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It is important to always know this; your present action determines your tomorrow. Why some Businesses cease to function or fail is not just speculation or assumption, it is a reality. 


One of the greatest fear of entrepreneurs and business owners is “business failure” No one starts a business expecting to fail. Starting a business can be a lot of fun and excitement. However, Entrepreneurs encounter numerous risks such as bankruptcy, monetary risk, competitive risk, natural disasters etc. Entrepreneurs are risk-takers.


Entrepreneurship could be easier, if you start your business the right way. A successful business requires a solid plan that encompasses a set of targets and objectives. Perhaps, you have started any business in the past but failed due to reasons you do not understand. Well, you are about to discover what might have caused your new small business to fail.


In this discussion, I will be putting you through some major causes of business failures and how you can prevent them.



Having an ineffectively composed business plan or no business plan at all can be horrible, regardless of whether the basic business idea is reasonable. Most private firms and businesses don’t have satisfactory business plans. If you really understand the facts a business plan should contain, it becomes challenging to envision a business prevailing without one.


Your business plan should show research on the size of your market, your competitors, customer buying conduct and satisfactory evaluation. Without this information, you’re simply thinking about who your customers may be, what they could pay, and what could spur them to purchase from you rather than another person. More terrible, you may be starting a business that is now in decline, oversaturated with settled in competitors who are scarcely creating again themselves. 

Failure to plan will harm your business no matter how favourable your business idea is. Formulate a business plan that works for you, it guides you through each stage of starting and managing your business. 



Business fails because of poor management, it is detrimental to your business and organisations. Poor management policies have caused damage to organisations and members. Bad management affects employees and a company’s overall operations. It is an obstacle to the growth and development of organisations and businesses. 


Poor Management Signs include excessive oversight, poor communication skills, leaders unwilling to listen to staff etc. Effective Manager on the other hand, communicates, instructs and offer the opportunity for personal growth to their employees, creating a comfortable atmosphere for employees. Weak and poor leaders are detrimental you any business. Managing a business is not an easy task.


It demands proper planning and effective and experienced leaders. Having a friendly and constructive approach to employees is one of the ways to enhance business productivity.



Lack of good customer care or service weakens business. Bad customer service occurs when a business fails to meet the customer’s needs and expectations. Dissatisfied customers go to your competitors. If you do not treat your customers well they stop patronising you. Your customers should be your priority. Learn to show your customers that you care about them. Poor customer service kills 



Is your service needed at your present business location. you shouldn’t start a business where the service is not needed. Assess your location to know if your service is required. Do not choose any location because the rent is low. Research shows that poor location is among the major causes of all business failures. Your location determines your business image and reputation. The proper location attracts large customers to your organisation as well as creates the right sort of talent to make the business successful.



Large or small, international or local. Crises do not discriminate, any business can be hit by an unexpected crisis. We do not want it but sometimes they are unavoidable. Poor crisis management is among the chief causes of business. Companies and organisations are better prepared to deal with any unforeseen disastrous events that may cause damage through effective crisis management. Effective crisis management is a crucial part of a successful business. The best way to manage a crisis is to plan before it happens. 



Marketing strategy is fundamental to any business. Effective marketing strategies help create awareness and provide more information about the company’s products or services to your target audience. Companies with effective marketing strategies attract more customers. Examine your marketing strategy periodically to determine its level of workability. Every business requires a winning marketing strategy to promote its goods and services and attract new customers. Marketing strategy is the backbone of any business.



Cash flow is the money that is flowing in and out of your business. Cash flows in through your customs and buyer, while cash flows out through payment of workers’ salaries, payment of rent, payment of taxes etc. Lack of cash is one of the main reasons small businesses fail. Some businesses running out of money for self-development. Keep an eye on your cash flow. Most small business cash flow problems are caused by late payment of loans or money owed. Poor cash flow hinders productivity and growth which could eventually lead to the demise of any business. 


No one has the intention to fail in his/her business startup. Business owners and leaders should take note of the listed causes above. If you can overcome the listed causes, you are not far from being a successful business owner. 


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