reasons why a business plan may fail

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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4 Common Reasons Strategies Fail

• Andrea Belk Olson

Stop blaming execution, and start identifying the underlying flaws.

Just because a strategy is formulated, doesn’t mean it’s ready for hand-off to the front-line for execution. Instead of reactively addressing failures during implementation, leaders need to examine whether the strategy was on solid footing in the first place. This requires stripping away assumptions to avoid four core errors, which often plague a strategy’s feasibility for being put in practice: 1) not understanding the problem; 2) not understanding the organization’s capabilities; 3) not understanding the immovable pressures; and 4) not understanding the cultural landscape. Examine whether the strategy considers the context in which it must be executed, as this is where uncertainty proliferates, and address potential pitfalls preemptively. This will ensure the team has the tools to deliver the hoped-for results. Successful strategy execution is a product of the fastidiousness of the plan itself.

Business strategies often fail. This is well-know by now: According to studies , some 60–90% of strategic plans never fully launch . The causes of derailment vary widely, but execution consistently bears the blame. While that can be — and perhaps often is — a fair diagnosis, it isn’t the whole story. The strategy design itself can be the real problem, however difficult that might be to admit.

• Andrea Belk Olson is a differentiation strategist , speaker, author, and customer-centricity expert. She is the CEO of Pragmadik, a behavioral science driven change agency, and has served as an outside consultant for EY and McKinsey. She is the author of 3 books, a 4-time ADDY® award winner, and contributing author for Entrepreneur Magazine , Rotman Management Magazine, Chief Executive Magazine , and Customer Experience Magazine .

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6 Reasons Why Small Businesses Fail and How to Avoid Them

7 min. read

Updated October 29, 2023

Roughly 20% of small businesses fail in their first year, according to recent U.S. Bureau of Labor Statistics data . About 50% fail in the first five years, and only one-third of new businesses are able to survive for 10 years. Research by the Small Business Administration found that about 1 in 12 businesses close in America every year.

If you’re a small business owner, another way to think about these statistics is that 80% of small businesses will survive their first year. Over five years, you have a roughly even chance of survival or failure. Looking out 10 years, you have a one-in-three chance of enduring.

What are the reasons businesses fail to thrive, given a 50/50 chance of survival and assuming a product or service for which there’s a demand? Let’s discuss six reasons businesses fail and some ways you can avoid business failure.

• 1. Leadership Failure

Your business can fail if you exhibit poor management skills, which can be evident in many forms. You will struggle as a leader if you don’t have enough experience making management decisions, supervising a staff, or the vision to lead your organization.

Perhaps your leadership team is not in agreement on how the business should be run. You and your leaders may be arguing with each other publicly, or contradicting each other’s instructions to the staff. When problems requiring strong leadership occur, you may be reluctant to take charge and resolve the issues while your business continues to slip toward failure.

How to Avoid Leadership Failure: Dysfunctional leadership in your business will trickle down and affect every aspect of your operation, from financial management to employee morale, and once productivity is hindered, failure looms large on the horizon.

Learn, study, find a mentor, enroll in training, conduct personal research—do whatever you can to enhance your leadership skills and knowledge of the industry. Examine other business and leadership best practices and see which ones you can apply to your own.

2.  Lacking Uniqueness and Value

You may have a great product or service for which there is strong demand, but your business is still failing. It may be that your approach is mediocre or you lack a strong value proposition. If there’s strong demand, you probably have a lot of competitors and are failing to stand out in the crowd.

How to Avoid Value Proposition Failure: What sets your business apart from competitors?  How do you conduct business in a way that is totally unique? What are your competitors doing better than you are? Develop a customized approach or service package that no one else in your industry is using so you can present it as a strong value proposition that attracts attention and interest.

This is how you build a brand . Your brand is the image your customers recognize and associate with your business. Your brand identity, including your logo, tagline, colors, and all the visible aesthetics and business philosophies that represent your company should be supported by your value proposition. It should separate you from the pack and present your individual perspective to your customers. Do everything you can to present that unique value proposition to your market so you can capture a market share and begin building your conversion rates.

To publicize your brand and set yourself apart, you will also need to step up your marketing plan and use as many venues as possible to present your brand to the public. You may be far better than your competitors but that won’t make any difference if your prospects don’t even know you’re in the game. Use social media, word of mouth, cold calling, direct mail, and other tried-and-true marketing techniques. Ensure you have a well-optimized online presence, develop lead generation and contact information capture techniques such as offering high-quality content on your site, a subscriber newsletter, and information giveaways.

3.  Not in Touch with Customer Needs

Your business will fail if you neglect to stay in touch with your customers and understand what they need and the feedback they offer. Your customers may like your product or service but, perhaps they would love it if you changed this feature or altered that procedure. What are they telling you? Have you been listening? Or is the market declining? Are they even still interested in what you’re selling? These are all important questions to ask and answer. Maybe you’re offering a product or service that is fallen well below trend.

How to Avoid Losing Touch with Customers: A successful business keeps its eye on the trending values and interests of its existing and potential customers. Survey customers and do market research and find out what their interests are and keep abreast of changes and trends using customer relationship management (CRM) tools. Effective use of CRM can help keep your business from failing.

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4.  Unprofitable Business Model

Akin to leadership failure is building a company on a business model that is not sound, operating without a business plan , and pursuing a business for which there is no proven revenue stream. The business idea may be good but failure may come in the implementation of the idea if there are no strategic guidelines in place.

How to Build a Good Business Model: Research and review the way other businesses in the industry operate. Develop a complete business plan that includes financial forecasting based on predictable revenue, strategic marketing, and challenge management solutions to overcome potential obstacles and competitor activities. Create a milestone chart with specific tasks and objectives assigned along the timeline so you can measure success, solve problems as they occur, and stay on track. A sound business model that incorporates best practices can help your business avoid failure.

5.  Poor Financial Management

SmallBizTrends.com, a business news resource, offers this infographic which states that 40 percent of small businesses make a profit, 30 percent come out even, and the remaining 30 percent lose money.

You must know, down to the last dime, where the money in your business is coming from and where it’s going in order for your business to succeed. Your business can also fail if you lack a contingency funding plan, a reserve of money you can call upon in the event of a financial crisis. Sometimes people start businesses with a dream of making money but don’t have the skill or interest to manage cash flow , taxes, expenses, and other financial issues. Poor accounting practice puts a business on a path straight to failure.

How to Avoid Financial Mismanagement: Use professional business accounting software like QuickBooks or Xero to keep records of all financial transactions, including every expenditure and all revenues received, and use this information to generate income statements (profit and loss statements). Even better if you use a business dashboard tool like LivePlan that makes it easy to monitor your financials. This is valuable information that you need to run your business, know where you stand at all times, and keep it operating in the black. If you lack skill in financial management, consider hiring a small business advisor and professional bookkeeper or certified public account to help manage your financial affairs.

6.  Rapid Growth and Over-expansion

Every now and then a business startup grows much faster than it can keep up with. You open a website with a trending product and suddenly you are inundated with orders you are not able to fill. Or perhaps the opposite is true. You are so convinced that your product is going to take the world by storm that you invest heavily and order way too much inventory and now you can’t move it. These are both additional paths to business failure.

How to Avoid Growth and Expansion Problems. Business growth and expansion take as much careful and strategic planning as managing day-to-day operations. Even well-established and successful commercial franchises such as fast-food restaurants and convenience stores conduct careful research and planning before opening a new location. They measure local and regional demographics and spending trends, future development plans for the area, and other pertinent issues before they move forward. You must do the same for your business to avoid failure.

Conduct thorough research to ensure the time is right and the funding is available for expansion. Make sure the initial business is stable before expanding to an additional location. Don’t order inventory you’re not sure you can sell but have a plan already in place to fill orders quickly should the demand present itself. The key to successful growth and expansion—and avoiding business failure—is strategic planning.

• Avoiding business failure starts with planning

If 50% of new businesses fail, then 50% of new businesses can succeed. Starting a business is an exciting endeavor that requires a clearly defined product or service and a strong market demand for it. Whether you desire to start a new business or you’re already running a business, you must understand that success depends on careful strategic planning and sound fiscal management that begin prior to startup and continue throughout the life of the business.

Mike Kamo is the VP of marketing for Strideapp. Stride is a Cloud-based CRM and mobile app that helps small- to medium-sized agencies manage and track leads, as well as close more deals.

Table of Contents

• 2.  Lacking Uniqueness and Value
• 3.  Not in Touch with Customer Needs
• 4.  Unprofitable Business Model
• 5.  Poor Financial Management
• 6.  Rapid Growth and Over-expansion

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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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10 Reasons Why Small Businesses Fail and How to Avoid Them

• March 20, 2022

Home » 10 Reasons Why Small Businesses Fail and How to Avoid Them

Small businesses can fail for many reasons, including inadequate planning, insufficient capital, and an inability to adapt to change, just for starters. Understanding the potential pitfalls can help small business owners avoid them and boost their chances of success.

According to the Small Business Administration (SBA), there were 33.2 million small businesses in the U.S. as of 2022 , with 4.2 million of those small businesses in California. And the Bureau of Labor Statistics reports in 2022 that about 20% of new businesses fail within their first year, while only 34.6% of all new businesses in 2012 managed to survive 10 years.

So, sobering statistics aside, how can you help your small business not only to survive but to grow and thrive? Read on to learn some of the most common reasons why small businesses fail and what you can do to prevent them from impacting the success of your business.

10 Reasons Why Small Businesses Fail

1. Lack of a clear business plan 2. Inadequate pricing strategies 3. Poor cash flow management 4. Resistance to change 5. Inaccurate financial records 6. Limited access to capital or credit 7. Not taking advantage of new technology 8. Poor customer service 9. Lack of resources 10. Inefficient operations

1. Lack of a Clear Business Plan

Think your business is too small to require a formal business plan? It’s a common assumption that can often spell trouble for your business from the outset.

Having a business plan that evolves with your business as it grows is essential to its success. Without a plan, it’s impossible to know what direction your business is going. It’s like driving with a blindfold and just hoping for the best. 

When you have a well-defined plan, it provides clear focus and direction for your business and allows you to make more informed decisions. This helps everyone involved to stay focused and work more efficiently and allows your business to operate more smoothly. A strong business plan can also be useful in attracting investors and obtaining financing.

2. Inadequate Pricing Strategies

When starting a business, one of the most difficult decisions is pricing your products and services . It can be tricky to strike a balance between being competitive and making a profit . 

If your prices are too high, you may miss out on potential customers who may go to a competitor that offers lower prices. On the other hand, if your prices are too low, you may be unable to cover your costs and sustain your business for the long haul.

It’s important to do your research and compare market prices to ensure you are in line with the competition and appealing to your target audience. You should also revisit your pricing strategy over time to ensure it’s still competitive and profitable.

3. Poor Cash Flow Management

Money may not be the be-all and end-all of life, but it is the lifeblood of your business. Not only should you have a solid pricing strategy in place, but you need to carefully manage how much money is coming in and going out at any given time.

To ensure that your business has enough cash flow to meet its obligations, it’s critical to stay on top of your billing and invoicing and always be aware of your numbers. This will help you avoid the risk of overspending and ensure that your business remains financially healthy and out of the red.

Also, improving your cash flow will help you plan for the future and make sure you have enough money to prepare for the unexpected . We’ve all faced some tough lessons on this front during the past few years, thanks to COVID and its ongoing impacts on the economy .

At FusePhase, we highly recommend Bill.com to our small business clients for help with managing incoming and outgoing payments. There’s nothing in it for us by recommending them — we just think they’re grand and thought you should know.

4. Resistance to Change

Flexibility is an essential part of owning a business. If you’re resistant to change, you will find yourself left in the dust by the competition and ultimately miss out on potential growth opportunities.

Make sure your business has a strong financial foundation that will allow you to respond quickly and adapt to challenges or changes in the market. Having a flexible mindset can make all the difference in a small business’s ability to survive over the long term.

5. Inaccurate Financial Records

If your books aren’t accurate and up-to-date, you can’t have a clear understanding of your financial situation. And without visibility into your finances, it can be difficult to make well-informed decisions that will benefit the long-term growth of your business.

Block out time in the calendar to devote to cleaning up your books as soon as possible. Your finances are the foundation of your business and essential to its success, so it’s critical that you don’t neglect them.

If you and your team are having trouble staying on top of managing your books on a regular basis, it may be time to seek help from a professional accounting and bookkeeping service .

6. Limited Access to Capital or Credit

Having limited access to capital or credit can make it extremely difficult for small companies to reach the next stage of growth or even keep their businesses afloat.

If you’re looking for ways to fund your business and boost its financial standing, start by getting your finances in order.

Lack of funding can prevent small business owners from taking advantage of emerging opportunities and investing in new products and services. It can also limit the ability to hire more staff and expand marketing initiatives to drum up new business.

If you’re looking for ways to fund your business and boost its financial standing, start by getting your finances in order. Tidying up your books, looking for ways to improve your cash flow, and creating a realistic budget for your business will help to lay a solid financial groundwork you can build on.

7. Not Taking Advantage of New Technology

Gone are the days of manually managing mountains of paperwork, filing documents, and storing information in physical filing cabinets. And frankly, good riddance.

Nowadays, the most successful businesses are embracing cloud-based technology to help them run their operations more efficiently and streamline their processes. This technology provides a more organized and secure way to store and manage data, helping businesses save time and money. 

Nowadays, the most successful businesses are embracing cloud-based technology to help them run their operations more efficiently and streamline their processes.

Better yet, the cloud also enables them to access their data from anywhere, anytime, allowing them to stay connected and informed. All in all, cloud-based technology has revolutionized the way businesses operate and has enabled them to become more successful.

8. Poor Customer Service

The best way to promote your business and its growth is to keep your customers happy. When your customers are happy, they will spread the word about your business and help to draw in more customers.

It’s essential to dedicate enough time, energy, and resources to give your customers the care and attention they need. Investing in customer service, providing quality products and services, and giving customers an overall positive experience are all ways to turn them into brand ambassadors . Doing so will help to ensure the success and growth of your business in the long run.

9. Lack of Resources

Running a business is not for the faint of heart. It seems there is never enough time, money, or qualified help to go around. Having an endless to-do list with limited resources can really stunt the growth of your business and keep it from reaching its full potential.

Also, finding and retaining qualified help can be a difficult endeavor, as there may not be enough funds to pay competitive wages or enough time to properly train and manage in-house employees.

From cloud-based technology to on-demand experts for hire to help fill personnel gaps, business owners have more user-friendly options than ever to help streamline their operations, improve efficiency, and better use their resources. With the right tools and strategies in place, business owners can take advantage of these solutions designed specifically with small businesses in mind and maximize their potential for growth.

10. Inefficient Operations

Streamlining your business operations can help you become more productive, efficient, and cost-effective. This can lead to increased profits and allow your business to scale more rapidly.

More efficient operations can also help you deliver more consistent, timely service to your customers. Happy customers will help any business to grow and thrive!

Take the time to analyze your current operations and identify ways to reduce costs and make processes more efficient. Invest in technology and automation to help reduce manual labor, and look for ways to eliminate unnecessary steps or redundancies. 

Additionally, consider taking advantage of outsourcing services or partnering with other businesses to help with areas where you may need additional expertise or resources.

Read more: How to Make Your Business More Efficient

Set Your Business Up For Success

If you feel your business is stuck in a rut and on the road to failure, don’t give up too soon! You have resources available to you to help you get your business back on the right track.

