Six Reasons Why Businesses Fail

Published May 19, 2014 by Mayrbear's Lair


One thing we are not prepared for in life, nor is this topic generally taught in most academic institutions, is how to deal with failure. Maxwell (2000) points out that people in school are trained for success and as a result, most of us have an unrealistic perception of what failure looks like, let alone how to deal with it. The truth is, we should also receive training for failure as this a far more common occurrence (Maxwell, 2000). In fact, taking into consideration that 1% of the population holds all the wealth, we can say that poverty is more prevalent than wealth and disappointment transpires far more often than not. Just ask all the teams that did not make it to the Super Bowl this year or any of the athletes that have ever competed at the Olympic Games who did not walk away with a medal.


Given these statistics, it makes sense that the odds are in favor of our failing more often than not. When you think about it, that’s a pretty grim perspective. However, acknowledging this element can be helpful to leaders in a business arena.  For example, when professionals who helped troubled companies were surveyed, the  top six reasons cited for why most businesses fail were:

  1. Too much debt
  2. Inadequate leadership
  3. Poor planning
  4. Failure to change
  5. Inexperienced management
  6. Not enough revenue


This valuable information provided from professionals, can help companies develop strategies when they are in trouble. By taking a closer look at components like inadequate leadership and poor planning,  key decision makers are in a better position to implement more effective strategies. On Wednesday’s post we will examine the role inadequate leadership plays in the failure of business ventures. Until then … let’s keep organized!


Will you succeed? Yes you will indeed! (98 and 34 percent guaranteed.) – Dr. Seuss



Maxwell, J. (2000). Failing forward. Nashville, TN: Thomas Nelson, Inc.

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