tommy Clothings was a really popular clothing store in Lagos at a time. They made customised wear and even styled some celebrities. I remember my sister bought shoes from them around 2012. Well, Tommy Clothings was started by a young man called Tomiwa Akintola. He was a very talented tailor and could do things I had never seen any other tailor do before.

Tommy decided to expand his business and manage a clothing store where he sold his own designs, and other brands as well. The only problem was that Tomiwa, although a good tailor, was a terrible businessman. He found it very difficult to separate business from friendship.

His friends will troop in and take things on credit. His stock soon started to decrease until there was nothing more to sell. He kept following up on debtors and couldn’t have enough funds to continue his business.

6. Woolworths

Woolworth, a candy company that folded up, rendered more than 27,000 people jobless. Most experts believe that it was poor financial management that brought down one of the biggest companies down.

It started out with a few stores closing down in the last half of 2009 and finally, in 2015, the company failed.

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7. Yu-mom Kitchen

Yu-mom kitchen used to be a very popular eatery in my area. They were, however, still very young in business when the manager decided another branch was a good idea. The new branch was a serious strain and soon they used profits from the main branch to keep the other running.

This whole thing continued for some time until they couldn’t keep up with the expenses. They had to shut them down. If the second one was built from scratch and made to earn its own profit, that might not have been the case.

The truth is that managing more than one place might seem exciting, but it is not usually easy unless you have more than enough funds to run both conveniently. Alternatively, you should give as much strength as possible to your current office instead.

8. RetireKing

RetireKing used to be a cooperative society that ran across different secondary schools in Nigeria. At first, they were doing so well that other institutions wanted to be a part of it. RetireKing would actually give you a product and take the money in bits from your account with the agreed interest.

However, a combination of corruption, bad leadership and incompetence brought down RetireKing before they finally experienced business failure in 1992.

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9. Mr Biggs

Many Nigerians know about Mr Biggs, how popular they were and how quickly they fell in the face of competition. Mr Biggs used to be the go-to place for take-outs, family outings or even a business meeting.

However, they failed to make the necessary adjustments when new competition arrived. Other fast-food restaurants like Chicken republic and Domino’s Pizza began to outshine their predecessor and soon Mr Biggs shut down.

One tip I strongly think can prevent business failure and heartaches as much as possible is commitment. You must be committed to the early stage of your business to actually grow it. When you’re committed, you would have scaled through 70% of these problems.

Only commitment allows you to quickly adjust properly to industry changes. Knowing when to expand your business, when to sit tight and when to manage what you’ve got is key to your business success. Remember a bird at hand is worth more than two in the bush.

I hope this helps!

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Post Author: Chibuike Nwogbo

2 replies to “13 types of business failure with 9 real-life examples”.

This is a valid article. Thanks

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10 Companies That Failed To Innovate, Resulting In Business Failure

It’s crazy to think that 88% of the Fortune 500 firms that existed in 1955 are gone. These companies have either gone bankrupt, merged, or still exist but have fallen from the top Fortune 500 companies. Most of the companies on the list in 1955 are unrecognizable, forgotten companies today. As the life expectancies of companies continue to shrink, organisations must be more vigilant than ever in remaining innovative and future-proofing their businesses. 

Here are 10 famous companies that failed to innovate, resulting in business failure.

1. Blockbuster (1985 – 2010)

Home movie and video game rental services giant, Blockbuster Video, was founded in 1985 and arguably one of the most iconic brands in the video rental space.  At its peak in 2004, Blockbuster employed 84,300 people worldwide and had 9,094 stores. Unable to transition towards a digital model, Blockbuster filed for bankruptcy in 2010.

In 2000, Netflix approached Blockbuster with an offer to sell their company to Blockbuster for US$50 million. The Blockbuster CEO, was not interested in the offer because he thought it was a "very small niche business" and it was losing money at the time. As of July 2017, Netflix had 103.95 million subscribers worldwide and a revenue of US$8.8bn.

2. Polaroid (1937 – 2001)

Founded in 1937, Polaroid is best known for its Polaroid instant film and cameras. Despite its early success in capturing a market that had few competitors, Polaroid was unable to anticipate the impact that digital cameras would have on its film business. Falling into the ‘success trap’ by exploiting only their (historically successful) business activities, Polaroid neglected the need to explore new territory and enhance their long-term viability.

The original Polaroid Corporation was declared bankrupt in 2001 and its brand and assets were sold off. In May 2017, the brand and intellectual property of the Polaroid corporation was acquired by the largest shareholder of the Impossible Project, which had originally started out in 2008 by producing new instant films for Polaroid cameras Impossible Project was renamed Polaroid Originals in September 2017.