A good place to start is to identify and address any issues that might be hindering the success of your business, and our team of finance and accounting experts at FusePhase can help. Whether it’s organizing your finances, establishing a business plan, or addressing operational inefficiencies — we’ll work with you as your partners to help your business become more successful.

Ready to get your business on track for more growth and profitability? Contact us today to discuss your options!

This article was originally published on March 20, 2016, and has since been updated for accuracy and relevancy.

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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.

Meet the Author   Chelsea Damon

Chelsea Damon is the Content Strategist at AchieveIt. When she's not publishing content about strategy execution, you'll likely find her outside or baking bread.

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9 Major Reasons Why Businesses Fail by Year 2 and How to Avoid Them

Posted january 28, 2021 by jake pool.

According to the Bureau of Labor Statistics, over thirty percent of private companies fail within two years.

Of course, there are external factors that businesses have no control over. Sadly, the COVID-19 Pandemic is a prime example of one. Since such events are unavoidable, let’s focus on internal factors that companies can act on.

9 common issues to avoid when running your business

As a new business owner, what are the traps to avoid from the start? And what can you do to stay in business? By understanding the following pitfalls you can hopefully avoid them and keep your business running smoothly for far longer than 5 years. Let’s dive in.

1. Insufficient funds due to weak forecasting

Without a doubt, poor financial forecasting is the main reason businesses fail.

It is relatively easy to plan fixed costs such as rent, payroll, utilities, hardware, etc. Entrepreneurs should vet this out extensively when writing their initial business plan.

However, it can be more challenging to forecast revenue generated from sales . Many new business owners are overoptimistic in their planning and vision. This results in an inability to amortize (pay off) an initial investment. Thus, the business fails.

Similarly, companies may be tempted to launch their product or services at a cheap price to be competitive. While it can work in the short-term, it’s not a sustainable business model. Once you start with a low price, it’s difficult to increase.

Goals should be ambitious, but attainable. And the budget should reflect accordingly.

2. The business lacks value

The success of any business hinges of its value. It might sound obvious, but it’s not that easy. As a business owner (or future), you probably think your product or service is great. But it’s not enough.

Before launching a business, always do extensive research (there is a lot of data available) on your target audience. Benchmarking and surveys are also a must.

Here are some generic survey questions to ask:

• Would you talk about this product or service with others?
• Have you ever heard of a similar product or service?
• How much would you pay for this product or service?

If your product is only valuable to you or a small group, or it doesn’t offer more value than your competition, it’s time to rethink things.

3. Inadequate business plan

As mentioned in the first point, budgeting is a key element of a business plan . But it’s not the only factor within the plan that will break a business.

A good business plan should include:

• A comprehensive description of the business
• Workforce needs and compliance (current and future)
• SWOT analysis
• Benchmarking Analysis
• Marketing Plan

But a solid initial business plan isn’t enough. Business owners should review and modify it regularly to keep with the pace of the industry and assess internal goals.

Many failed businesses in this scenario end up listed on business marketplaces like UpFlip because there are entrepreneurs out there equipped to change a poor business plan.

4. No connection with the target audience

The first questions any business owner should ask are — Do I know my target audience and do I understand what they need and want?

If you can’t answer those questions, it’s time to conduct more surveys and research. Otherwise, there is a disconnect, and the business will ultimately suffer and fail. It seems like a bold statement, but the biggest part of a purchasing decision is emotion.

Your product or service may have wonderful features and even value, but if it doesn’t connect with your target audience on an emotional level, it will fail.

For example:

If you run an office furniture business, obviously, the technical aspects of your premiere desk chair would be a sales point. But sturdy wheels and a comfortable backrest won’t differentiate you from the competition. 

Yes, you sell a chair. But also sell the idea of success, professionalism, or even luxury. The target audience must connect with your product on those levels. Otherwise, the business won’t stand out.

5. Competition is too stiff

Even with a comprehensive benchmarking analysis in the initial business plan, competition can evolve quickly. In many industries, there are new players every day in their respective markets.

To avoid failure, benchmarking must be a continuous effort. If your competitors are too big, it’s in the business’s interest to find a niche or some form of added value to your products or services.

Take TOMS Shoes , for instance. They broke into the highly competitive world of mid-level shoe sales by offering a socially conscious selling point to the value of their shoes. For every purchase, they give a pair of shoes to a child.

Note how their model also connects with their target audience at an emotional level.

6. Poor management

The success of a business comes from the top down.

Small business owners are often the only managers within a company. While it may work sometimes, it’s advisable to form a proper management team or at least hire a general manager.

Business owners don’t always have the necessary skills or time to be a good manager. Poorly managing or overlooking certain aspects of the business like human resources, marketing, or accounting can have a disastrous effect.

It’s important to learn to delegate to avoid wearing too many hats.

If you don’t have the money or infrastructure to hire full-time help (or in-house), think about outsourcing certain management tasks to a qualified freelancer via Upwork or a similar platform.

Otherwise, someone who can manage the company will soon take over.

7. Lack of a company culture

There is no happy company without happy employees. You may have a great business model and entrepreneurial skills, but the success of the company also depends on the staff.

It’s key to outline and implement a strong company culture from the beginning. And make sure that the people hired align with it.

Once in place, feed and maintain the culture mentality. Otherwise, you risk issues with high turnover. This has led to the internal collapse of many businesses in a shorter time span than two years.

8. Ineffective sales funnel

Getting leads is essential for any company, but your leads are worthless if they don’t convert. Many new companies focus on collecting data and leads and fail to nurture them properly.

To avoid bloating your sales pipeline , you need an effective sales funnel from beginning to end (and beyond!). It could vary depending on the industry, but be sure to nurture your leads as long as needed to complete the sale.

In the ideal sales funnel, leads convert when ready and become ambassadors of the brand. With a quality, automated system, you can sit back and watch it happen.

Here are a few ideas on nurturing leads:

• Send industry-related freebies (How-to Guides, Tools, White papers)
• Share relevant blog articles based on interest (personalization)
• Wish them a Happy Birthday! (Gift, Voucher)
• Set up a referral program with incentives
• Engage with leads on social media
• Use chatbot technology to answer FAQs when unavailable
• Newsletters (Old fashioned, but efficient!)

In other words, create and maintain a relationship even after the sale!

9. Bad marketing

In the early stages of a business, marketing is crucial. The key is to find the right balance between a reasonable budget and efficiency. Fortunately, this is possible thanks to digital marketing.

The two biggest advantages to investing in digital marketing campaigns are cost efficiency and measurable results (as opposed to traditional marketing methods such as print or tv advertising).

When setting up a marketing campaign, define the target audience, budget, and a realistic conversion rate. Again, if you need help, think about outsourcing for Google Ads or social media campaigns .

Many companies fail because of an inefficient marketing plan that allocates funds to ineffective channels or to ineffective content. And when it’s too late, it’s difficult to redirect funds to make up for the loss.

Awareness is key

As stated, some external factors that negatively affect a business are unavoidable, but there are many internal factors business owners can act upon to prevent failure. The first two years are critical to creating a perennial business.

Be aware of these reasons and don’t become a statistic!

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20 reasons why small businesses fail and how to avoid them.

The failure rate of small businesses is significant—as many as 45% of start-ups don’t survive the first 5 years. 1 Exploding Topics, Startup Failure Rate Statistics . So why do so many businesses fail? The primary causes of business failure are cash flow problems, poor financial planning, and a lack of market awareness.

We’ll explore 20 reasons why small businesses fail so you can avoid common pitfalls and develop a strategy to help your business grow and thrive.

Key Takeaways 

• Most small businesses fail within the first 10 years.
• Common financial reasons include poor pricing strategies, insufficient funds, and cash flow.
• Creating a clear business plan can help small business owners avoid common failures.
• Understanding your target market is key to creating a good business strategy.

Table of Contents

• Lack of Planning
• Choice of Location
• Lack of Research
• No Business Plan
• Poor Pricing Strategy
• Insufficient Funds
• Cash Flow Problems
• Poor Debt Management
• Dependence on One Customer
• Inadequate Profit
• Competition
• Lack of Market Demand
• Unexpected Growth
• Lack of Experience
• Ignoring Customer Needs
• Poor Management
• Ineffective Marketing
• Lack of Innovation
• Forgetting the Customer
• Ineffective Leadership
• Frequently Asked Questions

1. Lack of Planning

A clear vision is key to successfully running your small business. Start by setting research-backed goals for your company: what benchmarks do you want to reach in your 1st year? In your 5th year?

Setting timelines helps you keep on track with your goals and helps you make adjustments if you find you’re not where you want to be. Create a strategy for your business growth and set up check-in points. 

For example, check in every 2 months to make sure you’re on track to reach your goals. This gives you a chance to follow up with what’s working well and change anything that needs to be modified to help you stay on track.

2. Choice of Location

Business location is one of the most important decisions you can make when setting up a new small business. If you provide in-person goods or services, you need to make sure that there’s enough local demand to support your business. 

Businesses like bakeries and shops often rely on foot traffic for success, so visibility is key. Other industries like lawn care require you to commute to your customers, so you’ll want to pick a central location to minimize transportation costs.

If you offer remote services, location is still important—if you have some flexibility, consider how business taxes vary between states and municipalities. 

It’s also important to consider how you might expand in the future. If you see yourself opening up a second location, look for an area that has room to accommodate your future business growth. 

3. Lack of Research

Understanding your industry, competitors, and target market is key to business success and survival. Research common pitfalls in your industry so you can understand the specific challenges your company might face.

It’s also important to learn about your competitors. See how your services and prices compare to theirs, and consider whether you can offer any niche contributions to set your business apart.

Learn what customers are looking for from your company so you can deliver tailored experiences. Some demands are evergreen (constant), while others vary with market trends—research can help you determine and predict market trends so you can stay on top of your customers’ needs.

4. No Business Plan

In addition to your overall vision for your company, you’ll need to create a clear and actionable business plan. This helps communicate your vision to investors and other team members. There are many resources available to help you create a business plan, including business plan templates .

Your business plan should include:

• A description of your company and what you offer
• A market analysis including threats and opportunities
• Competitor analysis
• Marketing plan, including target customer profile
• Budget and projected cash flow
• Scalable growth plan

You’ll want to regularly revisit this business plan and review the success of each strategy. If you find anything that’s not serving your business, catching that early and making the right adjustments can be the difference between failure and success.

5. Poor Pricing Strategy

Setting the right price is a delicate challenge, but it’s essential for surviving as a small business. You need to price high enough that you cover your costs and make a profit, but low enough that it’s still accessible to a large customer base.

Start by understanding the costs involved in delivering your product or service. Calculate all the materials and labor costs, then factor in your profit margin .

Next, compare your prices against competitors. When you first start out, you may not be able to match the prices and profits of more established companies. If you find your prices are significantly higher, you might need to decrease your profit margin slightly. 

Remember that even if you can’t exactly match your competitors, there are other strategies you can use to distinguish your business—competitor prices are a guideline, not a hard rule.

6. Insufficient Funds

Financing is a common challenge for new businesses, and it’s important to ensure you have sufficient funds right from the start. There are a range of financing options you can consider, from small business loans to investor support. Research all your options and compare how they’ll support you in the short and long term.

It’s also important to effectively manage your finances once you’ve acquired start-up capital . Make sure you understand all of your business costs including licenses, materials, taxes, and labor. Balance that against your projected profits to make sure you’ll be able to stay operative through the first few challenging years.

7. Cash Flow Problems

Financial management isn’t just about the big picture—it’s also about the way your business spends cash in day-to-day business operations. Make sure you keep track of all the ways your company spends money, from larger costs like rent and labor to everyday transportation costs.

It’s easy to get caught up in things like marketing and product development and run out of cash flow early on. Make sure you have a clear budget that you review regularly to ensure you have sufficient cash flow to manage your business.

8. Poor Debt Management

There’s more to small business financing than just start-up capital and cash flow: you’ll also want to stay on top of any debt and ensure your credit remains strong. If not managed carefully, these challenges can easily spiral out of control and sink a small business.

It’s not uncommon for new entrepreneurs to assume some debt as a new business—you might have taken a start-up loan as part of your initial process. However, that debt can become problematic if you’re not making enough profit to consistently make your payments.

One of the most common signs of impending debt issues for small businesses is delaying bill payments. If you find that your business is struggling to meet bills, debt, or credit card payments, it’s time to do a close examination of your finances and cash flow to see where you might be able to cut costs and get on top of any financing issues before they become a larger problem.

9. Dependence on One Customer

Building customer relationships is important, but it can be risky to become too reliant on just one customer. Even if that customer represents a large share of your current profit, there’s never a guarantee that they’ll be able to sustain your company.

Once you’ve found a great customer, analyze how you won that customer and see how you can apply those strategies to finding new customers. Consider what that client was looking for and how they found your company so you can understand what worked well in your next marketing campaigns .

Build a customer profile and focus your marketing on reaching clients who fit that profile. See if they tend to live in a certain area, frequent a certain job or social media platform, or search for particular keywords. Try to diversify your customer base so you aren’t reliant on just one client for your business survival. 

10. Inadequate Profit

Most small businesses have low profits in their first few years, but there’s a point where those profits can become too low to survive. If you find that your profits aren’t enough to cover your expenses , it’s time to think about profit maximization strategies.

One of the first things to examine when you’re facing inadequate profit is your current cost management. Are there any areas where costs can be cut? Consider whether there are more affordable manufacturers, equipment options, or business spaces available to you.

You can also examine your pricing strategies. If you start by pricing low and you’re selling a large volume but still not making a good profit, your prices may be priced too low. Calculate how much you would have to raise your prices to make enough profit, and test out slightly higher prices to see how customers respond.

11. Competition

Even if you offer great products and services, it can still be hard to survive if you’re facing a lot of competition. Conduct a market analysis to see how many competitors are in your industry and area, what products they offer, and how their prices compare to yours.

Once you have a thorough understanding of your competitors, you can devise strategies to set yourself apart. This can include everything from offering competitive prices to providing a higher-quality product. You can also explore marketing strategies or consider how you can offer a slightly different product to fill a market niche.

12. Lack of Market Demand

Even the best businesses can fail if there’s no demand for their product. Market demand also fluctuates, so what’s in demand today can change by tomorrow. Keeping track of market trends and demand can help you stay ahead of the curve with what your company offers.

Start by assessing what’s currently in demand and how you can pitch your product to meet that demand. As customer needs evolve, you may need to slightly alter your products to adapt to changing customer needs.

13. Unexpected Growth

Growing your business is a hallmark of success, but it can also pose risks if you expand too rapidly without a clear plan. Unexpected growth can lead to over-extending your resources, overworking employees, and losing track of customers.

To prevent fallout from unexpected growth, it’s essential to have a scalable business plan. Make sure you can still deliver high-quality goods and services as you expand, so your customers stay satisfied. Keep track of how much money and labor you’re expending on new services so you can bring on new employees as you grow.

It’s all about striking a balance—you want to make sure you hire enough talent to keep up with growth but avoid hiring too early in case your growth slows down. Tracking your expenditures in relation to growth is the best way to create a plan for the future.

14. Lack of Experience

Successful business owners need vision and passion, but they also need experience to translate into their goals into a successful company. Lack of experience and industry knowledge can hold your business back, so it’s important to build a dedicated management team with a thorough understanding of the market.

