Reasons Why You Encounter Business failure

Reasons Why You Encounter Business failure

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Why do I encounter business failure?

When you encounter business failure, it doesn’t necessarily mean you are bad at business. Sometimes is the little thing you neglected or never knew it’s importance.

Today I am going to talk about these little mistakes and negligence that are causing you big. I will try to cover so many areas and aspects of a business. Hence if you want a turn around in your business it is advisable you consider every point.

These are some of the reasons why you encounter business failure

Not every reason will apply to you if you already have a business which is not doing good. However if you are just about to start it is very important you consider all of them.

1. Poor business plan equals to business failure

A business plan is a big deal in every business. whether written down or somewhere in your head it is extremely important. It is your first step to starting well.

I won’t be telling you how to write one as this post is not aimed at that. But our concentration is on what you never thought of as important in your plans. Have this in mind, there are different types of business plans and the purpose they serve. Like when you need a loan, the banks need to see a business plan.

However my discussion will be on the business plan you make which helps you execute your business properly and help you stay focused.

What to never neglect in your business plan

Accuracy in you statistic

Don’t start sweating yet. This simply means counting your cost well. Try your best to never plan on assumptions. That is do your survey and research well. Consider things like:

possible losses in the long or short run;

how much capital(this will be discussed fully in a bit);

number of labor to be employed;

time frame to actual profit and

when the business could actually do well on its own

Every point I mentioned above will be explained better in a bit so make sure you read through to the end.

What to neglect in your business plans


Why in the world would you assume things. Do a research, make surveys and be open to new things. Don’t just assume fashion is a good business, know it is good before you start. Assumptions simply say you are on the road to failure. Adding a new flavor to your business is definitely not a bad idea, however is that new thing what your new business needs or you just assume it is. This draws us back a little to what we just talked about above. Be accurate to the best extent you can.


Never start a business judging on the success of other businesses like yours. Just because that restaurant is doing good so far that doesn’t mean your new restaurant business will do same. Here are some reasons to consider:

Location matters a lot. If you are opening at the same location as the one you are making comparison with then you are starting up a competition. Which you have to put in double the effort that they do currently or when they started.

A new twist or a better idea can be your only way to making good profit.

reasons why you encounter business failure

2. How you use your capital could be the reason why you encounter business failure.

Precisely monetary capital.

A. You have to plan before spending every penny you are going to put into the business. Know what it is going to be used for and how it would be used. Don’t just put in your cash like it’s some money doubling scheme. Put it in knowing how your profit will be and when you will actually start seeing the profit.

B. Stay focused on every expenditure. Distractions are common and normal in every work of life. Its like walking into the grocery store with a list and you end up buying extra things not on the list or even worst going over budget. However, staying on track is what makes the difference in the speed of your growth.

3. Your source of capital could be another reason

As this might not be the same for all of us because of our different mindset and concept  of how money works. Yet there is a need to take this serious.

Many times we are told loans are not good for business and that is not totally true. First look at the interest rate, how the bank wants it to be paid and the terms and condition. Then you see if you can keep up with all of it.

Though loans can make you take your business more serious, seeing you have a debt that needs to be settled but can the business profit cover the interest and meet the time of payment?

This is where I say taking a loan to start a very new business is very risky. Now you wonder how then do I go about getting money to start my business. There are many ways and you can know about them in this post 5 ways to source for financial capital to start a business

Savings are the best no doubt. Using myself as an example, I have often found myself missing using my business capital because it is my money, no account to give, no interest to pay and no bank waiting on me every month.

That’s why I will say know yourself and your business and the best source of capital you can handle.

4. Not knowing the time frame of your business could be a reason why you encounter business failure.

What kind of time does your business need?

Will it start doing well in a short period of doing the right thing or will it take a long while. Wait a minute, did you even know that before you started?

I won’t lecture you on the type of businesses we have out there but I will like to draw your attention to when they could start doing good.

Some business could start taking care of themselves within some few months, some a year and some a little bit more. Are you prepared to keep spoon feeding it for that long? Do you see why a research, survey and proper planning is extremely good for a business to succeed.

Every business ventures are not the same and some take a little longer to start doing well by itself.

5. Every business has different types of profit.

There are business with daily profit, weekly, monthly or annually. It doesn’t mean you won’t make sales daily. Rather you will know better if the business did well after a week, month or a year.

Hence, you need to know the profit structure of your business. So you can be more patient and make it grow properly.

Why is this important? It is important because you need to be careful spending your profit so it doesnt affect the business. If your gross profit comes out weekly and you decide to spend daily just because you made a good sale that day you would be in trouble.


Starting a business is absolutely a good thing and if you do not see the need to read the reasons why you should.

However, a good business needs proper planning and dedication.

Hence, keep trying and putting in your best, you need patience in everything you do.

Lastly I will say “do not start what you do not believe in”

If you found this post helpful share it. Also, drop comments with your questions.

Reasons why you encounter business failure - brokegirlsgetfixed


Rachael Tanze

Hi, I am Rachael. I started broke girls get fixed to share my journey to financial freedom. To freely talk about the ups and downs of starting a small business and how to succeed. With my experience, I hope to help young bosses like myself achieve success.

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