3.Toys R Us (1948 – 2017)

Toys “R” Us is a more recent story about the financial struggle one of the world’s largest toy store chains.  With the benefit of hindsight, Toys "R" Us may have led to its own undoing when it signed a 10-year contract to be the exclusive vendor of toys on Amazon in 2000. Amazon began to allow other toy vendors to sell on its site in spite of the deal, and Toys "R" Us sued Amazon to end the agreement in 2004. As a result, Toys "R" Us missed the opportunity to develop its own e-commerce presence early on. Far too late, Toys “R” Us announced in May 2017 its plan to revamp its website as part of a $100 million, three-year investment to jump-start its e-commerce business.

While filing for bankruptcy in September 2017 under pressure from its debt of US$1bn and fierce online retail competition, it has continued to keep its physical stores open.

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4.  Pan Am (1927 – 1991)

Pan American World Airways (aka Pan Am), founded in 1927, was the largest international air carrier in the United States. The company was known as an industry innovator and was the first airline to offer computerised reservation systems and jumbo jets.

The downfall of Pan Am is attributed to was a combination of corporate mismanagement, government indifference to protecting its prime international carrier, and flawed regulatory policy. By over-investing in its existing business model and not investing in future, horizon 3, innovations, Pan Am filed for bankruptcy in 1991. Pan Am is survived only in pop culture through its iconic blue logo, which continues to be printed on purses and T-shirts and as the subject of a TV show on ABC starring Christina Ricci.

5. Borders (1971 – 2011)

Borders was an international book and music retailer, founded by two entrepreneurial brothers while at university. With locations all around the world but mounting debt, Border was unable to transition to the new business environment of digital and online books. Its missteps included holding too much debt, opening too many stores as well as jumping into the e-reader business to late.

Sadly, Borders closed all of its retail locations and sold off its customer loyalty list, comprising millions of names, to competitor Barnes & Noble for US$13.9 million. Borders' locations have since been purchased and repurposed by other large retailers.

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6. Pets[dot]com (1998 – 2000)

Pets.com was an online business that sold pet accessories and supplies direct to consumers over the World Wide Web. Although short-lived, Pets.com managed to find some success during a time when there were no plug and play solutions for ecommerce /warehouse management and customer service that could scale. Pets.com launched in August 1998 and went from an IPO on the Nasdaq stock exchange to liquidation in 268 days.

Its high public profile during its brief existence made it one of the more noteworthy failures of the dot-com bubble of the early 2000s. US$300 million of investment capital vanished with the company's failure. Pets.com is a memorable cautionary tale of a high-profile marketing campaign coupled with weak fundamentals (and poor timing). Today, the Pets.com URL redirects users to PetSmart's website.

7. Tower Records (1960 – 2004)

A pioneer in its time, Tower Records was the first to create the concept of the retail music mega-store. Founded by Russell Solomon in 1960, Tower Records sold CDs, cassette tapes, DVDs, electronic gadgets, video games, accessories and toys. Ahead of its time for a fleeting moment, Tower.com launched in 1995, making it one of the first retailers to move online. It seems the company’s foresights stopped short there as it fell prey excessive debts and ultimately bankruptcy in 2004. Tower Records could not keep up with digital disruptions such as music piracy, iTunes and streaming businesses such as Spotify and Pandora. Its legacy is remembered in the form of the movie ' Empire Records ,' which was written by a former Tower Records employee.

8. Compaq (1982 – 2002)

Compaq was one of the largest sellers of PCs in the entire world in the 1980s and 1990s. The company produced some of the first IBM PC compatible computers, being the first company to legally reverse engineer the IBM Personal Computer. Compaq ultimately struggled to keep up in the price wars against Dell and was acquired for US$25 billion by HP in 2002. The Compaq brand remained in use by HP for lower-end systems until 2013 when it was discontinued.

9. General Motors (1908 – 2009)

After being one of the most important car manufacturers for more than 100 years, and one of the largest companies in the world, General Motors also resulted in one of history’s largest bankruptcies. Failure to innovate and blatantly ignoring competition were key to the company’s demise. As GM focused predominantly on profiting from finance, the business neglected to improve the quality of its product, failed to adapt GM to changes in customer needs and did not invest in new technologies. Through a major bailout from the US  government, the current company, General Motors Company ("new GM"), was formed in 2009 and purchased the majority of the assets of the old GM, including the brand "General Motors".