A business mentor can help you manage the small business owner aspects of your company. Look for someone with experience managing their own business who can advise you on things like developing a business plan , hiring the right talent, and pitching to investors. 

It’s also important to bring on experts in your industry. Look for experienced financial advisors who can guide you through developing your financial strategies. You’ll build experience as you grow, but it’s a good idea to bring in experts for specific jobs like marketing and accounting.

15. Ignoring Customer Needs

The best source for understanding market demand is customers themselves. Responding to feedback helps you build strong relationships with your existing customers and helps you understand what you need to do to gain more customers.

Listen to customer feedback on pricing, services, accessibility, and any other concerns they may have. In some cases, you may not be able to accommodate every suggestion, but it’s helpful to respond and then do a cost-benefit analysis and see how making the recommended changes might impact your business.

If you feel like you’re not receiving customer feedback, consider reaching out. Comment and feedback forms after a completed order can be a helpful tool for gaining market analysis in real-time.

16. Poor Communication

Having a clear vision that you can communicate to investors and customers is important, but it’s just as key to having strong communication inside your business. When your team doesn’t understand your business goals, it’s harder for everyone to collaborate efficiently. 

If you’re operating your small business as a partnership, it’s fine to have different skill sets, but you need to be on the same page about vision and goals. Creating a business plan collaboratively can help ensure you agree on the primary strategies for your company.

Weak communication can lower morale and productivity and prevent your business from growing effectively. Consider making a modified version of your business plan that you can share with your employees. This can include an overview of your business goals and strategies to help everyone get on the same page.

17. Ineffective Marketing

Even with great products, your business can’t succeed unless you effectively reach your target market. Ineffective marketing strategies can hold you back from connecting with customers, while great marketing helps you reach new audiences and grow your business.

It’s important to have a targeted campaign with a clear focus. Start by identifying your target customers and learning about how they interact with local businesses. This helps you determine where to place ads, what to offer, and how to speak to potential customers.

Make sure your marketing strategy has a way to track results. That could include tracking impacts and clicks, measuring follow-through, and consulting with new customers to discover how they found your business so you can build on your most effective strategies.

18. Lack of Innovation

A great product at the start of your business may not remain competitive as the market changes. Innovation is essential for ensuring your business stays relevant and continues to be successful. 

This doesn’t mean you have to drop products if they’re still performing well, but it’s a good idea to consider how you can improve or develop new products if you have the capital to spend on development. This helps you stay ahead of the curve in a changing market.

Even with evergreen products, your business practices can still become stagnant. You’ll need to find new marketing strategies to reach new customers so that you can have a continuous revenue stream. Innovation spans all components of your business, from product development to new marketing methods.

19. Forgetting the Customer

Even if a product seems great to you, remember that in the end, it’s about the customer and how the product will meet their needs. Focus on learning about what the customer is looking for—what’s missing from current products, and how can your business satisfy that need.

If customers offer feedback, try to learn from that and incorporate it where possible. This can involve product innovation or customer service relationships. Customers will remember a great product, but they’ll also remember a personable and helpful business interaction.

Check-in with customers to make sure they’re fully satisfied with their experience. One way to do this is to send a follow-up email or form after their purchase. You can incentivize feedback by offering a small discount for filling out the form—this also encourages customers to return to your business.

20. Ineffective Leadership

While a great team and expert advice are important in supporting your business, it’s ultimately up to you to lead your company forward. If you’re burnt out or losing track of your vision, your team won’t know where to follow.

Strong leadership helps cultivate a positive company culture, a motivated team, and great client relationships. Your employees take their cue from you, so make sure to set a strong model for interacting with customers. 

Creating a good company culture starts with forging strong employer-employee relationships. Get to know your employees, their goals, and their challenges at work so you can help them perform their best. When you create a work environment that’s supportive and growth-oriented, it encourages your team to deliver their best work and help build your business.

The reasons why small businesses fail can include everything from poor pricing strategies to ineffective marketing. Learning how to recognize problems like poor management and inexperience can help you identify issues in your company before they impact your success.

Understanding and recognizing why small businesses fail can help you create strategies to avoid common pitfalls. Tools like FreshBooks accounting software can also help you manage your expenses and avoid problems like insufficient cash flow. Try FreshBooks free to discover an easy tool to help your small business thrive.

FAQs on Reasons Why Small Businesses Fail

Is it true that 90% of startups fail.

Yes, ultimately about 90% of startups fail. A few fail in the first year, and most new businesses fail in the first 2 to 5 years. After 5 years, businesses that survive tend to see a small rise in profits and growth.

Why are small businesses declining?

Some of the biggest reasons why small businesses decline are market competition, lack of demand, and lack of financing. In many cases, larger and more established companies make it difficult for new small businesses to enter the market.

What is the biggest problem facing small businesses today?

One of the biggest problems currently facing small businesses is inflation. High inflation rates mean higher input costs for products, and usually also mean employees will seek higher salaries. It can also mean higher interest rates when trying to secure a first business loan.

Why are small businesses failing in today’s economy?

Many small businesses are failing in today’s economy because they lack planning and financial preparation. While market competition and funding pose challenges to business owners, these can be overcome with financial preparedness and a clear business plan.

Article Sources: 

• Exploding Topics, Startup Failure Rate Statistics .

Sandra Habiger, CPA

About the author

Sandra Habiger is a Chartered Professional Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Alongside her accounting practice, Sandra is a Money and Life Coach for women in business.

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7 reasons strategic plans fail (and how you can avoid them)

Benjamin Franklin said: “By failing to prepare, you prepare to fail. ” This holds especially true in project management and business.

Consider setting out on a drive without first planning your trip. Without an ultimate destination, a map, weather forecasts, traffic updates, or knowledge of the route, you can’t expect to get anywhere fast. With unexpected issues and delays added into the mix, you might not get anywhere at all.

If you want your project to arrive in scope, on time, with all stakeholders happy, and a team that’s still intact, you need to plan ahead. Our planning best practices can help you do that.

Why plans fail

With so many factors in play, it will always be somewhat difficult to estimate plans accurately. However, many of the issues that cause plans to fail can be addressed preemptively with effective project management tools.

Here are some reasons why strategic initiatives and plans fail.

1. Unrealistic / unfocused goals

Strategic plans must be focused, including a manageable set of goals, objectives, and programs.

According to a study of project communication in industry , implementing effective communication methodologies as part of the planning process is crucial. Scope must be comprehensive, detailed, and crystal clear to all relevant stakeholders. Implementing a holistic planning process, building a realistic business direction for the future, and employing effective communication channels among teams greatly improves the chances for successful implementation of your overall business strategy.

2. Unnecessary complexity

Knowledge is power, and it can be tempting to provide exhaustive detail at every opportunity. However, excessive complexity creates more questions than it answers.

If you can’t effectively communicate strategic initiatives because of their complexity, team members can’t be expected to carry them out as intended. When constructing an overview, trust that less is more and provide only what is needed. Prioritize alignment over omniscience.

3. Inaccurate cost estimates

Accurately estimating costs is difficult, for good reason. It’s important. Unfortunately, projects often begin with only a vague (or hopeful) general cost estimate in place. The further a project is allowed to progress without adequate financial controls and checks in place, the higher the ultimate cost is likely to be. This extends beyond bottom-line financial costs to customer satisfaction and even your perceived reliability as a business.

Allow enough time to fine-tune your forecasting . It will save you time and money when it really matters.

4. Insufficient data

Relevant project data is often scarce in the initial planning phase – particularly in the software development realm. Poor data begets plans that are vague and misguided. Teams need a proper tool in place to help teams flexibly modify plans as a project evolves and more information becomes available.

If plans are made based on insufficient or misunderstood data, they are unlikely to succeed. This is especially true without contingency plans in place to mitigate issues encountered along the way.

5. Inflexible / undefined roles and responsibilities

Performance of project managers and team members is measured against how well a project delivers according to its designated plan. Problems arise when there is confusion over who is responsible for which aspects of that plan, or obstacles in the way of adjusting those responsibilities.

It is imperative that – from the outset – everyone involved in a project understands what their work will be, how it fits into the project as a whole, and to whom they will be reporting. It’s also important to have mechanisms by which their feedback can impact planning and project processes, particularly when changes in circumstances require it.

Projects change. Teams need room to adapt alongside them.

6. Poor resource planning

Resource planning is a crucial part of the project planning process. After all, plans depend on the people who deliver them. Project timelines and overall costs can be gravely affected by incorrect assumptions and estimates regarding human resource requirements. Resource planning needs to factor in team numbers, roles, skill levels, and capacity. Data and information is crucial throughout the project process to monitor availability and project status, and to inform any necessary course corrections.

Learn how to unlock your team’s potential with data-driven resource planning.

7. Rigid scope

Implementing a plan does not guarantee that all will go as expected. It’s never ideal when the scope of a project changes, and that can often be avoided through proper planning, but flexibility is an important fail-safe. Being adaptable and having a “Plan B” in place makes overall project success more attainable.

How can you keep your plans from failing?

Creating a robust plan before beginning its implementation has plenty of benefits. It enables betterorganization. It allows for a better understanding of objectives. It ensures project alignment with broader organizational goals. It illuminates potential issues. It reduces uncertainty. It empowers project teams to succeed.

Organizations that adopt project portfolio management (PPM) solutions , and conduct ongoing reviews of these projects, see a marked increase in success.

Well-defined project planning also provides a basis for monitoring and controlling work on the project, which is crucial to staying on top of schedules, milestones, costs, risks, and issues. Employing effective software measurement tools is therefore essential in both the immediate and long term – for early forecasting and estimates as well as measuring compliance and identifying trends or deviations along the way.

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Top 10 reasons why businesses fail

By BBC Maestro

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Starting your own business can be as daunting as it is exciting. Your business idea has the potential to improve the lives of millions, but the road ahead can feel uncertain. Whether it’s your first time launching a business or your tenth, it’s always good to have an awareness of the reasons why businesses fail.

Research has shown that approximately 20% of  small businesses fail within the first year . By the end of the second year, 30% of businesses will have failed, and roughly half will have failed by the fifth year. If you hadn’t guessed it, the further time goes on, the higher the failure rate.

That’s not to say that your business will fail though. There are plenty of ways to minimise the risks. Read on to explore the top 10 reasons why businesses fail, and how you can avoid these pitfalls.

Why do businesses fail?

Every business owner will face a time when they are uncertain of their future. It may be a quiet period, a lack of direction, or plummeting numbers that can send business owners into a spiral. The good news is, it’s normal, and there are usually clear signs that something isn’t working. Take a look at this list of reasons why businesses fail and what you can do to prevent it from happening.

1. Lack of leadership

One of the most important reasons why a business fails is a lack of leadership. When the most senior person in a company fails to take ownership of their role and understand their impact on the company’s culture, it can be detrimental to the success of that business.

Leaders need to provide direction, act responsibly on behalf of the business, hold themselves accountable, and show loyalty to the business and its people. Good leaders make sure their staff and investors remain happy, and that their product or service consistently delivers on quality.

A great leader will have a vision for the company that they want to achieve and will be an expert in communicating that goal from the top down. Peter Jones aptly says in  his online business course  “every successful person starts with a vision”. A leader without a vision may misdirect the business and its needs. Ultimately the behaviour, attitudes and beliefs of a CEO or managing director will impact the company culture – and affect your employees’ motivation. So, it’s important to lead your business with confidence, focus and charisma.

2. Improper planning

To build a successful business that stands the test of time, having a business plan that serves every need of the business is vital. An incoherent or inaccurate business plan that fails to consider all the business’ needs – from the supply chain, all the way to partnership investment – is one of the key indicators that a company may fail.

A good business plan will show the company’s objectives, strategies, goals, and forecasts. It will clearly explain what the company needs to do to achieve its business aims. It will provide an overview of the business at large and can help business leaders and investors spot potential problems that could lie ahead. The benefit of this is that the company can then plan how to tackle these issues before they come to fruition.

Constructing a good business plan will act as your pathway to achieving your vision. “If you don’t have a vision, you don’t know where you’re going,” says Peter Jones. It will keep you on track which can be particularly useful for new entrepreneurs.

3. Ignoring customer needs

One of the biggest reasons businesses fail is because they fail to recognise the most important part of their work – the needs of their customers.

Starting a new business can be a whirlwind. As a business leader, the moment you commit to your idea is where the rush kicks in. From securing investment and getting your company name out there, to competing with others in the market and making more revenue, there will be times when you need to prioritise different parts of your business.

The one thing many fail to address in this exciting period is  the demands of their customers. Sometimes you need to chase an investment or pivot your strategy altogether.  But in these moments, it’s important to remind yourself of who the customers are that you are serving, and what they expect of you and your business. After all, they are the ones who can keep you in business. Peter Jones perfectly sums this up – “the customer is king,” he says.

4. Company culture

People are at the heart of every business. This is something Peter Jones speaks highly of in  his BBC Maestro course Toolkit For Business Success . From board members to team leads – everyone who is a part of your company has their own reasons why they are working for you. You can hope that they are working towards the same goal as you – to do the very best for your company – but to keep you all on that path together, you need to make sure everyone is being treated in a fair, supportive and encouraging manner. This is a vital part of  business ethics .

If those in charge of different business areas have poor management skills – of either workload or people – this can have an impact on your business’ success. Perhaps a manager isn’t proficiently managing the team’s workflow. This can have detrimental impacts on the quality of work and employee happiness. These employees may be overworked, exhausted and lacking inspiration or motivation as each new day arrives.

The same goes for a manager who fails to protect and encourage their team, and instead looks out for their own needs first. It could be something in their actions, behaviour or morals that indicates they’re not doing what’s best for the team at large. The effect of one badly managed team can have a ripple effect onto other teams, and it can have a huge impact on the culture of the company.

To build a workforce that is inclusive, diverse, motivated and happy, take a good look at the people making decisions for the company. Whether it’s department leads or investors, you want to make sure that their aims and approaches are appropriate, respectful and fair to all.

5. Need for change

This is a very important one. There comes a time in every business journey when a business needs to make changes. This is just part of surviving in a modern world that is ever-moving and oversaturated with the competition. Businesses that don’t adapt to the world around them can feel stale. Customers will note it, good investors will note it, and the market will prove it.

Innovation is hugely important to remain relevant and for futureproofing your business. Think back to some of those high-street brands we once knew – Blockbuster, Kodak and Blackberry. They each struggled to survive in the wake of change.

So, it’s important to remain aware of the changes that are ahead. But how do you do this? Do your research. Consume a variety of content about the industry you’re in – news articles, podcasts or market reports. Who are the biggest players in the market? What are they doing that is different? You can attend conferences or study the work of trend forecasters who may highlight how technology, culture or retail are all changing the lives of consumers, and how this can impact your business too.

Once you have a grasp on what is happening and where the future is headed, you can start preparing now.

6. Unsustainable growth

Overexpansion is one of the biggest reasons businesses fail. In times of success, many companies choose to take a big leap – accepting more projects, recruiting more staff, and committing to more than they are used to.

Growth needs to be managed carefully, with attention to detail in all areas of the business so that new demands can be met. Expanding too early, with little consideration for the business’ true needs, can drain financial resources, and in some cases, end in financial ruin.

So in times of success, don’t jump the gun too soon. Revisit your business plan and assess areas of growth, the impact this will have on the wider company, and how long you may be able to sustain it.  

7. Impractical partnerships

Sometimes the choices we make backfire. But that’s just one of the risks of starting a business. Mismatched partnerships can be another reason why some businesses fail.

