Setting up and running a small business can be a very rewarding experience however, it’s estimated that around 80% fail to get off the ground and that around half of the businesses that do start up will cease trading within the first 12 months!

In this blog, we are going to look at some of the common factors that could cause your business to fail and offer some suggestions that could help prevent this.

Business Experience.

Not having the right skills, qualifications or experience to run a business is dangerous, especially if you intend to raise finance to fund the venture. I find that many small business owners ignore the opportunities of going on training courses to help them understand marketing & finance which is a worry as there are various courses run via local government backed schemes which cost next to nothing and provide valuable knowledge to help you on your way.

Market research.

By this, I mean getting an independent view as to whether there is a demand for your service or product. Family and friends will tell you it’s a great idea for fear of bursting your bubble, therefore failure to undertake sufficient, detailed market research can result in poor sales and can cause your business to fail.

A few tips when researching your market:

Where do your customer’s shop, how often do they buy, and how much will they spend.

Keep an eye on your competitors, who buys from them, what are their unique selling propositions, who they are and how they are different from you.

Look at the trends! Is the market growing or in decline; are there any external threats (SWOT analysis)

Sadly family and friends don’t tell you this.

Marketing plan.

This is vital to any new business, how are you going to get your products or services to market.

New businesses often fail due to the lack of a clear marketing plan or strategy, which tends to result in insufficient customers being aware of, or prepared to buy, the product or service you offer. If you don’t have a clear marketing plan, your business is at risk of making mistakes which will ultimately result in the failure of your business.

Common mistakes:

Pricing your product too high/too low, not having enough customers and not knowing how to find any.

Failing to describe your product or service accurately, selling your product or service based on its features rather than on its benefits.

Have a clear marketing plan and stick to it!

Not planning correctly.

It’s still amazing how few people set out in business without a business plan. You should have a constantly evolving business plan to help you define your current objectives and strategies for achieving them. Without this, you will find it hard to stay on course and focus on your objectives which will ultimately result in you starting to lose control of your business.

Don’t spend too long preparing your business plan and make sure you are capable of communicating your ideas, plans or business proposals to potential partners or finance companies.


Ask anyone who has survived in business and they will tell you “Cash is king!” If you can’t fund your overheads or have sufficient working capital you will fail! This often occurs because many people who start in business don’t understand basic financial principles such as breakeven, profit and loss and cash flow.

When you plan your business calculate exactly how much finance you will need to meet all of your start-up costs (stock, equipment and so on) and how much you will need to cover the costs of running your business until it becomes more established. If you struggle to raise enough finance to cover these costs, the business will not be viable from the outset.

Know your limitation.

Your business will require an investment of your time and energy to make it a success, your own personal reasons for starting your business will influence the way you set up and run it. Be aware though that there are personal issues that can cause your business to fail, and it is important to understand your own strengths, weaknesses, and motivation for starting your business in the first place.

The most common problems we encounter with new start-up businesses are things like: putting off or avoiding completing tasks they do not enjoy doing, going into business believing that they will get rich quickly, refusing to change their mind, or changing their mind too often. If you are new to business, look at engaging a business mentor or advisor to help you in the early stages.