Study Confirms Why Businesses Fail

Home » Blog » Study Confirms Why Businesses Fail

Shutterstock_258895871-2A recent study by CBInsights listed the top 20 reasons startups fail.  (Full study at  This isn’t the first study about startup failure, but it is different from others in that it provided a much higher level of detail.

Though it focused on startups, I believe its lessons apply to every business that is not growing to the level the owner expects.  Here are the study’s top five reasons businesses fail:

1. No market need was listed by 42%.  Almost half the failures were caused because their product didn’t solve a customer problem.  This is why we spend so much time in our Sales & Marketing Boot Camp pushing our clients to really discover their customers’ true need (Check out our Boot Camp at

2. Running out of cash was listed by 29%.  A third of the businesses simply ran out of cash.  This is why the business owner must become an expert in raising cash, keeping cash, and budgeting.  This is also why the business owner must have good accounting records.

3. Not having the right team was listed by 23%.  Too often a small business owner can’t grow a viable business independently and fails to bring in qualified help.  Sooner or later this kills the business.

4. Being outcompeted was listed by 19%.  You are often told to ignore the competition and just put out good work.  But if they have a solution to the customer’s problem that is much easier to use, or they simply out-market you, they will become the leader in your niche and you will lose.

5. Pricing/cost issues were listed by 18%.  Many businesses have trouble determining what to charge and what pricing model to use.  They often build a product or service and say, “This is what I need to charge to make money.”  This approach ignores the customer.  What is the customer willing and able to pay to solve their problem?  Only after you discover this information can you determine if you have a profitable solution (product or service) to offer.

This brings me back to our feature article where I mentioned that businesses seem to be either doing very well or simply surviving.  If you aren’t doing as well as you think you should be, these five things may be a large part of the problem.  Read the full study with the comments and I guarantee you will find ideas and solutions that you can apply to your business.