There are many reasons why partnerships don’t always work out – from lack of communication and transparency, to unequal contribution to the mutual goal. It may be down to miscommunication or a change in vision by either partner.

For example, you may partner with another company early on in your journey when it makes sense to. Perhaps you can both gain something from the other. But inevitably, as time moves on, on and your business needs change, so might your priorities.

It may mean that this partner can no longer be of service to you and you need to cut ties. If this is an amicable end to the relationship it can be plain sailing. In some instances, this can get ugly, with expensive fines or even lawsuits being placed in front of you. These can seem unlikely when your collaboration first began together, but these can happen when you least anticipate it.

So when you’re exploring new partnership opportunities, think long and hard about how this will help your business thrive in the long run. From the moment you send your  business proposal  or business pitch, to the moment you sign any lawful agreements, get advice from legal partners and use your  business acumen  to assess if this is really the right decision.

8. Competitor success

Competition in business is healthy. It keeps many businesses tuned in to the market and encourages them to strive to do better. But ignoring the work of your competitors can be damaging to the success of your company.

Understanding the core offering of your competitors, and what makes it different to yours, is incredibly valuable as a business owner. It allows you to differentiate yourself from the crowd and can instil confidence in you that your business is unique and serves a purpose.

It’s when a new competitor arrives in the market, with an offering that outshines yours, that problems can arise arrive. Or if a market becomes oversaturated and standing out from the crowd becomes challenging. For example, take a look at the  new wave of fast-track food delivery services  that cropped up post-pandemic. The once exclusive Deliveroo now competes with over a dozen other food delivery services around Europe. It’s in these instances that appealing to your customer base in new ways can help your business survive.

Having a business model that is agile, and an innovative and creative team behind you, can help you adapt to new competitors on the scene. Tackling a challenge head-on, exploring new solutions and being able to adapt, will differentiate your business from those who remain stagnant.

9. Poor financial management

It may seem obvious, but it’s crucial to pay attention to your company’s finances. Inefficient processes, inaccurate forecasts, and a general lack of awareness of your company’s spending and income, are some of the biggest reasons why a business can fail.

Many  businesses take about 2-3 years to become profitable . Business owners and financial leads need to make realistic expectations about the amount of income the company will need to bring in sufficient capital to cover all costs until the business can do it itself.

Making sure you have a strong team of financial experts can help, but a business owner should also be aware of the details. Get to grips with what your income is versus your expenses. The more comfortable you are with this, the better equipped you will be to grasp the overall picture. It can help you spot any upcoming pitfalls, assess the potentially good or bad times of year for you as a business, and therefore plan in advance.

10. Unforeseen events

Across the world, businesses are still grappling with the repercussions of Covid 19. It was the event that put a stop to business, government agendas, and life at large. For many businesses during the emergence of covid, cash flow dramatically decreased. In its wake, many business owners are still feeling the impact it has had and are now aware of the need to be prepared for unforeseen global events.

It’s not just pandemics that pose a threat. But economic crashes, breakouts of war, or climate-related disasters, are all possible situations that the world may find itself facing in the future.

Although preparing for these seems impossible, some ways to futureproof your business may be to develop emergency plans or set up new payment schemes that give consumers the option to pay in instalments for your services. You can also  study the strategies many of today’s businesses adopted throughout Covid 19  and see how effective they were.

So when it comes to launching your own business, keep this list close to hand. Running a business will be hard work at times, so having an overview of potential pitfalls may just keep you on track.

If you’re looking to start your own business, you can take a look at  Peter Jones’ BBC Maestro course  to help kickstart your journey as an entrepreneur. 

See related courses

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Toolkit for Business Success

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14 reasons why businesses fail

If you’re starting a business, you may be wondering how many businesses fail either in the short-term or the long run. Unfortunately, business failure is common: About 20% of small businesses fail in their first year, and a staggering 96% of businesses will fail over a 10-year period of time. As for the remaining 4%, it does not necessarily mean they succeed – it means that they’ve survived.

Why Businesses Fail

So why do businesses fail? What makes one entrepreneur succeed while another experiences business failure? It comes down to a combination of preparation, strategies and knowledge.

1. Not having an effective business plan

If you don’t have an effective business plan, you can’t properly communicate your vision to your team. Tony Robbins advocates not just having a business plan, but having a business map for entrepreneurs to take their small businesses to the next level. Your business map will help you master vital stages of the business cycle, like scaling. Explosive growth can be tempting, but not scaling in a mindful manner is one of the biggest reasons why businesses fail – you have to strike the right balance between growth and infrastructure.

2. Not putting the customer first

One of the top reasons why businesses fail is that they fall in love with their product instead of their customer. To circumvent business failure, fall in love with your client and figure out every single way you can meet their needs. Anticipate what they want, what they need and, when possible, determine what they might not even know they need yet. Turn your customer into a raving fan – somebody who will tell everybody about your product or service or company. Once you grasp that your customer’s life is your business’ life , you can truly envision how to succeed.

3. Not hiring the right people

Hiring the right people has a massive effect on nearly every area of your business. One of the most obvious examples is sales: If you don’t have enough sales, you can’t pay your team or yourself and you cannot grow. Confident salespeople are a key to increased sales. It’s also astounding how many businesses fail due to inventory mismanagement. Hiring someone who is skilled at inventory management or using a good inventory management software is an easy way to solve this issue.

4. Doing it all yourself

Yes, you are an entrepreneur, but that doesn’t mean you have to do everything on your own. A business is only as strong as the psychology of its leader – and the ability to let go and trust others is an essential leadership trait . If you need to control everything, it’s likely you won’t succeed over the long term. Delegating is a top skill to manage a business effectively : it helps you manage your time, focus your energy on what matters most and spot potential up-and-coming leaders within your company.

5. Lack of flexibility

Remember Blockbuster? Radio Shack? Tower Records? These giants of their industries all fell victim to the same reason for business failure: inability to adapt to a changing market . Entrepreneurs who fall in love with a service or product and refuse to change directions when the market demands it are likely to fail. The key to long-term success – in business and in life – is flexibility and a willingness to pivot when necessary.

6. Lack of innovation

Peter Drucker and Jay Abraham, among the greatest business minds of our time, maintain that business failure – and success ­– all starts with two key factors: innovation and marketing . Innovation means finding a better way to meet your clients’ needs than anybody else. Anybody can make some money for some amount of time. But if you want to become successful and sustain that success over years and over decades – if you want to build a brand – then you have to find a way to add more value than anybody else in the game. And that comes from constantly innovating.

7. Not understanding your industry

This is one of the driving factors behind why businesses fail to innovate. Certain industries require more innovation, while others may have different product life cycles. Consider the technology industry. The life cycle on an average product is about six months. And in some sectors, like the app business, it’s just one month. People expect continual innovation and improvement , and if you don’t deliver that to them, someone else will. It’s a different world we live in today, where the only constant is change. And if you aren’t staying ahead, you’re falling behind.

8. Fear of business failure

Business failure is one of the main, if not the biggest, fears of any business owner. If it weren’t for that fear, we wouldn’t even be asking, “Why do businesses fail?” However, as you develop your entrepreneurial and managerial skills, you will find that one of your greatest assets in running a successful business is overcoming your fear of business failure . Without minimizing the validity of your fears, you need to learn to view business failure as a learning opportunity rather than an insurmountable obstacle. Remember, life happens for you, not to you .

9. The wrong mindset

One of Tony Robbins’ central philosophies is that our mindsets create our realities ; what we believe influences what we are able to achieve. As entrepreneurs, when we embrace strategies for turning business failure into success, we transform our mindset from one of defeat into one of empowerment . And when we are empowered, a failing business is not the concluding chapter in our story; it is only the beginning. Don’t let your limiting beliefs disempower you. Instead, stay hungry in your search for success . Your hunger will inspire you and pay off in the end.

10. Lack of vision

Marketing guru Jay Abraham understands the question of why businesses fail. It’s a high-velocity and high-leverage mindset that prepares business owners to navigate the ever-changing seas of business. Rather than adapt your dreams to the economy, you must set and achieve your own goals, independent of circumstances. How can you accomplish this? By recognizing that business success hinges on loyalty to a vision .

11. Lack of passion

A passion-driven mindset lets you persist in honing your ethics and beliefs while learning from all the reasons why businesses fail. By adhering to your passions, you’re able to see your circumstances clearly – the positives and negatives. With this level of focus, you create an unstoppable drive to accomplish your goals. This focus allows you to take risks, acknowledging that feelings of doom and failure arise not from circumstances but from feeling stuck in the status quo. Don’t get stuck – persist.

12. Ineffective marketing strategies

Whether your company is large or small, marketing is the next critical step . Why do businesses fail in their operations? If you cannot find a way to market your product or service, then your business will have a hard time getting off the ground. Because the truth is, you could have the most innovative product or service, but the best product doesn’t always win. Do you think McDonald’s has the best burger? Probably not. But their marketing strategies are top-notch.

13. Not understanding your X factor

To market effectively and prevent business failure, you have to understand what your “X-factor” is . What are you here to deliver and how can you improve your customers’ lives? Take, for example, FedEx founder Fred Smith. Even in FedEx’s early stages when profits were slim, Smith invested in three market studies for testing the value expedited shipping would add to his product. Smith’s research paid off: He discovered his X factor and FedEx is now a household name, in large part due to its corner on the market via expedited shipping.

14. Asking the wrong questions

To help discover what your true value is as a business, go one step further and ask yourself the right questions . This includes core questions like: What does the marketplace need? Who is my customer? What can I do to make my company talkably different ? And perhaps one of the most important questions you can ask yourself is, “What business am I really in?” Let’s look at an example of a wildly successful company that needed to ask itself that very question: Apple.

How Apple came back from business failure

Today, everyone has heard of Apple. It’s one of the most valuable companies of our time, with a market cap of nearly $2 trillion and a stock that is soaring above its competitors. But it wasn’t always that way. Apple is actually the perfect example to look at when considering why businesses fail.

Apple’s founder Steve Jobs was fired from the company in 1985. Before re-hiring Jobs in 1997, the failing business operated at a loss and inched toward bankruptcy. In fact, Michael Dell was advising decision-makers to shut Apple down and give its shareholders their money back. But Apple persisted, and Steve Jobs asked himself one of the most critical questions in his lifetime: “What business are we really in?”

At first, the answer seemed obvious – Apple was in the computer business. But how were they supposed to win back customers when 97% of all computers across the United States were run by Microsoft?

That’s when they realized that no matter how good their product was, Microsoft was embedded and entrenched in the masses. After all, it was one of the main reasons Apple found itself in bankruptcy.

So Jobs asked, “What business do we need to be in?” And Apple decided that it needed to be in the business of connecting people to their passions – to their photographs, their music, to each other. When he did this, he avoided one of the top reasons why businesses fail: lack of flexibility.

Answering this question created one of the most life-altering shifts for Apple. The company transitioned into building basic, cool technology that connects people to what they love. Upon rehiring Jobs, the company arranged a partnership with Microsoft which signaled the company’s turnaround. When Apple launched the iMac just one year later, the firm returned to profitability and made its mark. Before long came the iPod and iTunes, then the iPhone. Their net sales soared. Since that point Apple has never stopped innovating, and their marketing campaigns have propelled the company to an entirely new realm. Had Jobs viewed his firing as the death toll of his career (and company), the firm would have never experienced its revival.

Today, is Apple really in the computer business? Only 10.4% of their business is computers, which means almost 90% is not – the vast majority is made up of iPhone, iPad and Apple Watch sales. Honestly answering the question “Why do businesses fail?” was vital for Apple to change course and become profitable.

If success is about innovation and marketing, then you have to decide who your customer is, what they need, what business you are in and what business you really need to be in. Answering these questions can change your entire business, because the answers will ultimately allow you to change your offer. As we say, change your offer, change your business – and change your business, change your life.

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19 Reasons Why Small Businesses Fail (and How to Avoid them)

• by Lightspeed

minute read

Here are a few popular ones:

• Only about 20% of new businesses survive their first year of operation
• The U.S Census data shows that new business creation is nearly at a 40-year low
• Half of small businesses fail within their first five years

Whether you’re a seasoned small business owner or an entrepreneur just starting out, these statistics can be a little scary. What you probably don’t realize is the sample of small companies cited in these studies. 

The point is that while there may be some truth to these numbers, you shouldn’t let it kill your entrepreneurial spirit. Instead, try to understand the major reasons why small businesses fail. If you understand the mistakes of others, you can avoid following in their footsteps.

Here are 19 reasons why small businesses fail.

Profit and Loss Template

Examine the financial health of your business by highlighting exactly how much revenue is being generated versus what’s being spent.

19. No business plan or poor planning

This reason is especially true for brand new small business owners. What you think sounds like a good business idea on paper may not fare so well in reality. (For some hard truths, see the fastest-growing occupations as measured by the Bureau of Labor.)

This doesn’t mean you should ignore your passions. Instead, it means you need to do a little research and business planning.

A business plan forces you to define your Unique Value Proposition (UVP) — what differentiates your project from its competitors. In a sea of food trucks gathered in a parking lot, how will yours stand out? Is it the food? The service? Is it the neon hues and festively decorated truck? Is it the daily social media promotion? Likely, it’s all of the above. Maintaining a sustainable business model requires setting yourself apart from competitors.

Other important considerations include: Who comprises your customer base? How will they buy your product or service—in-store, online , or both? What’s your marketing plan? How will customers find out about your business? What are your cash flow projections ? Your startup capital? How far will your cash reserves take you? Remember to factor in both business and living expenses, as most businesses are not profitable during their first year.

Answering these kinds of questions while your business idea is still in the planning stage will help you boost the probability of your product or service becoming a success.

18. Neglecting the importance of a unique value proposition (UVP)

A well-crafted UVP serves as a critical communication tool, succinctly conveying the value your business offers to customers. It answers the fundamental question of why a customer should choose your business over others, by emphasizing unique features, benefits, or solutions that address specific needs or problems. 

Without a distinct UVP, businesses struggle to differentiate themselves from competitors, making it challenging to capture the attention of potential customers in a crowded market. 

Businesses that overlook the development of a strong UVP risk blending in with the competition, losing potential market share and ultimately facing difficulty in sustaining their operations. 

How to write a unique value proposition

• Identify your target audience: define who your ideal customers are. Understand their needs, preferences, pain points and what they value in a shopping experience. 
• Analyze your competitors: research your competitors to understand their offerings, strengths, and weaknesses. Identifying gaps in their services or products can help you pinpoint opportunities for your business to fill.
• List your unique features and benefits: compile a list of your products’ or services’ features and benefits. Focus on what sets your offerings apart from competitors. Consider quality, price, selection, customer service and any other factors relevant to your target audience.
• Articulate what solves customer problems: identify which features or benefits directly address your customers’ needs or pain points. This will form the core of your UVP, as solving these problems is likely what will attract customers to your business.
• Simplify your message: condense your findings into a clear, concise statement that communicates the value customers gain from choosing your business. 

17. Ineffective branding and positioning

Branding is more than just a logo or color scheme—it’s the heart of a company’s identity, embodying its values, mission, and what it stands for. When a business fails to establish a strong brand identity, it struggles to connect with its target audience on a meaningful level.

Building a strong brand identity

The cornerstone of successful branding and positioning is consistent brand messaging. Consistency ensures that every interaction customers have with the business—whether through advertising, social media or customer service—reinforces the same core message and values. This consistency builds trust and recognition, crucial components in a customer’s decision to choose one business over another.