10. Kodak (1889-2012)‘

At one time the world’s biggest film company, Kodak could not keep up with the digital revolution, for fear of cannibalizing its strongest product lines. The leader of design, production and marketing of photographic equipment had a number of opportunities to steer the company in the right direction but its hesitation to fully embrace the transition to digital led to its demise. For example, Kodak invested  billions of dollars into developing technology for taking pictures using mobile phones and other digital devices. However, it held back from developing digital cameras for the mass market for fear of eradicating its all-important film business. Competitors, such as the Japanese firm Canon, grasped this opportunity and has consequently outlived the giant. Another example is Kodak’s acquisition of a photo sharing site called Ofoto in 2001. However, instead of pioneering what might have been a predecessor of Instagram, Kodak used Ofoto to try to get more people to print digital images. Kodak filed for bankruptcy in 2012 and after exiting most of its product streams, re-emerged in 2013 as a much smaller, consolidated company focused on serving commercial customers.

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Boeing CEO, other executives stepping down amid safety crisis

Three senior Boeing executives including its CEO are stepping down, the company said Monday, as the company continues to deal with an ongoing scandal and federal investigation into the safety of its passenger jets.

CEO Dave Calhoun confirmed he was leaving the company by the end of the year in a statement. Stan Deal, the CEO and president of Boeing Commercial Airplanes, has retired effective immediately. Larry Kellner, chair of the company's board of directors, will not stand for re-election at the next shareholders' annual meeting. Boeing board member and former Qualcomm CEO Steve Mollenkopf will succeed Kellner.

The company has been mired in a slew of negative stories since a door panel blew out on a Boeing 737 Max plane flown by Alaska Airlines in January. The fallout from that fateful flight shows no sign of stopping: The FBI informed passengers last week that they may have been the victims of a crime that the bureau is still investigating.

Despite Boeing announcing a range of measures to improve safety and committing to working with federal investigators, some passengers have spoken of feeling nervous climbing on board its aircraft.

In a letter to staff, posted on the Boeing website , Calhoun acknowledged that the Alaska Airlines incident had changed the company.

"As you all know, the Alaska Airlines Flight 1282 accident was a watershed moment for Boeing," he wrote. "We must continue to respond to this accident with humility and complete transparency. We also must inculcate a total commitment to safety and quality at every level of our company."

"The eyes of the world are on us," he said, referring to ongoing efforts to reassure both the company's airline customers and the flying public that its aircraft are safe.

In an interview with CNBC following Monday's announcement, Calhoun acknowledged the ongoing challenges at Boeing.

"We have this bad habit in our company," he said, adding production pressures continued to weigh on performance. "When you move it down the line, it sends a message to your own people that 'Wow, I guess the movement of the airplane is more important than the first time quality of the product.' And we have got to get that in way more balanced. Without a doubt." 

Calhoun said in the letter to employees that the company had over the last five years faced “some of the most significant challenges our company and industry have ever faced in our 108-year history.”

Calhoun was appointed CEO in 2020 in the wake of two other air disasters that some experts blamed on failures at Boeing. The crashes of Lion Air and Ethiopian Airlines in 2018 and 2019, which killed a total of 346 people, both involved the failure of a Boeing software system known as MCAS.

In an interview with the New York Times upon his appointment, Calhoun, who had served on the board of Boeing since 2009 and was appointed non-executive chairman in 2019, promised to change the internal culture at Boeing.

“It’s more than I imagined it would be, honestly,” Calhoun said at the time, describing the problems he was confronting at the plane manufacturer. “And it speaks to the weaknesses of our leadership.”

Yet in the same interview, he seemed to imply that American pilots would not have reacted to the MCAS system failures as the foreign-born ones did.

In the wake of the second crash in March 2019, the 737 Max was grounded worldwide and not re-approved for flight for nearly two years.

In 2021, Boeing agreed to pay a $2.5 billion penalty to settle criminal charges over accusations it concealed information about its 737 Max airplane, with Boeing admitting it had "deceived" the FAA about the MCAS system's reliability.

Calhoun said at the time that the settlement "appropriately acknowledges how we fell short of our values and expectations."

In an interview last week , Michael Whitaker, administrator of the Federal Aviation Administration, told NBC News that Boeing had no choice but to develop a plan to improve its culture and practices to meet the agency's safety standards.

Whitaker said Boeing’s priorities “have been on production and not on safety and quality.”

In a written statement in response to the leadership changes, Alaska Airlines said it has flown Boeing planes for nearly 60 years and is committed to the company.

"We share more than a hometown with Boeing; we share a passion for flying and a commitment to safety. We know the people behind the planes, who have dedicated their careers over these decades to make air travel better and safer," the statement said, adding "we will do everything we can to contribute to the critical work under way to ensure excellence in production quality and safety." 

In the wake of the January Alaska Airlines incident, some Wall Street analysts said more drastic change was needed.

“How many times can ‘won’t happen again’ happen again?” Bank of America Corp. analyst Ronald Epstein wrote in a report in January.

