3 Causes Of Small Business Failure

It’s a fairly well-known stat that around 90% of startups fail, with about 20% of these failures happening within the first twelve months of business. It begs the question, why do we see so many startups fail so quickly? 

Naturally, different small businesses operate in different industries, so there could be any number of reasons behind specific failures.

However, by looking at startup failures as a generalization, we can pinpoint some common flaws that typically lead to a lack of success.

So, here’s why 90% of small business ventures end before they’ve properly got going:

1. Poor marketing strategies

Finally, lots of startups see their doors close because of terrible marketing strategies. You need to market your small business to your target audience if you want to succeed.

Examples of poor marketing include a complete lack of marketing, and advertising your business to the wrong people. This is where the previously mentioned preparation becomes so important.

You prepare beforehand, finding your target market and getting to know them. From here, you use all of this knowledge to base marketing campaigns around your audience. It’s all about getting THEIR attention, and nobody else’s.

Good marketing brings in new customers and encourages loyalty. If a small business has a steady flow of new and existing customers, it’s very hard for it to fail. 

2. Too much competition, no USP

Unless you have a 100% unique business idea, there will always be competitors for you to deal with. This is part of owning a company, and your small business should find ways of dealing with the competition a lot better than others.

Many startups fail because they’re competing with far too many people and lack any originality. In essence, there’s no unique selling proposition for your customers to look at and be drawn to.

A great example is coffee shop businesses – right away, you compete with the big chains like Starbucks. How do you draw people to your business over theirs?

You produce unique drinks, sell food that Starbucks doesn’t have, or you market yourself to be more ethical and honest. If you’re not giving people a reason – or reasons – to come to your business over your rivals, why on earth would they turn up?

3. A lack of preparation

Too many small businesses started with minimal preparation. Realistically, every single business owner needs to have a detailed startup checklist before they open their doors.

This should cover everything from idea screening to finding secure ways of accessing funds for your startup. A lack of preparation means you aren’t prepared for what lies ahead, meaning you have to come up with solutions to problems as they arise.

If you’re well-prepared, you already have solutions to combat common problems that could come up during the first years of business. Ultimately, it’s all about laying some good foundations for your business before you open its doors. 


Learning about why most startups fail helps you avoid making the same mistakes. If you have an existing startup that’s struggling, you can look at these points and finally figure out the cause of your shortcomings. Or, if you’re planning on starting a small business, you now know how to prevent failures!

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Post Author: Abimbola Joseph

Abimbola Joseph is a creative content developer who derives pleasure in encouraging individuals to be the best they can be in all relevant facets of life. She believes that we all have a better version of ourselves which can be leveraged to impact others and make the world a better place. Connect with me on Instagram @abimbolajoe.

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