Not sure if your branding is consistent enough? Run through a brand building exercise to see if you could make it stronger:

• Define your brand’s core values and personality: review what your business stands for, its mission and the values it embodies. These core elements should resonate with your target audience and reflect in every aspect of your business, from customer service to product selection. 
• Develop a consistent visual identity: your visual identity, including your logo, color scheme, typography and imagery, should consistently communicate your brand’s personality and values across all touchpoints. Ensure that your storefront, website, social media and all marketing materials present a cohesive look and feel that accurately represents your brand.
• Engage and connect with your audience: utilize social media, content marketing and in-store experiences to tell your brand’s story, share your values, and connect with your customers on an emotional level. Listening to customer feedback and adapting your approach can further strengthen your brand identity by showing that you value and respond to your audience’s needs and preferences.

Effective marketing and positioning strategies

Once you’ve reviewed and updated your brand identity, make sure you’re communicating it effectively. 

• Leverage omnichannel marketing: create a seamless experience for your customers across all channels, including in-store, online and through mobile apps. Omnichannel marketing ensures that your messaging is consistent and accessible, whether customers are shopping from their computer, smartphone, or physically in your store. 
• Utilize targeted social media campaigns: identify the social media platforms where your target audience is most active and engage them with content that resonates with their interests and needs. Use targeted ads, influencer collaborations and interactive content to increase brand awareness, drive traffic to your website or store and boost sales. 
• Create value through educational content: position your retail business as an authority in your niche by providing valuable and informative content to your customers. This can be through blogs, videos, tutorials or in-store workshops that educate your audience on topics related to your products or services. 

16. Overlooking legal and compliance issues

Legal and regulatory landscapes can be complex, with requirements varying significantly across different industries and regions. Understanding and adhering to these requirements is not optional. It’s essential for the survival and growth of any business.

Ignorance of the law is not a defense, and failure to comply can result in severe consequences, including fines, lawsuits or even business closure. 

For instance, not respecting intellectual property laws could lead to costly litigation, while neglecting employment laws might result in damaging disputes or sanctions. Demonstrating a commitment to legal and ethical practices enhances a business’s reputation and competitive edge, encouraging customer loyalty and attracting investment.

Navigating the maze of legal requirements can seem daunting. However, investing in legal advice is not just a cost, it’s a strategic investment in the business’s future. Legal professionals can provide invaluable guidance on the necessary licenses and permits, advise on the correct legal structure for the business, help draft solid contracts, and ensure that the business stays updated on relevant laws and regulations.

15. Failure to adapt to technology and innovation

Not adapting to new technology and innovation is a common pitfall that can lead to the downfall of small businesses, especially in retail. As consumer preferences shift towards convenience, personalization and seamless shopping experiences, staying current with technological advancements is crucial. Retailers who ignore these trends risk becoming obsolete.

For example, retail businesses that fail to establish an online presence beyond just their own website miss out on a vast digital market. Retailers should be selling on their site, major marketplaces and social media all at once, and using tools like Lightspeed eCom to keep the management of all those different sales channels simple.

Similarly, the implementation of data analytics can offer invaluable insights into customer behavior, enabling personalized marketing strategies and inventory management. Retailers not leveraging these tools may fail to meet customer expectations and lose to competitors who do.

Additionally, contactless payments and mobile wallets have become the norm, enhancing customer convenience and safety. Neglecting these payment options can lead to a decline in customer satisfaction and sales. 

Innovations in small business management

In the rapidly evolving landscape of small business management, several innovations have emerged to streamline operations, enhance customer engagement and improve overall efficiency. Here are three recent innovations:

• AI and machine learning: Artificial Intelligence (AI) and Machine Learning (ML) technologies are being increasingly adopted by small businesses for a variety of applications, including predictive analytics, customer service (through chatbots) and personalized marketing. These technologies help in making informed decisions, automating repetitive tasks, and enhancing the customer experience.
• Digital payment platforms: the rise of digital wallets and mobile payment solutions has transformed financial transactions, making them faster, more secure, and convenient. Small businesses are integrating these platforms into their payment systems to accommodate the growing preference for contactless payments, thereby improving customer satisfaction and operational efficiency.
• Social commerce: the shift towards online shopping has been accelerated by innovations in ecommerce platforms and social commerce, enabling small businesses to sell their products and services directly through social media platforms and websites. This not only expands their market reach but also provides valuable insights into consumer behavior.

14. Failure to understand customer behavior today

In our connected age, ‘the customer is always right’ rings more true than ever. For example, today’s consumers expect small brick-and-mortar companies to accept credit cards and “currencies” like Apple Pay, even if the shop is a tiny mom-and-pop operation. And they demand quality customer service . If you don’t deliver it, expect your customers to complain loudly on social media and with other communication tools.

For better or worse, review sites and platforms amplify word-of-mouth marking.

In our digitally obsessed society, it’s easier than ever for customers to share their thoughts and opinions about the businesses they interact with—which means it’s easier than ever for business owners to monitor and solicit customer feedback.

Not sure where to start? Here is a list of channels to help you monitor feedback and engage in conversations with customers.

Social media

All social media platforms (Facebook, Twitter, Instagram, Pinterest, TikTok, etc…) are great social listening tools that make it easier than ever to listen to your customers. In fact, in today’s world, using a social media platform to contact a business is often preferred by customers as a faster alternative than traditional phone calls. Thanks to push notifications that alert you when your business has been mentioned, re-tweeted, liked, pinged or poked, knowing when to engage with customers is easier than ever.

Yelp reviews

Yelp is one of the go-to destinations for people who want to find local businesses. With over 148 million cumulative reviews, it’s also a great place to find out what customers are saying about their experience with your business. If a company receives a poor review, Yelp encourages the business owner to jump into the conversation, so you have an opportunity to apologize or explain.

Google reviews

Just like Yelp, this a more passive channel than social media, but nonetheless, very important. Google is dominating the review market with 6 in 10 consumers now looking to Google for reviews. Since literally everything is Googled these days, your business’ Google reviews are likely one of the first things a user will notice about your business.

Dedicated customer advocacy website

One of the most trusted websites for consumer reviews is Trustpilot . With over 45,000 new reviewers each day, they’ve built an entire online review community dedicated to helping customers share their genuine experiences.

Customer surveys 

Surveys are still one of the best ways to ask customers specific and direct questions. If you collect customer email information at the point of sale, you can quickly identify your top customers and previous customers who are less engaged. Using this data, you can create a survey for free using SurveyMonkey to find out how you can improve your business. It doesn’t hurt to offer an incentive for completion, like a discount on their next purchase.

With 85% of consumers saying they trust online reviews as much as personal recommendations, it’s imperative that your online reputation is intact so that potential customers aren’t turned off by poor reviews. At the very least you should try to make sure your positive reviews outnumber the negative ones. While poor reviews may not bring down a startup on their own, they play a large role in the success of brick and mortar businesses.

At the very least, you need to keep your business information current across as many channels as possible.

13. Not prioritizing customer experience and satisfaction

In retail, personal interaction and customer service are paramount. Customers have endless options at their fingertips, making it easier than ever to switch to a competitor after just one poor experience. Retail businesses that fail to recognize the importance of customer satisfaction often see a decline in loyalty, negative word-of-mouth, and a drop in repeat business, all of which can lead to failure.

For example, a retail store with unhelpful staff, limited product information and a complicated checkout process will likely frustrate customers, driving them towards more user-friendly competitors. Similarly, an online retailer that neglects post-purchase support, such as handling returns and addressing customer complaints, risks damaging its reputation and losing customer trust.

Building customer loyalty programs

To prevent these outcomes, businesses should focus on building robust customer loyalty programs and personalizing the customer experience. Loyalty programs that offer rewards, exclusive deals and personalized discounts encourage repeat business and can turn a satisfied customer into a loyal advocate. 

Personalize the customer experience

Use Lightspeed’s built-in customer profiles to tailor experiences, recommendations and communications to individual preferences and behaviors. This can range from greeting customers by name to suggesting products based on past purchases or browsing history.

12. Ineffective online presence and digital marketing

An ineffective online presence and lack of digital marketing are significant obstacles for small businesses. With potential customers turning to the internet for shopping and product research, a strong online presence is not just beneficial—it’s essential. 

Retailers without a user-friendly website or active digital marketing strategies miss out on countless opportunities to attract and retain customers. Here’s how you can make sure you don’t get caught in this trap.

Have a strong website

Your website serves as your digital storefront, offering a first impression that can either attract or repel potential customers. It should be visually appealing, easy to navigate and optimized for mobile devices, as mobile shopping makes up around 60% of ecommerce globally.

Make sure you’re providing a seamless shopping experience with detailed product information, high-quality product photos , customer reviews and a secure checkout process. 

Leverage social media

Platforms like Instagram, Facebook and Pinterest can be powerful tools for engaging with customers, showcasing products and driving traffic to your website. Creating consistent, high-quality content that resonates with your target audience can boost brand awareness and foster a community around your business.

Make sure you’re using social media for:

• Product launches and promotions: announce new product arrivals, special promotions or exclusive deals. Engaging visuals, limited-time offers and shareable content can drive excitement and traffic, encouraging both online and in-store visits.
• Customer engagement and feedback: create interactive posts, polls and live sessions to engage with customers. This direct interaction fosters community and provides valuable insights into customer preferences and feedback.
• Influencer collaborations: partner with influencers whose followers match your target audience. Influencers can showcase your products in a relatable and authentic way, expanding your reach and credibility among potential customers.

Utilize SEO (search engine optimization) strategies 

Strong SEO is vital for ensuring that your website and content are discoverable by potential customers searching online. 

Three areas of SEO you should be focusing on:

• Keyword optimization: research and use relevant keywords throughout your website’s content, including product descriptions, blog posts and meta tags. Targeting the right keywords helps improve your site’s visibility in search engine results for those terms, attracting more potential customers.
• Mobile optimization: ensure your website is mobile-friendly, with responsive design and fast loading times. 
• Quality content creation: produce high-quality, relevant content that addresses your target audience’s needs and interests. Regularly updating your site with valuable content, such as product guides, how-to articles, product reviews and industry news, can improve search rankings and engage customers.

Implement a variety of email marketing techniques

Email marketing remains one of the most effective techniques for directly reaching customers. Retailers can use email campaigns to announce new products and offer exclusive discounts to grow sales.

• Personalized recommendations: utilize customer purchase history and browsing behavior to send personalized product recommendations. This tailored approach makes emails more relevant to the recipient, increasing the likelihood of engagement and sales. Lightspeed Retailer Thread + Seed uses Advanced Marketing for personalized targeting: “Being able to see who our high spenders are and knowing how to target them means we can track their spending and figure out, who are our top spenders? Who do we want to be approaching for something like our one on one styling sessions, and so forth?
• Segmentation: divide your email list into segments based on criteria like purchase history, location and interests. Tailoring your messages to different segments allows for more targeted and effective communication, improving open rates and conversions.
• Exclusive offers and loyalty rewards: send exclusive discounts, early access to sales and loyalty rewards to email subscribers. This not only incentivizes purchases but also fosters customer loyalty and encourages subscribers to stay engaged with your brand.

11. Inventory mismanagement

Your business startup cannot be successful if your inventory is poorly managed. According to the Small Business Administration (SBA) , problems with inventory ranks among the major reasons new businesses fail. Poor management can often lead to inventory shortages and overages—silent cash flow killers.

It’s a rookie mistake that easily happens to new businesses that don’t understand their sales patterns. The best way to combat this is to use inventory management software or a point of sale (POS) system that can track inventory and provide reports detailing your best and worst selling products to help you identify sales patterns.

If you’re not keeping track of your top-selling items or when they’re in high demand, you’re going to experience inventory shortages that will shrink your profits.

As a merchant, you take on risk when you buy large amounts of inventory with the goal of selling it for a profit. If you don’t sell those products as quickly as you forecasted , they can lose value or become obsolete. This forces you to sell them at a deep discount, or not at all. Until you can recoup your money by selling the inventory you have on hand, your capital will be tied up in a lot of unsold inventory.

Picture this. Instead of thinking of stock items as inventory lining your shelves, think of it as piles of cold hard cash. Each product in storage or your local warehouse is cold hard cash you’ll never see since it’s not contributing a return on investment (ROI) .

The harsh reality is that U.S. retailers are sitting on $1.43 of inventory for every $1.00 in sales they make. Proper inventory management using modern tools will ensure you’re not one of them.

10. Financial mismanagement and lack of budgeting

Financial mismanagement and lack of budgeting are pivotal reasons small businesses, particularly in retail, face failure. 

Effective cash flow management is crucial. Without it, businesses may struggle to cover essential expenses like rent, inventory and salaries. Retailers must carefully balance stocking diverse and sufficient inventory against the risk of over-purchasing, which can tie up precious capital and lead to cash flow problems.

Another common pitfall is not allocating funds for marketing or underestimating the costs associated with acquiring new customers, which can stifle growth.

Effective budgeting strategies

Engaging a financial advisor can make a significant difference. They provide expert guidance on budgeting, financial planning, and investment strategies tailored to the business’s specific needs, helping to navigate financial challenges and avoid common pitfalls.

Here are some budgeting strategies you can use with your financial advisor: 

• Zero-based budgeting: start each new budget period with a base of zero and justify every expense, rather than using previous spending patterns as a baseline. This approach forces retailers to evaluate the necessity and ROI of every cost, ensuring that all spending contributes directly to business goals and helps in eliminating unnecessary expenses.
• Inventory management Optimization: use inventory management techniques such as just-in-time (JIT) to minimize holding costs or the ABC analysis to prioritize inventory based on profitability and turnover rates. Efficient inventory management can free up cash flow and reduce waste, allowing retailers to allocate resources more effectively to areas with higher returns.
• Flexible budgeting: implement a flexible budget that can adjust to changes in sales volume or operational costs. This strategy allows retailers to adapt their spending in response to actual performance and unforeseen expenses, ensuring that the budget remains relevant and effective throughout the financial period.

9. Poor employee management and training

Poor employee management and inadequate training are critical factors that can lead to the failure of retailers, fast.

In retail, the direct interaction between employees and customers means that every employee’s knowledge, skills and attitude can significantly impact customer satisfaction and loyalty. Without proper training, employees may lack the necessary product knowledge, sales techniques, and customer service skills to effectively engage with customers and close sales.

Poor management practices, like a lack of clear communication, failure to motivate and recognize employee contributions and inadequate feedback, can lead to low morale and high turnover rates. High turnover not only increases recruitment and training costs but also affects team cohesion and service continuity, which can further erode customer satisfaction.

Strategies for effective team leadership

Make sure your managers know the importance of:

• Empowering and engaging the team: effective retail team leadership involves empowering employees by involving them in decision-making processes, acknowledging their ideas and fostering an environment where they feel valued and motivated. 
• Continuous training and development: implement ongoing training programs to enhance product knowledge, customer service skills and operational efficiency. Regular training ensures that team members are up-to-date with the latest retail trends, technologies, and best practices. This commitment to development helps in building a knowledgeable and adaptable workforce capable of delivering exceptional customer experiences and driving sales.

Creating a positive workplace culture

If your business has a positive culture, employees will be less likely to leave.