“Both Boeing and [Boeing parts supplier] Spirit [AeroSystems] need a drastic cultural overhaul. This cultural change won’t come from FAA mandates, congressional hearings, internal memos, or one-hour all hands meetings. For culture to move from corporate jargon to being embodied in the habits and minds of both workforces, we see it as necessary for Boeing and Spirit to drastically rethink the ways they have operated.”

Patrick Smith is a London-based editor and reporter for NBC News Digital.

Rob Wile is a breaking business news reporter for NBC News Digital.

• Donald Trump

Why Is Trump’s Truth Social Worth Billions? Experts Have Theories

O n the cusp of a financial crisis, Donald Trump got help from an unlikely source: His struggling social media platform. Investors approved a plan on Friday to take Truth Social public, increasing his net worth by billions as he’s drowning in legal expenses and owes New York state half a billion dollars in a civil fraud case. The company started trading on the ​​Nasdaq exchange on Tuesday.

But the financial statements of Trump’s firm show scant evidence of a booming business worthy of the $4.7 to $5.6 billion market capitalization reported on Monday. Trump Media & Technology Group, which owns Truth Social, lost money last year, according to regulatory filings. 

The company’s trajectory has led many to wonder how it could have scored such a high valuation. To close observers of American finance, it’s less a sign that Wall Street investors are buoyed by Trump’s social media platform than they are bullish on his chances of returning to the White House.

“It's a barometer for how he's doing in the election,” says Kristi Marvin, the finance guru who founded SPACInsider. “There are definitely people who like Trump and want to support him. They're probably buying the stock. And there's probably other people thinking: If he wins the presidency, who knows?”

Truth Social’s rally began earlier this year. As Trump notched primary victories over the winter, the Special Purpose Acquisition Company (SPAC) created to merge with his fledgling social media platform issued millions of new shares. 

In early January, Digital World Acquisition Corporation (DWAC) had 163 shares and closed at $17.32. After Trump clinched the Iowa caucuses, the firm had 8 million shares and closed at $22.35. The next week saw more growth. After Trump won New Hampshire, DWAC had 29.5 million shares and closed at $49.69. 

Some are speculating that the company's valuation will crash after Trump's firm replaces Digital World in the stock market under its new ticker, DJT. Others fear what it would mean for investors if Trump were to sell his shares, especially before the election.  

Last week’s initial public offering, Marvin says, was a signal that investors think Truth Social will garner more users and soar in value if Trump beats President Joe Biden in November. Trump currently leads Biden in some national polls and swing states likely to determine the election outcome.

But the election is still eight months away and Biden has been gaining ground. It also isn't clear that Truth Social would become an omnipresent platform even with Trump in office. He would still have other avenues to amplify his message and there’s little reason to believe that non-MAGA Americans would ever subscribe to the app.

Some investors may have other incentives. The largest institutional investor of the shell company that merged with Truth Social is Susquehanna International Group, the trading firm owned by GOP megadonor and billionaire Jeffrey Yass. According to a December regulatory filing, Susquehanna owned two percent of DWAC, roughly 22 million shares based on its share price.

“It looks like there's an opportunity to influence a candidate,” says Virginia Canter, the chief ethics counsel for the watchdog group Citizens for Responsibility and Ethics in Washington (CREW). That infusion of cash “may have provided him some level of access or influence that he might not otherwise have gotten.”

There are already signs that Yass has endeared himself to Trump. After the two recently met, Trump reversed his position on legislation that could lead to a TikTok ban. Yass’s investment company has a 15% stake in ByteDance, the China-based firm that owns the popular video-sharing app. Trump also recently struck a rapprochement with the conservative anti-tax group Club for Growth, of which Yass is its biggest benefactor. “We’re back in love,” Trump told a gathering of its donors, according to Politico, after the organization spent millions over the primary cycle in a failed attempt to crush his campaign. 

“I think it's a way to speculate on his political viability,” says Canter, a former ethics adviser for the International Monetary Fund. “The more successful he is as a politician, the more they’re anticipating success that Truth Social will have as a business entity.”

It’s not the first time that markets have embraced social media companies at levels that appear to exceed their value, according to Karen Petrou, managing partner of Federal Financial Analytics. Other examples she cites include Uber and WeWork.

“These kinds of valuations that seem insane are surprisingly common,” says Petrou, “They're less common than they used to be when interest rates were low. All sorts of firms have been financed significantly, or capitalized through IPO, well above their estimated value. Some of them had no revenues for years. But the markets were chasing yield.”

In other words: they were taking high risks they thought could lead to high rewards. That could also be the case with the lagging Truth Social, where shareholders are betting that a Trump victory could boost their bottom line. Says Petrou: “Some of this may be people hoping he succeeds.” 

