Yadda yadda yadda. Yes, we know that most businesses fail within the first two years and we know that the truly successful “entrepreneurs” (such an exciting and seemingly modern noun which covers everybody from the guy or girl giving every ounce of their energy in a maybe-crazy attempt to turn their idea into an actual- living-breathing business through to the mega successes such as Mark Zuckerburg) just never give in.


There is a lot of research to suggest though that ALL business success is actually a combination of luck, timing and determined focus on the challenge. There are very, very, VERY many young (and not so young) people working away just trying to get their business off the ground. So it can be useful to reflect on why it is that so many young businesses fail, and so soon?


The truth is that there is no one answer; just as it is not possible to know, from day one, what will make some other businesses so successful. Each and every business is truly unique in its scope, ambition, funding, significance, presence, product, progression and personality. Sometimes they work and sometimes they don’t.



But a wide body of business school research does allow us to see common themes in business failure (and, alternatively, business success). These are the most significant:-


1- The dream meets reality

Every new business begins with an idea which grows and becomes somebody’s dream. Turning that dream – which can just as easily be a pragmatic one as a romantic one – into reality most typically involves a lot of dedicated hard-work, imagination, and determination.


But, even with that determination and huge amounts of energy, it can just be that the business model is wrong. Maybe nobody else shares your belief in your idea and, more importantly, nobody can be persuaded to share it? That does not mean giving up at the first sign of resistance but it does indicate that you might need to think differently, maybe coming at the opportunity from another angle?


2- The money just is not there, not now, not never

It is hard to conceive of a business, no matter how small or how niche, that does not need some cash to flow. And, as an early lesson, we learn that cash flows both in (good) and out (ouch).  Typically there is a start up phase when the business is being assembled and tested during which there is a one-way flow of cash outwards: laptop, mobile-phone, premises, power, furniture, machinery, raw-materials, services, vehicle rental and so on.  Typically that money comes from personal savings and perhaps the salary earned in a full or part time job on the side, and from either loans or contributions from the Bank of Mum and Dad or family and friends.  As entrepreneurs become more experienced and their financial needs become more sophisticated; that finance might come from a bank loan or outside investors or crowd-funding.


As the business becomes more complex so, typically, does the funding. Of course, the idea is that this funding will be repaid, ideally on time, from revenue coming in from the business. And this is the critical thing: Time and time again, when a business folds, it had a ready supply of customers, it had plenty of raw materials and it had good business in the pipeline.  But it lacked hard actual cash in the bank with which to pay the bills due and so the payments that needed paying at that time just could not be met. At that stage in the cycle, for a new business particularly, the plug gets pulled by the supplier and the business is in serious trouble.


3- Planning and Management is SO boring

So often the business idea is great. To mix metaphors it has legs and it will fly. But the boring stuff gets in the way.  Boring but, typically,    So much energy and thinking and drama thought goes into getting started that, often, none at all goes into thinking “OK, I’ve started.  Now what?”.  Not enough Due Diligence.  Pricing wrong.  Distraction.  Paying for things that are not essential to the business.  Bad contracts.  Overexpansion. Poorly defined goals.  Poor leadership.  Becoming overwhelmed.  These are most typically skills that can all be learned and can be mentored.  If a business starts well because the underlying idea is great, but fails primarily because it was totally disorganised, then that business has let down its clients.


4- Marketing gets stuffed

No real differentiation. The entrepreneur does have a good idea, and has flair, but the product or service is essentially a rehash. There is nothing at all wrong with that.  If there is no bicycle shop in an area full of lycra-clad cyclists, why not go ahead?  But the most successful entrepreneurs create a buzz around something specific – the Bike shop that specialises in high-end Italian kit or good but basic Bulgarian hardware; or where the coffee is just fantastic; or known to stay open til midnight to get a bike back on the road.  And, rather than keeping this awareness of their differentiation in their head, they communicate relentlessly – a two way process.  They listen hard to what the market is telling them, and they respond intelligently based on that data.  They get out, in person and online, real contact and social media; and they make their efforts known to those who might appreciate them.


5-We are all different

Maybe business reality with its competing demands for time and energy and ideas and activity becomes overwhelming? There will always be negative people, who will only be too willing to burst your business idea bubble. In that environment, you have got to want to persevere, to press on, to try again, to find the right people to bring on board, as partners or as employees. And good luck, many do persevere and go from strength to strength; loving the buzz of being their own boss.  If the effort of what you are trying to do though is making you miserable or ill, maybe it is time to pause for a rethink? Other people, the vast majority in fact, work for somebody else and that is often brilliant too.  In the right company, they can express themselves entrepreneurially, making a contribution to the growth of the Company or organisation but able to go home at night!  It ain’t always so bad!  And the idea need not die.  Get some different experience under the belt and then maybe another place and another time it might fly?



No, not a weirdo colleague; Mission Creep is the loss of focus as would be business people get distracted. They start out with one idea and get diverted down another path. That is fine; probably most great ideas are born from a completely different one, but it is essential that once you have nailed down that thing you are going to do that to you get on and do it. If you believe in it, then commit to it, focus on it, work damned hard at it. Exclude anything else.   Use your brain, and the brain of others, to check you are on the right path and focus, focus, focus.  It is a tightrope you are walking and you do not want to fall off unless there is a very large and very bouncy mat below you. in some cases of course, no amount of focus is going to enable a particular idea to work, it is just not meant to be.  But, for sure, a business owner that lacks focus is the most likely to fail



So, would being passionate and realistic, having some reliable funding and income in place, a smart but flexible business plan, the ability to listen to actual and potential customers, a great partner and intense focus on the project together guarantee business success? That unfortunately is not for us to confidently say…But, for sure, avoiding these common pitfalls would make long-term success much more likely.