• Recognize and reward: regularly acknowledge and reward employees for their hard work, achievements, and exceptional customer service. Recognition can be as simple as verbal praise, employee of the month awards or incentives for reaching sales targets.
• Foster open communication: encourage open, honest communication by creating an environment where team members feel comfortable sharing their ideas, feedback, and concerns. Regular team meetings and one-on-one check-ins can facilitate this, helping to build trust and collaboration among staff.
• Promote work-life balance: recognize the importance of work-life balance by offering flexible scheduling, considering employees’ needs outside of work and promoting a supportive atmosphere. 

8. Unsustainable growth

In business, slow and steady wins the race most of the time. Expanding too quickly , which usually entails financing on credit like a small business loan, can backfire if the market changes or you hit a rough patch.

Trying to take on more business than you can handle drains your working capital and usually results in a quality decline. You are overwhelmed and your product or service suffers.

Instead, be smart about which customers you court, and how you will pay back each business loan. Saying no is part of running a business.

7. Lack of sales

On the other end of the spectrum, nothing hurts a new business faster than not reaching its sales goals .

This can happen when you rely too much on one large customer. If your cafe depends on student traffic during the school year, you will need to diversify come summer to stay afloat.

The only way to make sure you’ll hit your sales targets is to gain analytic insights from existing data and use those insights to inform your sales strategy. A quality point of sale system is a good place to start.

6. Inadequate network and community engagement

Inadequate engagement can significantly hinder a retail business’s growth and lead to its failure. 

Networking is not just about making connections. It’s about building relationships that can offer support, insight and opportunities. Small businesses thrive on the strength of their local networks—customers, suppliers and fellow business owners. Without active engagement in these networks, retailers may miss out on valuable partnerships, shared resources and local customer loyalty.

Engaging with the local community involves participating in local events, supporting local causes and creating a space that serves as more than just a store. Such engagement fosters a sense of belonging and community support, which can be crucial during tough economic times.

Establishing partnerships and collaborations with other businesses can lead to cross-promotion opportunities and broadened customer bases. For instance, a clothing retailer could collaborate with a local jewelry artisan for a pop-up event, benefiting both parties through shared marketing efforts and customer cross-pollination.

5. Trying to do it all

Small business owners are a scrappy bunch, and tend to view themselves as Jacks (or Jills) of all trades. But entrepreneurs, like all people, have strengths and weaknesses, not to mention a finite number of hours in each day.

Delegation is your friend. Whether that means hiring your first employees or investing in software that cuts down on busywork, your business will only start making money once you offload some of your responsibilities onto other qualified shoulders.

4. Underestimating administrative tasks

When you were planning your company, maybe you imagined happy customers, smart marketing and of course, plenty of cash. You probably didn’t imagine spreadsheet after spreadsheet. But large chunks of running a business revolve around administrative tasks.

From inventory management to managing employees to all the bookkeeping and accounting involved in the endless quest to meet your financing goals and turn a profit, administrative responsibilities can easily eat up your entire day.

According to a poll conducted by SCORE , 47% of small business owners dislike the financial costs associated with bookkeeping, and 13% dislike the administrative headaches and the amount of time it sucks out of their workday.

So be prepared. Hire accordingly or outsource many of your rote tasks to technology. As an example, Lightspeed Accounting seamlessly integrates with QuickBooks , so you never have to manually input your accounting data. Shortcuts like this save you time, and time is money.

3. Refusal to pivot

That’s right, old-fashioned stubbornness comes in at #3 of the top reasons small businesses fail. It’s easy for entrepreneurs to become obsessed with their business idea or product, even when all evidence points to it not being a success.

Maybe by the time your brick-and-mortar store is celebrating its second anniversary, all the excitement and shininess of your new store has worn off, and fewer locals are walking through your doors. Now what? Do you become a statistic and resign to failure, or do you take the time to figure out where you need to adapt? Maybe you pivot to appeal to tourists, or stock a different type of merchandise that appeals to your customer base, or use your space to host weddings and parties on the weekends.

Sometimes an effort to pivot to ecommerce can backfire, if not done properly. Typically, physical stores and digital stores will share inventory. And while you may keep them in separate storage areas, if you sell out of an item online faster than in-store, you’ll have to fulfill some of your online orders from your store inventory. Unless of course, you’d rather ship to your warehouse first and then ship to the customer—causing unnecessary delays and a poor customer experience. To avoid this, invest in a POS system that offers a truly omnichannel ecommerce experience that automates the exchange between online and physical inventory.

2. Lack of data

Your small business is competing with cash-rich behemoths like Wal-Mart and Starbucks. What do those giants have at their disposal? Data. Tons of data.

Though your market is much smaller, you should still gather as much information as you can. If you don’t have insight into the performance of your business in real-time, it will drastically limit your ability to make smart, data-driven decisions.

For example, you need complete visibility into the revenue you collect and the expenses you pay. Without this knowledge, you are literally flying blind.

On the expense side of the equation, if you want to buy a new line of inventory or make some updates to your storefront, you need to know how it’s going to impact your bottom line. And it’s not just these expenses you need to keep an eye on, but all of your costs.

As a business owner, you need to know what percentage of revenue you can allocate to employee wages, utility bills or rent so you can set proper targets for cost savings. On the revenue side, you want your business to grow month over month or year over year.

If you don’t achieve your goals, you may want to examine areas of your business where you’re overspending—i.e., the expense side. To ensure your expenses don’t exceed your revenue and turn your business into a failure rate statistic, it’s helpful to know your net income.

Calculating your net income

First, you need to define your Gross Profit (GP) by taking the Cost of Goods Sold (COGS) and subtract the number from the total net sales. If you’re using a POS system like Lightspeed, you can find reports like these, and more.

The second factor you’ll need in this calculation is your Operating Profit (OP). To find the OP, you need to subtract your operating expenses (i.e., payroll, rent, utilities) from your gross profit. If you’re using accounting software, you’ll easily be able to retrieve this information.

Lastly, you have non-operating expenses. These are expenses that are not related to core business operations like your operating profits, but rather taxes or interest you may have on loans or cash advances. Non-operating expenses are subtracted from your operating profit to yield your net income.

The secret to running a lean business is a long-term, ongoing strategy that strives to eliminate waste to improve efficiency, agility and quality of business operations—all while maximizing value to customers.

While this seems like a contradiction, doing more with fewer resources, it’s much easier than you think once you break it down into small steps. The ideology of a lean business is built on the methodology of build-measure-learn.

The main idea behind build is that Rome wasn’t built in one day. Nor was Google’s Gmail, Apple’s iPhone or mega-retailer, Amazon. Businesses don’t start out doing all the cool and fancy things they’re known for today. For instance, Amazon started as an online bookstore, and now they deliver groceries to your home and provide streaming music services. The point is these companies started with a basic idea, or in the business world, a Minimum Viable Product (MVP) that they can introduce to the market.

Next, these companies measured. They measured the results of the MVP during the experimental stage. How did the market respond to your product or business? Did they react the way you expected them to, or was the reaction the complete opposite of your hypothesis?

Once you have some reliable data measurements, you can then determine which direction to move based on the results of that data. Have you been right all along and now you have the data to back it up? Or did the measurements provide you with some insight into areas you can improve?

Applying build-measure-learn

To apply this to your small business, you need to go back and look at your business plan. What are you trying to build? What are your goals? Finally, what is the bare minimum you need to get started?

Whatever the outcome, know that it is backed by reliable data that you can trust to help pivot your business in the direction that will help it be most successful.

Real-time data dramatically reduces lag time between data collection to data analysis , thus making your business more agile and responsive to changing trends. And if there’s one thing every small and medium-sized business has over big-box retailers is the innate ability to be agile because they don’t have to cut through the corporate red tape to make changes. They can see the data trends in real-time and respond accordingly.

1. Poor management

We’ve finally reached the #1 reason why a new business might fail. Entrepreneurs have power over their businesses, and with great power comes great responsibility.

Management is partly about attitude and mindset—and it does have an effect on your bottom line.

Sometimes small business owners become set in their ways when it comes to doing certain things. This is especially true for veteran business owners. For new entrepreneurs, make sure you don’t fall into this trap. And to be fair, it’s not just business owners. It’s everybody. It’s human nature, and we are all guilty of it at some point in our lives.

Assumption and complacency typically happen when a business is doing well and fall into a false sense of security that your business is operating in the best possible and most productive way. That’s precisely when fallacy swoops in and wreaks havoc if you’re not careful.

Planning your road to business success  

Operating a successful business is not something you can leave up to chance or luck. It takes a clearly defined business plan, strategic operations and sound financial management from startup and throughout the life of your business. 

These 19 reasons should give you a solid understanding of how to turn around a failing small business so your company doesn’t become a failure rate statistic. While you might not be able to avoid every single reason listed above, it’s important to be aware and think preemptively about what you can do to tackle each of them, and come out winning. If you want to get started on proper inventory management, analytics, and ecommerce, let’s chat !

What is the #1 reason small businesses fail?

The number one reason small businesses fail is inadequate cash flow management. Without sufficient cash flow, businesses struggle to cover daily operations, invest in growth or manage unexpected expenses, leading to financial instability and ultimately, failure.

What is the biggest mistake small businesses make?

The biggest mistake small businesses make is neglecting to plan thoroughly. This includes failing to develop a solid business plan, underestimating the importance of financial planning and not preparing for market changes. Without a clear strategy and adaptability, businesses struggle to navigate challenges and seize opportunities, leading to potential failure.

How do you revive a failing business?

To revive a failing business, start by conducting a thorough analysis to identify the root causes of its struggles. 

Restructure your business plan focusing on viable products or services, streamline operations to reduce costs and enhance customer experience to boost loyalty. 

Consider diversifying offerings or exploring new markets. Improving financial management and seeking external funding if necessary are also crucial. Engage with customers and stakeholders for feedback and support.

Lastly, don’t hesitate to seek advice from mentors or industry experts who can provide fresh perspectives and strategies.

How long does the average small business last?

The longevity of a small business can vary widely by industry, location and other factors. 

According to data from the Bureau of Labor Statistics, about 50% of small businesses survive at least five years , and roughly 33% survive ten years or more. 

What year do most small businesses fail?

Most small businesses face the highest risk of failure within their first five years. Specifically, around 10% of small businesses fail in their first year , around 31% in their second year, and by the end of the fifth year, almost 50% have ceased operations. This critical period highlights the importance of solid planning, financial management and adaptability in the early stages of a business.

How many startups survive 5 years?

Approximately 50% of startups survive past their fifth year. 

How many businesses make over $1 million?

Less than 10% of U.S. businesses generate over $1 million in annual revenue. Achieving this level of revenue typically requires strategic planning, effective marketing, strong customer relationships and continuous innovation to stand out in competitive markets.

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Lightspeed is a cloud-based commerce platform powering small and medium-sized businesses in over 100 countries around the world. With smart, scalable and dependable point of sale systems, it's an all-in-one solution that helps restaurants and retailers sell across channels, manage operations, engage with consumers, accept payments and grow their business.

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• Bad Location or Marketing
• Remaining Rigid
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Top 6 Reasons New Businesses Fail

The first years of a new business are often the hardest. New business owners must struggle to find capital, suppliers, and customers, all while trying to find enough income to pay their bills. In order to be successful, it is essential for new business owners to prepare for these risks.

According to the U.S. Bureau of Labor Statistics (BLS), approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more. These statistics haven't changed much over time, and have been fairly consistent since the 1990s. Though the odds are better than the commonly held belief, there are still many businesses that are closing down every year in the United States.

According to the BLS, entrepreneurs started 1,054,052 new businesses in the year ending March 2023. From the historical data, we can expect approximately 210,810 of these businesses to fail within the first two years. With the right planning, funding, and flexibility, businesses have a better chance of succeeding. We'll go through some of the biggest mistakes that startups can make and figure out how to improve your chances of success.

Key Takeaways

• New businesses have the highest chances of failing, due to the combined pressures of raising capital, finding customers, and bringing in enough income to pay their bills.
• About 45% of new businesses fail within the first 5 years.
• Failure to research the market, and prepare a business plan are common reasons for business failure.
• Many companies do not raise enough starting capital, which is essential for new businesses without a reliable revenue stream.
• For more established businesses, there is also a danger of expanding too fast, without conducting enough market research.

Investopedia / Ellen Lindner

1. Not Investigating the Market

So you've always wanted to open a real estate agency, and you finally have the means to do so, but your desire to open the agency blinds you to the fact that the economy is in a down housing market and the area where you want to work in is already saturated with agencies, making it very difficult to break in. This is a mistake that will result in failure from the start. You have to find an opening or unmet need within a market and then fill it rather than try and push your product or service in. It's a lot easier to satisfy a need rather than create one and convince people that they should spend money on it.

2. Business Plan Problems

A solid and realistic business plan is the basis of a successful business. In the plan, you will outline achievable goals for your business, how your business can meet those goals, and possible problems and solutions. The plan will figure out if there's a need for the business through research and surveys; it will figure out the costs and inputs needed for the business, and it will outline strategies and timelines that should be implemented and met.

Once you have the plan, you should follow it. If you start doubling your spending or changing your strategies whimsically, you are asking for failure. Unless you have found that your business plan is overwhelmingly inaccurate, stick with it. If it is inaccurate, it's best to find out what's wrong with it, fix it, and follow the new plan rather than change how you do business based on quick observations.

The more mistakes you make, the more expensive your business will become and the greater the chance of failure. You may also be called to pivot when market conditions change drastically and impact negatively the chances of success based on the initial business plan. In this case, you revisit your plan and edit it fully based on the decided pivot.

According to a study by U.S. Bank, 82% of business failures are due to insufficient cash flow.

3. Too Little Financing

If you have started a company and things aren't working out, and you have little capital and a struggling business, you're not in a good position to ask for another loan . If you're realistic at the beginning, you can plan to start with enough money that will last you to the point where your business is up and running and cash is actually flowing in.

Trying to stretch your finances at the beginning may mean that your business never gets off the ground, and you'll still have a lot of cash to repay. Lean management strategy is warranted in this phase in particular but can be applied even after this phase. Try to think of multi-channels for funding and financing. Get educated about this area and be creative searching alternative sources of financing.

4. Bad Location, Internet Presence, and Marketing

A bad location is self-explanatory if your business relies on location for foot traffic . Just as dangerous, however, is a poor Internet presence. These days, your location on the internet and your social media strength can be just as important as your company's physical location in a shopping district. An online presence will let people know that they can give you their business, so if the need is already there, the availability and visibility of your business is the next important step.

This is similar to marketing . Not only must you make sure that marketing reaches people, but it must also reach the right people. So make sure the type of marketing lines up with the audience you want to reach. Big billboards may not be the way to go for an internet company, just as online ads may not be the way to go for a heavy-construction business. If the need is already established, make sure you're reaching the audience who needs your product or service.

5. Remaining Rigid

Once you've done the planning, established your business, and gained a customer base, don't become complacent. The need that you're fulfilling may not always be there. Monitor the market and know when you may need to alter your business plan. Being on top of key trends will allow you lots of time to adjust your strategy so that you can remain successful. One must only look at the music industry or Blockbuster video to know that successful industries can undergo huge changes.

6. Expanding Too Fast

Now that your business is established and successful, it's time to expand, but you must treat the expansion like you're starting all over again. If you're expanding the reach of your business, make sure that you understand the areas and markets into which you'll now be reaching. If you're expanding the scope and focus of your business, make sure you understand your new products, service and intended consumer as much as you do with your current successful business.