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20 leaders share lessons learned from business failure.

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No business journey is without failure. While many leaders understand that they will inevitably encounter challenges on the road to success, moving forward after a mistake, setback or dire situation is easier said than done, especially when the stakes are high.

What matters most in these trying moments is how a leader responds, regardless of the outcome. The right mindset and a solid commitment toward continuous learning can turn a seemingly impossible situation into an opportunity to grow and innovate.

As experts, the members of Forbes Business Council continually face and overcome hurdles in their own entrepreneurial journey. Below, 20 of them share the biggest lessons they’ve learned from failure and how those experiences have impacted how they move now as leaders.

1. Keep A Positive Mindset

When we experience failure, it’s important we understand that it is all part of the learning and growing process. Keeping a positive mindset will help you move forward with the lessons learned from that experience. Overcoming challenges is what makes us good leaders. The experience and knowledge that you gain can’t be bought. - Ryan Whitefield , Revilo Property Group

2. Believe In Yourself

Believing in oneself is crucial. Each journey is unique, and patience is essential for success. Embrace every moment, continually strive to improve and believe that tomorrow will be better than today. This mindset has shaped my leadership, teaching me to persevere and inspire growth. - Harsh Patel , Water and Shark

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3. Put The Team Before Ideas

I try to impart to my team that it’s an idea that fails, not an individual. Failures provide valuable insights into what doesn’t work, enabling adjustments and eventual solutions. Moreover, I’ve learned failures often yield deeper lessons than success alone. We lead with a people-first mindset, so our entire team has the opportunity to learn from these setbacks as we support those affected. - Emily Hartstone , From The Hart Management, LLC

4. Prioritize A Culture Of Open Communication And Support

Embracing failure has shaped my leadership style to prioritize open communication and a supportive environment. I've created a workplace culture that values innovation, risk-taking and the pursuit of excellence. This approach has not only strengthened my team's problem-solving capabilities but has also cultivated a sense of camaraderie and shared accountability. - Trey Ferro , Spot Pet Insurance

5. Hold Post-Mortems To Become Better

Failure is the greatest teacher—when all is going well, people don't learn as much. In the 90s, I grew professionally by being part of SEAL teams who embraced a culture of learning from mistakes. After each major evolution, we would hold after action reviews that were designed to be ego-free and constructive. Everyone on the team was open to hearing how they could perform better. - Joe Crandall , Greencastle Associates Consulting

6. Embrace Failure

Embracing failure is an integral part of the journey. I've learned to see failure not as a setback but as a step toward growth. Each failure has contributed to my development by equipping me with knowledge and insights. This mindset has profoundly impacted how I lead, as I now approach challenges with resilience and focus on continuous learning. Failures are not the end but a means to evolve and improve. - Nir Ayalon , Cydome

7. Get Back Up After A Setback

Failure is just a setup for a successful comeback. Don’t let it get you down. Think about what you learned from it, make the proper adjustments, keep your head up and go kill it! - Todd Price , Perimeter Roofing

8. Use Failure To Improve Yourself And Your Business

Failure is a part of any business journey. It's important to take a step back, analyze what went wrong and come up with an action plan to move forward. Use failures to better yourself and your business. Don't let fear of failure dictate your decisions. Failure is just another stepping stone to success. - Michael Shribman , APS Global Partners Inc.

9. Prioritize Resilience

As a woman with almost 30 years in the financial services industry, resilience is my firm pillar. I view failures as key lessons, not setbacks. This mindset shift transformed my leadership approach, fostering a culture focused on growth, learning and seeing risks as opportunities. I prioritize integrity and strength, leading by example and viewing challenges as chances to grow stronger. - Aleesha Webb , Pioneer Bank

10. Be Open To Taking Calculated Risks

Don't be afraid to take calculated risks and have things not work out. Create a culture where it's okay to try something new and have it not work out—the best and most innovative companies share this principle. You can't foster innovation without taking risks and, oftentimes, failing. What I've learned to do is to redefine failure as not trying or the price you pay for success. - Jeaneane Falkler , Room 8 Group

11. Focus On Remaining Adaptable

Failure has taught me the importance of adaptability. It's crucial to stay flexible and open to change. This understanding has transformed my leadership style, allowing me to encourage a culture of innovation and experimentation within my team. We've learned to view each failure as a stepping stone and use it to fuel our resilience and creativity, as it ultimately makes us better equipped to handle future challenges. - Khusniddin Muradov , Kings Mountain National Carriers & Comston Technologies

12. Determine How You Will Respond To Failure

The biggest lesson I learned from failure is that failure is not what defines you but how you act in the face of failure. Having experienced many failures, I have built the discipline to give myself some space to react and let out my emotions. But the next day, I commit to moving forward, even if it's just doing one or two simple tasks. - Eran Mizrahi , ingredient brothers

