There are various reasons for business failure. In this topic we discuss the reasons of business failure Although what seals the nail in the coffin is the lack of funds, there are other things which would’ve made cracks much earlier before its final demise. Most of these things sneak up insidiously and before anyone can make any decisive action, this thing would have done irreparable damage and pretty soon you would be witness to your own destruction. It pays to identify these factors and to prevent them from infiltrating your business, and these could be just a mind-set or something tangible. Some of the important points are mentioned below.

Unique Ideas not present

Unique idea should be present while formulating a business plan. People are ready to jump on the bandwagon whenever they discover the new trend catching and loads of opportunities popping, that most of the time they disregard the need for unique ideas. These firms don’t have any distinctive characteristic from the million other doppelgangers that flood the market. Their ideas become diluted and more often than not, they fade into obscurity without any trace of them at the end of the day.
What makes companies survive is their constant compulsion to diversify along with the market, and keep coming up with creative new ideas. The business idea should be present and that is mandatory.


Some companies would’ve done the hard work of getting an organization strengthened on its foundation, and have it function to its maximum capacity. But, here is when some of them get complacent and expand infectiously without taking time to consider the repercussion of such an expansion. Businesses fail due to them not understanding the extent of their change in reach, focus or scope of the company, and instead carry own the obsolete strategies despite the circumstances being completely different. With expansion comes totally different customer base and services rendered, with expansion one needs to start from the bottom-up because everything gets shaken up.

Market Presence must be improved

Market present and brand image is another important point to be considered. This is the age of computers; the realm of the digital is now an indispensable part of the entire business arena. If you’re not willing to step out of your comfort zones and expand into new territories then you’re more than likely to stay on your lonely deserted island. Apart from relying on traditional advertising marketing in the physical realm, i.e., billboards, sales, yellow pages, the online arena has an immense influence on the amount of success that you’ll receive, as it creates immense platforms to spread your message.

Low Funding

Funding should be proper for the improvement of business. Most firms underestimate the costs needed to finance their new start up. Once an idea takes over the mind, like Christopher Nolan’s Inception, it is uncomfortable to convince yourself that there is another way. What most people do is think only about the short term and not factor in a variable such as cost of maintenance, expected sales return, etc. Failed businesses failed because their expected revenue never came in time so that their initiative could be replenished. To survive the fluctuating markets there need to be adequate funds to be supplied at the right kind of scenario.

Failure of a Business Plan

Failure of a Business plan is an important point. The Business highlights your goals, obstacles, costs, and strategies that need to be
developed. With a business plan at your helm, you’ll be able to impress the right investors as they will be impressed by the tremendous effort you’ve to put so that your vision becomes tangible and your determination to see it through. Businesses that begin without Business plans in place often find themselves getting lost when the tide turns. So as discussed management should have a good plan.

Better Location

A better location can help to improve the business. What’s the point in trying to sell leafy green vegetables in the middle of the textile hub?? Your business will literally rot away before anyone could try a bite of it. But if you place yourself in the middle of the local bazaar, there is a greater chance of your business attracting new customers because it is innate in the psychology of the customers to try different options of the same product.


Communication is very essential for the development of business.“What we’ve got here is the failure to communicate” – Prison Warden in “Cool Hand Luke”. What is conveyed in this famous line is the inability of Luke to comprehend a stern order and defiance in front of the captain resulting him getting beaten. This analogy may not be immediately that corresponding, but it is a hard warning for those who take customers for granted. Remember you’re working for them and not the other way around, and this relationship needs to be strengthened by engaging in a dialogue with each other at all times.

Management failing to cope up

If Management fails to cope up with the presence change, it can have a negative impact on business. Let us all be frank, when we create a business, there is a hierarchical system in place so that there can be more division of labor, and consequently more efficiency. This structure is the reason for greater productivity and every single piece, like the blocks of the Giza Pyramid, is important for the whole structure.  The Management forms the Apex so it’s important for the control of the rest of the structure, and if the management makes a lapse, or makes poor indecision, it more often than not, has a domino effect and leaves the rest of the company in shambles. It is, therefore, an imperative for the management, and especially the chief executive to maintain equanimity. So now that you’ve seen these pitfalls, you must make sure to avoid them or else you’ll never climb out of it. Your business can never succeed if you just want to make money; it will reach anywhere if it is driven by passion and genuine care and nurturing of it at every stage, leaving nothing for granted and always keeping an eye out for anything new and out of the ordinary.