When a business expands too fast and doesn't take the same care with research, strategy, and planning, the financial drain of the failing business(es) can sink the whole enterprise.

Why Do Most Startups Fail?

Most new companies do not survive the startup phase, with 20% failing after the first year. Surveys of business owners suggest that poor market research, ineffective marketing, and not being an expert in the target industry were common pitfalls. Bad partnerships and insufficient capital are also big reasons why new companies fail.

What Is the Biggest Risk for Small Businesses?

One of the biggest hurdles for small businesses is running out of working capital. Since small businesses tend to have a low cash flow, they also have less financial cushion if they face economic hardship, and need to borrow or find investors when they face financial difficulty.

How Do You Find the Best Market for Your Industry?

Finding the right target market is a major hurdle for new companies, and entire industries exist to help market your products to the right consumers. Marketing professionals use focus groups, surveys, and in-person meetings with potential consumers to find out who their customers are, and what products they are looking for.

Research, planning, and flexibility can help you avoid many of the pitfalls of a new business and be a part of the approximately 25% that make it to 15 years and beyond.

U.S. Bureau of Labor Statistics. " Table 7. Survival of Private Sector Establishments by Opening Year ."

U.S. Bureau of Labor Statistics. " Table 5. Number of Private Sector Establishments by Age ."

U.S. Bank. " Closing Strong: Year-End Cash Flow Strategies, Monitoring, and the Role of Spend Management Platforms ."

Square. " How to Identify Your Target Market ."

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12 reasons why small business plans fail (that no one wants to talk about)

Even with the best of intentions, a significant proportion of small business plans fail. This shouldn’t be discouraging news if you’re planning to start a business. What this means is that there is a lot you can learn from startups that fail.

But some entrepreneurs won’t tell you honestly why their small business plans failed. Maybe they’re embarrassed about it, or maybe they simply don’t know. So, here’s a list of twelve reasons that explain why startups usually fail.

12 reasons why small business plans fail

1. no concrete plan.

Why should you learn to write a sound small business plan ? Well, without one, things will never be sustainable. You won’t know how much it will cost to start a business , its expected expenses, revenue, price etc. This means you won’t be able to properly plan your operations.

2. Bad business idea

No one wants to be told that their ideas are bad or more precisely, unviable. This is one of the most common reasons why small business plans fail to take off. The solution is to do your research, find viability for your product or service, talk to your prospective customers, and get as much feedback as possible.

3. Lack of differentiation

“I really believe in it” isn’t a convincing strategy. Your product or service needs to be different from the available options. Even the best marketing tactics can’t save a product or service that doesn’t stand apart from its competitors.

4. Not enough capital

Most small businesses underestimate how much money they will need for their operations. This leads to a severe capital crunch early on, which will discourage employees and dissuade investors from considering you. Not enough capital means not enough innovation and not enough talent. That’s when growth becomes impossible.

5. Poor leadership

Some startups are so dependent on their founders that there is no room for different views or ideas. This egotistical management style stifles innovation and prevents employees from doing their jobs. Eventually, it will lead to an exodus of people and business associates.

6. No focus

Another reason why small business plans fail is that they focus on too many things. The founders get excited about several products or services, audience groups or marketing tactics. Spreading yourself too thin is a sure-fire way to fail. This leads to capital shortage and wasted efforts.

7. Low profitability

Finding paying consumers isn’t enough to make a business succeed. You should have consumers that pay you enough to cover your costs and make sustainable profits. But in their bid to acquire customers, some businesses ignore profitability. This can create a curious situation where the business has customers but can’t meet its overheads.

8. Not enough talent

One sad aspect of the startup world is the glamorisation of the ‘genius solopreneur’. But in reality, even the smartest of founders needs a talented team. Not just that, they need an initial team to stay with the firm for a long time. This calls for attractive compensation that usually includes considerable equity.

9. Unviable location

Location is a crucial factor for businesses that sell physical products or services and expect customers to walk in. If these stores, offices or service centres are in a location with low foot traffic, the business will run into problems. To attract customers, they will have to offer steep incentives which will reduce their revenue and profits.

10. Lack of flexibility

Your bestselling product may not be the one you started your business with. What will make you profitable might be a service you still haven’t thought about. Your most frequent customers may not have been on your initial list. Corporate consultants call it agility but here’s a simple and friendlier version: it’s the ability to spot new opportunities and challenges and change your tactics accordingly.

11. Poor customer service

When customers are happy with your service, they will repeat their business with you and refer you to friends and colleagues. When they are unhappy, they will stop buying from you. But more than that, they might leave a negative review about you online, which could cost you future customers and revenue.

12. Bad financial management

A great idea is meaningless if not backed by proper financial management. Entrepreneurs who don’t have reliable financial projections and market estimates will find it a challenge to plan and invest. This will make it difficult to pay vendors and employees and will eventually force the founder to shut down their business.

With these reasons as a checklist, it will be easier to launch and manage your business. It will go a long way in ensuring that your small business plan succeeds in any competitive market.

Continue reading

Everything you need to know about a business plan including a step-by-step guide and the best practices for writing one

All the costs and expenses to consider if you’re planning to start a business

Facts about Trump assassination attempt: What's real, what's not and how we know

The attempted assassination of former President Donald Trump comes in an election cycle inundated with questions about what's real.

We've seen a fake Joe Biden robocall , fabricated Trump statements , fake election filings and all manner of AI and deep fake images and videos . Not to mention the expected array of misleading posts about the presidential race.

This environment has spurred many to question reality – whether the scenes displayed nationwide by media outlets and on social media really reflect what happened.

But let's be clear. The shooting was real. Though the investigation is ongoing and some details remain unknown, there is extensive evidence showing what happened at Trump's July 13 rally in Butler, Pennsylvania.

Here's what we know and how we know it.

Fact check roundup:   False claims about Trump rally shooting spread online

Was there really an assassination attempt on Trump?

Claims that major news events are staged are hardly original. We saw the same trope after the Hamas attack on Israel , the Baltimore bridge collapse , the 2023 Ohio train derailment , the 2023 Nashville school shooting and many more. This narrative is as wrong now as it was in each of those cases.

An investigation led by the FBI found that Thomas Matthew Crooks , a 20-year-old from Bethel Park, Pennsylvania, fired multiple shots toward the stage where Trump was speaking to a crowd of his supporters, according to statements released by the FBI and Secret Service . Crooks fired an AR-15-style rifle from a roof about 150 yards away and was killed by Secret Service agents moments after opening fire.

Videos published by multiple news outlets , including USA TODAY , show Trump abruptly reaching for his right ear, looking at his bloody hand and then dropping down behind the podium. People nearby can be heard saying , "Shots, shots, shots." A moment later, Secret Service agents surround Trump and escort him off the stage.

Shortly before Crooks opened fire, several rally attendees tried to get the attention of police after witnessing a suspicious man on a roof . Footage they took shows a man with long, light brown hair dressed in a beige shirt and pants can be seen lying down on the upward-slanting roof.

“Someone’s on top of the roof,” a man says in a video posted on social media the next day, while Trump speaks in the background. “Officer! Officer!" a man yells. “He’s on the roof!” a woman adds.

A July 15 statement from the FBI says it's investigating the incident "as an assassination attempt … and as potential domestic terrorism." It also indicates the bureau has done nearly 100 interviews with "law enforcement personnel, event attendees and other witnesses."

Were shots really fired at Trump rally?

Multiple shots were fired during the incident, contrary to various online claims that the shooting was "fake" or " staged ."

In a July 14 statement , the Pennsylvania State Police identified three rally attendees who were "shot during the attempted assassination of former President Trump at yesterday’s rally in Butler County." Corey Comperatore , a 50-year-old firefighter and father of two, was killed. Two others, David Dutch, 57, and James Copenhaver, 74, were injured.

Trump said in a Truth Social post that he was struck by a bullet in the upper part of his right ear. A photo taken by New York Times photographer Doug Mills shows what appears to be a bullet streaking by Trump's head during the rally.

Fact check : Post wrongly claims nothing hit in Trump rally shooting

Was Trump shot?

In his Truth Social post, Trump said he was " shot with a bullet that pierced the upper part of my right ear."

"I knew immediately that something was wrong in that I heard a whizzing sound, shots, and immediately felt the bullet ripping through the skin," he wrote.

The statements released by the FBI are not as direct about the cause of Trump's injury, only indicating that the "shooting incident" led to "one victim's death and injuries to former President Trump and other spectators."

Who was behind the Trump rally shooting?

As of July 16, the investigation indicated that Crooks acted alone , according to the FBI, which also noted it "continues to conduct logical investigative activity to determine if there were any co-conspirators associated with this attack."

Crooks, who was not known to the FBI before the incident, worked at a nursing home as a dietary aid, a job that generally involves food preparation. He doesn't have a criminal record in Pennsylvania, according to state court records. No record of him shows up in federal court databases either.

Some former classmates described Crooks as a loner who kept to himself and had few friends. Crooks also appears to have had an affinity for guns . He and his father were members of the Clairton Sportsmen’s Club, a nearby 180-acre complex with rifle, pistol, archery and competition ranges, among other amenities.

The National Security Council hasn't identified any ties between the assassination attempt and any foreign officials. However, it is still tracking threats by Iran against former Trump administration officials, Adrienne Watson, a spokesperson for the agency, said in a statement.

Fact check : Man pretended he was Trump rally shooter in a viral video

Was the Trump shooter a Republican? Antifa?

Various unproven claims about the Trump shooter have circulated online, but the little we know about his politics right now is somewhat conflicting.

Crooks is registered to vote as a Republican in Allegheny County, Pennsylvania, according to county voter records. His voter registration status has been active since 2021. However, he also made a $15 donation in January 2021 to the Progressive Turnout Project, a group working to increase voter turnout for Democrats, according to Federal Election Commission records.

The bureau has yet to identify a motive for the shooting, but it has searched Crooks' residence and vehicle , and it also gained access to his phone. However, CNN reported that investigators have not found evidence of a political or ideological impetus and that Crooks' search history did not show he had researched homemade explosives.

Fact check : Officials identified Trump shooter as Thomas Matthew Crooks, not Mark Violets

Five Tax Takeaways from 2024 State Legislative Sessions 

July 18, 2024

Aidan Davis State Policy Director

State lawmakers across the country navigated budget challenges and slowing revenue growth in 2024. This challenge was made worse by the winding down of temporary federal pandemic aid, coinciding with deep, permanent tax cuts . The impact of those tax cuts becomes clearer as they weigh on the ability of places like Arizona and Ohio to fund crucial public services.   

Tough decisions must now be made to make up for lost revenue and fully fund key priorities like education, transportation, and health care. Fortunately, evidence-based tax policies can ensure that wealthy families and corporations pay their share toward the public services that benefit us all.   

  As we reflect on this year’s state legislative sessions, there are a few clear takeaways.

1. Major tax cuts were largely rejected, but states continue to chip away at income taxes.

This year brought smaller tax cuts than the past few years as tax-cutting plans were scaled back so lawmakers could balance state budgets. Many permanent income tax rate cuts that passed were measured by roughly a tenth of a percentage point (in Georgia, Idaho, Iowa, Kansas, South Carolina, and Utah). Half of those –Georgia, Iowa, and South Carolina – sped up cuts already on the books.    

A handful of other states pushed through deeper income tax cuts. Arkansas passed a 0.5 percent top income tax rate cut – its fourth rate cut in less than two years. Kansas condensed its income tax brackets and lowered rates (cutting their top rate by 0.12 percentage points in the process). And West Virginia lawmakers announced the state’s personal income tax cut trigger will reduce each bracket’s rate by 4 percent – this results in a percentage point reduction ranging from 0.1 to 0.2, with larger rate cuts going to higher tax brackets. Those cuts come as the governor discusses a potential special session to focus on further tax cuts.   

Kentucky’s debate, however, is beginning to shift in a different direction as lawmakers have started to question the feasibility of a law that would eventually eliminate the state’s individual income tax. The budget cuts required by such a move would be drastic and deeply unpopular.  

Hawai’i also stands apart for its unusual approach to tax cutting this year: it did not cut tax rates, but did reshuffle brackets and increase the state’s standard deduction, setting the state up for a staggering $1.4 billion annual revenue loss by 2031, when the policies are fully phased in.  

Narrowing the income tax base was also a part of the story this year in Kansas and West Virginia where lawmakers provided full tax exemptions for Social Security income, joining a long list of states that have rushed to provide carveouts to high-income seniors in recent years. And four states—Arkansas, Georgia, Idaho, and Utah—reduced corporate income tax rates levied on business profits. The rate reductions ranged from 0.1 to 0.5 percent, with Arkansas passing the deepest cut. By contrast, New Mexico and New Jersey strengthened their corporate taxes by raising rates on business profits.   

2. More states focused on cutting property taxes, but lawmakers are largely missing the point.

Property tax cuts were hotly debated this year, with concerns over housing affordability and property tax affordability front and center. But lawmakers largely failed to deliver effective solutions to these problems.

The property tax cuts that passed in Arkansas, Colorado, Kansas, Georgia, and Wyoming, and that were under consideration in Florida, Nebraska, and elsewhere , were disconnected from ability to pay. This is a missed opportunity for lawmakers who have more targeted options at their fingertips: especially property tax circuit breaker s that can keep property tax payments at a manageable share of household budgets for low- and middle-income families.   

3. States continued cutting taxes on groceries.

This year lawmakers in Illinois and Oklahoma removed groceries from their state sales tax bases. These actions continue a trend of states moving to reduce or eliminate taxes on grocery purchases, following state-level elimination in Virginia, a phasedown to elimination in Kansas, and reductions in Alabama, Arkansas, Tennessee, and Utah (pending voter approval) in recent years.   

In Oklahoma, groceries were exempted from the state’s 4.5 percent sales tax, which will result in nearly $420 million in annual lost revenue. In Illinois, groceries were already subject to a reduced rate (1 percent instead of 6.25 percent) and lawmakers decided this year to remove the tax entirely.  

Reducing or fully exempting grocery taxes reduces the overall regressivity of state and local tax systems. Too often, however, lawmakers pursue grocery tax exemptions without adequate consideration of their cost and whether more targeted options are available for aiding families most impacted by grocery taxes. Refundable tax credits for low-income families such as Earned Income Tax Credits (EITCs), Child Tax Credits (CTCs), and sales tax credits can help food-insecure families as much or more at a lower cost because they do not require giving tax cuts to high-income shoppers and out-of-state visitors.  

4. More states discussed cracking down on corporate tax avoidance.

This year marks the second year in a row that Worldwide Combined Reporting , also known as complete reporting, passed a state’s legislative chamber. This makes clear that lawmakers and advocates are becoming more interested in stopping widespread tax avoidance by multinational corporations. Minnesota lawmakers led the charge in 2023 and Maryland lawmakers grabbed the baton in 2024. In addition to Maryland, the policy was also discussed in states as varied as Hawai’i, New Hampshire, Oregon, Tennessee, and Vermont this year.   

Enacting this policy would be a huge step toward eliminating state corporate tax avoidance , as it neutralizes a wide array of tax-planning strategies corporations use to pretend their U.S. profits were generated overseas, outside the reach of state tax authorities. And, fortunately for lawmakers, the policy would be a natural extension of features that already exist in state tax law, as more than a dozen states and the District of Columbia currently allow or require companies to file returns that include some profits booked in foreign countries.  