13. Remove Ego And Emotions From Decision Making

Failure makes you resilient once you learn not to overreact. In many cases, we let failure win because of our egos. The best thing to do is remove your ego and try to think clearly without the emotions. Make data-based decisions and lead with confidence, even if you don’t feel confident. Your team will rally if you stand in failure and show confidence while also being humble and taking ownership. - Ryan Lucia , Such n Such Media

14. Master Delegation

Losing my joy has been my biggest failure. Even though I was successful and making money, I couldn't enjoy time with my loved ones. We often think failure is just about money, but taking care of ourselves is also crucial. I've now reclaimed my well-being by mastering the art of delegation, which helps ensure a harmonious balance between personal fulfillment and professional success. - Raquel Gomes , Stafi

15. Persevere

Perseverance is a key trait in successful business leaders. Keep pushing forward, even if an idea doesn’t work out in its original form. If a concept fails to jump off the page, head back to the drawing board and keep your eyes open. An idea for a new business can come from anywhere or anyone, but it’s crucial to trust your instincts and not let failure deter you from taking chances. - Howard Makler , Innovation Refunds

16. Seek Value And Vision Alignment With Partners

When starting a business with partners, go the extra mile to understand not just their professional qualifications and motivation but also align on underlying values to understand what their personal vision is. When one business partner's biggest goal is to buy a Porsche fast and yours is to change the paradigm of an industry, you may be okay for starters, but will clash along the way. - Barbara Wittmann , IT Zeitgeist LLC

17. View Failure As A Problem To Solve

When creating a business, you should embrace the challenges and see failures as puzzle pieces that need to be solved. The easy or "happy" path is where everyone will want to go and that’s why startups shut down. If you solve a challenge, you've created a competitive advantage. - Joseph Edgar , SnapAds

18. See Failure As A Part Of Life

The best lesson is that failures are part of life. Every time I do something new, learn something new and grow, I can and I will fail. Therefore, embracing the possibility of failure while doing everything I can to succeed is helpful for avoiding the fear of failure. Moreover, considering the ways in which I can fail allows me to prepare plans to mitigate the impact of failure. - Gaidar Magdanurov , Acronis

19. Focus On Controlling What You Can

The biggest lesson I've learned is that failure is all about what you do with it. You can learn about it and eventually laugh at your mistakes or you can wallow in it and eventually turn other successes into failure, too. How you respond is your choice, but moving forward takes time, commitment, honesty and courage. - Gary Romano , Civitas Strategies

20. Remain Future-Focused

It is important to first recognize failure, accept it and feel it. Then pivot to the future. The focus has to turn to learnings from the experience, and lean on optimism. View that current experience as a stepping stone to something better. The road to success is not a straight line but one that is winding and full of obstacles. Having the right mindset will help you achieve success. - Aseem Goyal , Factum Global Asia

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Ride the boom: how to start a home inspection business.

The real estate market is continuing to boom, and with it comes the need for home inspection business owners.

The best home inspectors have a blend of characteristics. They must have an entrepreneurial spirit, technical skills, expansive knowledge of house systems and construction, and meticulous attention to detail.

The home inspector is a key component of the real estate sales system. It plays a pivotal role in communications between real estate agents, and in assisting buyers in making informed decisions about the purchase of a property, and its price.

Starting Your Own Home Inspection Business: Key Steps

These are the key steps you should take in starting your own home inspection company. We’ll tell you everything you need to know, from crafting a business plan and handling startup costs to marketing and growing the business.

What Do Home Inspectors Do?

Home inspectors play a crucial role in the real estate process, offering services that provide potential buyers, sellers, and property owners with essential information about a property’s condition. Their tasks typically involve a detailed examination of various aspects of a property to ensure its safety, functionality, and overall condition. Here’s a more in-depth look at what home inspectors do:

• Assess Structural Integrity : Inspect the foundation, walls, floors, roof, and other structural components to identify signs of damage, deterioration, or potential failures that might affect the property’s safety and value.
• Evaluate Systems and Components : Examine the property’s essential systems including electrical, plumbing, heating, ventilation, and air conditioning (HVAC) systems to ensure they are installed correctly and functioning as intended.
• Inspect Exterior Elements : Check the exterior of the property, including siding, windows, doors, decks, balconies, and other attached or detached structures to identify any issues that could lead to problems or require maintenance.
• Review Interior Conditions : Evaluate the condition of interior elements such as ceilings, walls, floors, stairs, and installed fixtures to detect any signs of water damage, mold, pests, or other interior deficiencies.
• Examine Insulation and Ventilation : Inspect insulation quality and ventilation efficiency in attics, crawl spaces, and other areas to ensure proper temperature regulation and moisture control within the property.
• Descriptions of Deficiencies : Clearly describe any issues found during the inspection, specifying the location and nature of each problem.
• Photographic Evidence : Include photographs of noted deficiencies to provide a visual reference that supports the findings in the report.
• Recommendations for Repairs or Further Evaluation : Suggest necessary repairs or recommend further evaluation by specialists (like a structural engineer or a licensed electrician) for more complex issues.
• Provide Maintenance Advice : Offer guidance on regular maintenance practices that can help prevent future issues and ensure the property remains in good condition.

Home inspectors must navigate a fine balance between thoroughness and practicality, ensuring they provide valuable, actionable information without unnecessarily alarming clients. Their reports can significantly influence buying decisions, making their role critical in the real estate transaction process.

Obtaining Certifications and Training

Acquire relevant certifications and training from recognized organizations to ensure credibility and competence in the field of home inspection. For instance, the components of a home include electrical, plumbing, foundation, roof, heating/cooling systems and more.

The standard for home inspector certification is with the ASHI Certified Inspector (ACI) program. The ASHI certification program establishes a minimum and uniform standard of practice for home inspectors practicing in the United States and Canada. Home Inspections performed to ASHI Standards of Practice are intended to provide the client with objective information regarding the condition of the systems and components of the home as inspected at the time of the home inspection.

You may also require business certifications to operate in your area. For example, you may incorporate a business or look into creating a business entity like an LLC. Then research business licenses and permits specific to your state and community.

Home Inspection Business Plan

Develop a comprehensive business plan outlining your goals, target market, services offered, pricing strategy, and marketing approach to guide your business operations. You should also choose a business structure, which typically is the Limited Liability Corporation, or LLC.

Home Inspection Business Startup Costs

Starting a home inspection business involves various initial costs that are essential for setting up a professional, reliable service. So how much does it cost to start a business in this industry? These costs can vary widely depending on the region, the scale of the business, and the specific services offered. Here’s a breakdown of the potential startup costs you might encounter:

• Inspection Tools : Moisture meters, infrared cameras, electrical testers, gas leak detectors, flashlights, and ladders.
• Safety Gear : Protective clothing, respirators, gloves, and safety glasses to ensure safety while inspecting potentially hazardous areas.
• Software : Inspection reporting software to create professional reports for clients.
• General Liability Insurance : Protects against claims for property damage or injury that occur as a result of your inspection services.
• Errors and Omissions (E&O) Insurance : Covers legal fees and damages if a client claims a missed or inaccurate inspection report led to financial loss.
• Branding : Costs for logo design, business cards, and branded clothing.
• Website : Development and hosting costs for a professional website to showcase your services and contact information.
• Advertising : Online and traditional advertising costs, including social media, local newspapers, and real estate publications.
• Education and Training : Costs for courses and exams necessary to meet licensing requirements.
• License Application Fees : Fees associated with applying for and renewing your home inspection license.
• Vehicle Purchase or Lease : If you don’t already have a suitable vehicle, you’ll need to acquire one that can transport your equipment and present a professional image.
• Maintenance and Fuel : Regular maintenance and fuel costs to ensure your vehicle remains reliable.
• Membership Fees : Annual fees for memberships in professional home inspector associations.
• Continuing Education : Costs for ongoing education to maintain your license and stay updated on industry standards and practices.

When planning your startup budget, it’s essential to account for these costs to ensure you have the financial resources needed to launch and sustain your home inspection business successfully. It’s also wise to set aside some contingency funds to cover unexpected expenses as you get your business off the ground.

Setting Up a Business Bank Account for Your Home Inspection Business

Establish a separate business bank account to manage your finances effectively and maintain clear separation between personal and business expenses. Your local financial institution or chamber of commerce should be able to walk you through how to open a business bank account .

Navigating Self-Employment Taxes

Unless you are hired by a company to work as a home inspector, if you work for yourself you must pay self employment taxes. Familiarize yourself with the tax obligations and responsibilities associated with being self-employed, including income tax, self-employment tax, and potential deductions.

How to Market a Home Inspection Business

Marketing is an essential part of learning how to start a business in this industry. Develop a marketing strategy to promote your services, utilizing online platforms, networking, referrals, and targeted advertising to reach potential clients.

Building Your Client Base for a Successful Home Inspection Business

Building a client base is crucial for the success of a home inspection business. Establishing strong relationships with real estate agents, offering exceptional service to create word-of-mouth referrals, and leveraging online marketing strategies are key steps to attract and retain clients. Providing thorough, reliable inspections and clear, detailed reports can set the foundation for a positive reputation in the industry.