5. States continued creating and improving effective tax credits for families and children.

Public investments and family economic well-being are inextricably connected. Over the years, states have chosen to bolster support for low- and middle-income families through refundable tax credits that directly lift after-tax incomes.   

This year alone, the District of Columbia and Colorado stand out for their moves to do more for children in their communities. D.C. passed a new fully refundable Child Tax Credit that will provide $420 per child under age 6 in low- and moderate-income families. And Colorado lawmakers passed a Family Affordability Tax Credit that, subject to state economic conditions, builds upon their existing refundable Child Tax Credit. The new credit provides a benefit of up to $3,200 in years of strong economic growth for children under 17 in families earning less than $95,000 a year. In New York, lawmakers opted to provide another one-time boost to the state’s Empire State Child Credit.  

Colorado lawmakers also boosted their state Earned Income Tax Credit (EITC) to 50 percent of the federal amount in 2024, 35 percent in 2025, and a baseline of 25 percent in the following years with an option to raise it higher, depending on state economic conditions. Lawmakers in Illinois also provided a child bonus for children under 12 who benefit from the state’s EITC. Those qualifying working families will see a 20 percent increase to the state Earned Income Credit in 2024 and a 40 percent increase in 2025 and beyond.   

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Reality interrupts the fever dream of income tax elimination in kentucky, property tax circuit breakers can help states create more equitable tax codes, scotus rejects expansion of trump’s corporate tax cuts, leaves broader tax questions for another day.

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Chaos and Confusion: Tech Outage Causes Disruptions Worldwide

Airlines, hospitals and people’s computers were affected after CrowdStrike, a cybersecurity company, sent out a flawed software update.

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By Adam Satariano ,  Paul Mozur ,  Kate Conger and Sheera Frenkel

• July 19, 2024

Airlines grounded flights. Operators of 911 lines could not respond to emergencies. Hospitals canceled surgeries. Retailers closed for the day. And the actions all traced back to a batch of bad computer code.

A flawed software update sent out by a little-known cybersecurity company caused chaos and disruption around the world on Friday. The company, CrowdStrike , based in Austin, Texas, makes software used by multinational corporations, government agencies and scores of other organizations to protect against hackers and online intruders.

But when CrowdStrike sent its update on Thursday to its customers that run Microsoft Windows software, computers began to crash.

The fallout, which was immediate and inescapable, highlighted the brittleness of global technology infrastructure. The world has become reliant on Microsoft and a handful of cybersecurity firms like CrowdStrike. So when a single flawed piece of software is released over the internet, it can almost instantly damage countless companies and organizations that depend on the technology as part of everyday business.

“This is a very, very uncomfortable illustration of the fragility of the world’s core internet infrastructure,” said Ciaran Martin, the former chief executive of Britain’s National Cyber Security Center and a professor at the Blavatnik School of Government at Oxford University.

A cyberattack did not cause the widespread outage, but the effects on Friday showed how devastating the damage can be when a main artery of the global technology system is disrupted. It raised broader questions about CrowdStrike’s testing processes and what repercussions such software firms should face when flaws in their code cause major disruptions.

How a Software Update Crashed Computers Around the World

Here’s a visual explanation for how a faulty software update crippled machines.

How the airline cancellations rippled around the world (and across time zones)

Share of canceled flights at 25 airports on Friday

50% of flights

Ai r po r t

Bengalu r u K empeg o wda

Dhaka Shahjalal

Minneapolis-Saint P aul

Stuttga r t

Melbou r ne

Be r lin B r anden b urg

London City

Amsterdam Schiphol

Chicago O'Hare

Raleigh−Durham

B r adl e y

Cha r lotte

Reagan National

Philadelphia

1:20 a.m. ET

CrowdStrike’s stock price so far this year

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Ex-Secret Service special agents explain why countersniper who saved Trump's life may have lost crucial seconds

• Trump's life was saved by a Secret Service countersniper assigned to Saturday's detail.
• But the shooter still managed to kill one rallygoer and injure two others before he was taken out.
• Experts said heat, staffing, and a focus on a nearby tree line may have cost crucial seconds.

The Secret Service countersniper who narrowly saved the life of former President Donald Trump may have lost crucial seconds because of factors including the extreme heat, a lack of antisniper backup, and a likely focus on a nearby tree line, a former special agent told Business Insider.

"This countersniper made an amazingly quick decision and clearly saved Trump's life," Bill Pickle, the former special agent in charge of Al Gore's vice-presidential Secret Service detail, said.

"Our guys are the best shots in the world. That's what they do," Pickle said.

"And within a second of the moment this kid opened fire, the CS guy shot him," he said, using Secret Service shorthand to refer to the countersniper deployed at Saturday night's rally in Butler, Pennsylvania.

"But someone will blame that CS and the spotter and say, 'If only he had been two seconds faster in spotting the shooter,'" the former special agent said.

"The real question may be: If there were more antisniper eyes on that building, could this have all been avoided?" he added.

How did the countersniper team not see the shooting suspect sooner?

Pickle said one area of focus for investigators would be how the shooter managed to get on top of the building without authorities taking notice.

"The other question is: Why wasn't this roof secured, and were there agents or law enforcement in there checking IDs?" he added.

"How did this kid figure out a way to get out on the rooftop and slither across that rooftop?" Pickle said. "He low-crawled across the roof on his hands and knees, and he pushed the weapon ahead of him just like in the military."

But even if they see a shooting suspect quicker, countersnipers may not always have the ability to act immediately when they spot a threat, Anthony Cangelosi, a former special agent who directed the Secret Service's technical-security advances for presidential candidates, said.

"You either have to make a decision: 'Do I take a shot? Or do I not take a shot?'" Cangelosi told BI.

"What if you find out, 'Oh, I just killed a 20-year-old kid who loves the protectee, and he couldn't get in the venue, and he just wanted to get up on that roof?' No one wants to be in that position," Cangelosi said.

Cangelosi said the Secret Service team at the event should have a "site plan" that would include a layout of the area and the surrounding buildings.

The would-be assassin fired at least three rounds from a rooftop 150 yards from where Trump was speaking. He killed one rallygoer and critically injured two others before being shot dead by a yet-to-be-identified Secret Service countersniper who was positioned on another rooftop.

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One bullet grazed Trump's right ear , bloodying his face.

"This kid, at 150 yards, made a great shot," Pickle said Sunday of the would-be assassin, his voice grim. "I don't know the specifics of whether he used optics, meaning a scope on his rifle," he told BI.

"But even with optics, it takes somebody with training to aim at somebody's head from 150 yards away and you actually hit the edge of the head," he said.

"That's not a lucky shot," he added. "That's a guy who actually shot before."

The FBI identified the shooter as Thomas Matthew Crooks , 20, of Bethel Park, Pennsylvania. The FBI said it was still investigating a motive.

But for now, it's clear that at least three things may have factored into the several-second delay between when Crooks was seen crawling onto the roof and when the CS team saw and shot him, Pickle said.

The decision on how many antisnipers to deploy may prove the most critical factor, he said.

"Someone made a decision that that number of countersnipers was sufficient," he said. "And obviously, in hindsight, they were wrong because there was a kid who was able to get up there on that rooftop and pull the trigger three times at least."

How many CS teams were deployed?

Staffing decisions would have been made at the Secret Service's headquarters in Washington, DC, based on whatever agency personnel on the ground recommended after a several-day investigation of the site, Pickle said.

"An advance team actually does a lengthy survey, where they look at everything and then recommend what they need," he said.

"But if they're stretched for resources, headquarters can say we can only get you one team out there. And that's not unusual — if you don't have it, you don't have it," Pickle said.

"It always boils down to resources," he said. "And if it's not a resource problem, and the money was there, then it's still an allocation-of-resources problem," he said — meaning someone underestimated the forces needed to keep Trump safe.

Regardless of how many snipers were present, the Secret Service typically has "360-degree coverage" of an event where a sitting or former president is speaking, Cangelosi said.

Another factor is the weather.

"The CS guys would probably say: 'We were up there for four hours in 100-degree heat, and if we had another team up here or drone support, this wouldn't have happened,'" Pickle said.

The team may also have been focusing on a nearby tree line, seeing it as the primary risk.

"You're looking at everything that would hide a potential assassin," Pickle said.

"The first assumption is that if I'm a bad guy, I'm going to hide. Human nature is such that I'm going to be scanning the rooftops to make sure they're empty, but then I'm going to be focusing on that tree line because you think the bad guy is going to be hidden," Pickle said.

"You don't think the bad guy is going to be out in the open," he said.

Interagency squabbles and intense public scrutiny are forthcoming

Once the would-be assassin opened fire, "everything that happened up there was textbook and the way it should have happened," Pickle said. The CS team returned fire, long-gun-toting counterassault agents in black jumpsuits and helmets rushed the stage, and business-suited agents at the rally platform hurried Trump offstage.

"But why wasn't he identified seconds sooner?" Pickle asked of the shooter.

"Was it caused by exhaustion from being on a 100-degree roof for four hours? Was the CS team watching the heavy foliage there, which arguably was the best place to hide?" he said.

"An open roof is not the best place to hide. If he climbed out onto an open rooftop, he was prepared to die," he added.

"The worst nightmare for the Secret Service has always been a lone gunman who hasn't been announcing his views publicly and is ready to die," he said.

Pickle said Saturday's attack would be dissected for years to come and "will be in the training syllabus forever."

"It's going to be a circular firing squad," Pickle said of the interagency finger-pointing and conspiracy theories that will play out as the attempted assassination is scrutinized by the FBI, Congress, and the press and public.

Cangelosi told BI that "a lot of people talk and things just travel" within the agency after an event of this magnitude.

"We all want answers, and we want them as quickly as possible, but it's going to take some time," Cangelosi said. "You know the Secret Service; they're professionals. Mistakes are made. They're going to remedy them."

• Main content

Here’s How Kamala Harris Performs In Polls Against Trump—As Biden Drops Out And Endorses Harris

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Vice President Kamala Harris is the most likely replacement for President Joe Biden, who dropped his 2024 presidential bid and endorsed Harris Sunday—and she is performing about the same as Biden in head-to-head polls with Trump.

Vice President Kamala Harris speaks at the 2024 ESSENCE Festival of Culture at the Ernest N. Morial ... [+] Convention Center in New Orleans, Louisiana on July 6, 2024 . (Photo by Christiana Botic for The Washington Post via Getty Images)

A flurry of polls conducted in the wake of the June 27 presidential debate showed Harris performing roughly the same as Biden against Trump (who has been leading the president by a slim margin for months), and more recent polls after the attempted assassination of Trump show similar trends.

Harris has also polled better than other Democrats commonly floated as replacement candidates to Biden, but the polls didn’t factor in how months of campaigning could change voters’ perceptions of many of the lesser-known candidates that don’t have the benefit of national name recognition like Harris does.

One CBS News/YouGov poll conducted last week gave Harris a slight edge: Trump led Harris by three points (51%-48%), while leading Biden by five (52%-47%) among likely voters (the poll’s margin of error was 2.7 points).

However, an Economist/YouGov poll (margin of error 3.1) conducted July 13 - 16 and released Thursday found Biden would lose to Trump 41% to 43%, while Harris would perform slightly worse, losing to Trump 39% to 44%.

A Reuters/Ipsos poll conducted and released Tuesday—after the attempted assassination of Trump—found both Biden and Harris are virtually statistically tied with Trump, but 69% of respondents see Biden as too old to work in government (margin of error 3.1).

Democratic polling firm Bendixen & Amandi found Harris beating the former president 42% to 41% (margin of error 3.1) in a survey released July 9 and first obtained by Politico, while Biden, Whitmer and Newsom all trail Trump.

A YouGov poll conducted July 3-6 found more Democrats and independents who lean Democrat prefer Biden over Harris as the nominee, 47% to 32%, while 21% said they weren’t sure (margin of error 4).

A Five Thirty Eight analysis of polls found Harris’ odds of winning the Electoral College over Trump are slightly better than Biden’s (38% versus 35%), but when various economic and political factors are incorporated, in addition to polls, Five Thirty Eight found Biden’s odds of winning swing states and the Electoral College against Trump are better than Harris’—48% to 31%.

A Reuters/Ipsos poll released July 2 (margin of error 3.5) found Harris would lose to Trump by one point, Biden tied Trump, while four governors who have been floated as potential Biden replacements—Michigan Gov. Gretchen Whitmer, California Gov. Gavin Newsom, Kentucky Gov. Andy Beshear and Illinois Gov. J.B. Pritzker—would all perform worse than both Biden and Harris against Trump.

In a CNN/SSRS poll (margin of error 3.5) conducted June 28-30, Harris outperformed Biden, and three other potential candidates commonly floated to replace him, in a hypothetical matchup against Trump—but she would still lose to the former president by two points (while Biden would lose to Trump by six points).

3.2. That’s how many points Trump leads Biden by, according to Five Thirty Eight’s polling average , compared to 0.7 points on June 28, the day after the debate, and 0.2 on June 27, ahead of the debate.

Surprising Fact

Former Secretary of State Hillary Clinton (who is not among the Democrats commonly floated as potential Biden replacements) would beat Trump by a slightly wider margin, 43% to 41%, according to the Bendixen & Amandi poll. When the poll tested Biden replacements with potential running mates, a ticket with Clinton at the top and Harris as the vice presidential nominee outperformed all other hypothetical Biden-replacement scenarios, showing them beating Trump 43% to 40%. Former First Lady Michelle Obama (another long-shot replacement prospect) would also far outperform Harris, Biden and other potential replacements against Trump, according to the Reuters/Ipsos poll that showed her leading Trump 50% to 39%.

What To Watch For

While Harris is the most likely replacement for Biden, some pundits and prominent Democrats have floated the idea of a “mini primary” in which candidates could compete for Biden’s delegates through a series of high-profile party-sponsored events, such as debates and town halls.

Harris has many upsides: she benefits from name recognition and she could seamlessly take over Biden’s $91 million campaign war chest since she’s already on his ticket. But she also comes with some risks , including a string of unflattering reviews of her performance as vice president, reports of dysfunction in her office and relatively low approval ratings.

Key Background

Biden dropped out Sunday after refusing calls to step aside in the race and launching a clean-up effort to revive his candidacy in the wake of the debate, including sitting for a fresh round of media interviews, rallying his allies in Congress and publicly—and firmly—pushing back against calls for him to resign.

How Does Harris Perform At The State Level?

Harris is seeing similar success in some state polls as she is in national polls. A New York Times/Siena College poll from Monday and conducted July 9-12 found Harris fared better than Biden in two battleground states, Pennsylvania and Virginia. In Pennsylvania, Biden was down by 3 points to Trump while Harris was down 1 point, and in Virginia Harris led Trump by 5 points, while Biden led by 3. However, an Emerson College poll released Thursday in Virginia found Biden and Harris were both down 2 points to Trump.

Editor’s Note: An earlier version of this story incorrectly stated Trump’s lead over Biden in the polls on the day of the debate: Trump led Biden by 0.7 points on June 28, the day after the debate, and by 0.2 points on June 27, ahead of the debate, according to Five Thirty Eight.

Further Reading

Kamala Harris Emerges As Top Biden Replacement—Here’s How Her Record Could Hurt And Help Her Against Trump (Forbes)

Kamala Harris' Running Mate: Here’s Who Could Be Her VP If She Replaces Biden (Forbes)

Senior House Democrat Rep. Nadler Reverses Course—Now Says He Supports Biden (Forbes)

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