To effectively build a client base, consider the following strategies:

• Attend local real estate events and meetings.
• Offer to give presentations or workshops on home inspection topics.
• Be punctual, professional, and thorough in every inspection.
• Follow up with clients to ensure their satisfaction and address any concerns.
• Develop a professional website showcasing your services, qualifications, and customer testimonials.
• Utilize social media platforms to engage with potential clients and share useful content related to home maintenance and inspections.
• Encourage satisfied customers to refer others by offering discounts or other incentives.
• Become an active member of local business associations and chambers of commerce to increase your visibility in the community.
• Stay updated with the latest inspection techniques and regulations to enhance your expertise and credibility.

By implementing these strategies, you can steadily grow your client base, enhancing the longevity and success of your home inspection business.

Home Inspection Business Cards

Create professional business cards that include your contact information, services offered, and branding to leave a lasting impression on potential clients.

Home Inspection Business Names

Choose a memorable and descriptive name for your home inspection business that reflects your brand identity and resonates with your target market.

Scaling and Growing Your Business

Explore opportunities for expansion and growth, such as hiring additional inspectors, offering specialized services, or expanding into new geographic areas.

Building Your Home Inspection Business

Scaling a home inspection business involves expanding its capacity and reach to serve more clients and increase revenue. This expansion requires strategic planning, investment in resources, and the implementation of systems to ensure quality and efficiency as the business grows. Key steps include diversifying services, hiring additional inspectors, leveraging technology for efficiency, and enhancing marketing efforts to reach a wider audience.

To successfully scale your home inspection business, consider these strategies:

• Recruit and train additional inspectors to increase your business’s capacity to take on more inspections.
• Expand your service offerings to include specialized inspections, such as radon, mold, or thermal imaging, to cater to a broader market.
• Invest in advanced inspection software and tools to improve the efficiency and quality of your inspections.
• Use customer relationship management (CRM) software to manage client interactions and streamline operations.
• Develop targeted marketing campaigns to reach new customer segments.
• Increase your online presence through SEO, content marketing, and social media engagement.
• Form strategic partnerships with real estate agencies, lenders, and insurance companies to generate referrals and expand your network.
• Strengthen your brand identity and ensure a consistent, high-quality customer experience across all touchpoints.
• Encourage continuous learning and professional development for yourself and your team to stay ahead of industry trends and standards.

By carefully executing these strategies, you can effectively scale your home inspection business, leading to increased profitability and a more substantial market presence.

Launching Your Home Inspection Business

Officially launch your home inspection business by implementing your marketing strategies, securing clients, and delivering high-quality inspections to establish your reputation in the industry.

FAQs: Home Inspection Business

How much do home inspectors make.

Is a home inspection business profitable? Yes. Inspector salaries vary depending on factors such as location, experience, and the number of inspections conducted. On average, home inspectors in the United States earn between $50,000 to $80,000 per year.

What are the pros and cons of being a home inspector?

• Flexible schedule: Home inspectors often have the flexibility to set their own hours and work independently.
• High demand: With the real estate market constantly active, there is a consistent demand for home inspection services.
• Opportunities for growth: As you gain experience and build your reputation, there are opportunities to expand your business and increase your income.
• Physical demands: Home inspection work can be physically demanding, requiring crawling into tight spaces and climbing ladders.
• Liability: Home inspectors may face liability risks if they miss significant issues during inspections, leading to potential legal challenges.
• Irregular income: Income as a home inspector can be variable, especially during slow periods in the real estate market.

Why do some home inspection businesses fail?

Many home inspection businesses fail due to lack of marketing and networking. Failure to effectively market services and build a client base can result in a lack of business.

Here are the other main reasons:

• Inadequate training and qualifications: Insufficient knowledge or certifications may lead to subpar inspections and damage the business’s reputation.
• Poor customer service: Failing to provide excellent customer service and address client concerns can lead to negative reviews and loss of business.
• Financial mismanagement: Mismanaging finances, underestimating startup costs, or failing to plan for slow periods can lead to financial difficulties and business failure.

What are the key factors in building a successful business in home inspection?

A successful home inspection business is known for its exceptional service: Providing thorough and high-quality inspections, accompanied by excellent customer service, is crucial for building a positive reputation and securing repeat business.

Here are other factors for success:

• Marketing and networking: Effective marketing strategies, including online presence, networking with real estate professionals, and word-of-mouth referrals, are essential for attracting clients.
• Continuous learning: Staying updated on industry trends, regulations, and best practices through ongoing education and training helps maintain credibility and competence.
• Strong business management: Proper financial management, including budgeting, pricing strategies, and maintaining professional standards, is essential for long-term success. Create these systems on your own, or consider a home inspection franchise that will provide these tools as you get started.

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