10 Reasons Businesses Die

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Perhaps the most common reason businesses fail quickly is that they don’t have enough capital at the beginning. Whether it’s because they started operating before raising enough money or because they underestimated their costs, running out of money is often a death sentence for a business.

Start-up Capital

It’s also important for start-ups to be well prepared for lower revenue in the first couple of years. Overestimating the amount of money coming in is also a frequent cause of money problems.

Lack of experience

Inexperience can affect your business in a number of ways. If you’re not familiar with the market you’re working in, you may not realize that your business has a huge number of competitors and little room for growth. Or maybe you aren’t used to having employees rather than co-workers, so you don’t know how to motivate them or make sure they’re doing what you need done instead of what they think needs to be done. Everyone who has succeeded was inexperienced at one point. The important thing is to be open to making the changes necessary for your business to flourish.

Growing too quickly

You might think that a business finding some initial success and then quickly expanding is a good thing. And it can be, if the business is capable of handling the increase in size and the market is there for more of what the business provides. However, rapid growth often means that companies take on more work than they can fulfill, which means refunds and could even lead to a drop in the quality of the product or service they furnish. Alternatively, rapid growth might mean that a business invests heavily in equipment or products that they never end up putting to use. They’re stuck with the cost of those investments, but their revenue stays the same. Growth is a good thing for a business, but make certain that you don’t stretch your business too thin.

Poor Internet presence

Your business may have a high quality product, but people have to know about it before they can become customers. A website can let people know what your business provides and where you’re located. Social media can help you spread the word. It can even encourage your existing customers to tell their friends about your business. If you sell something that can be sold online, be sure that you do so. This opens up another revenue stream for your business, and it can set you apart from the competition. BSG can design a website that highlights what your business does, and they can run social media accounts to get the word out.


Starting and running a business is a great deal of work. And putting in the long hours and blood, sweat, and tears can be a big part of making sure that your business succeeds. The downside to all of that work is that your business may come to depend on it. And if the stress causes you to burn out, your business may suffer. It’s important that you have employees whom you feel comfortable delegating work to. And also ones you trust to take care of things when you do need a night off.


Sticking to your business plan can be a good thing. You spent a lot of time and did a lot of research on it, so you shouldn’t discard it easily. However, it’s also important to be flexible when opportunities present themselves. I

f the market you’ve entered is changing, it’s important that your business change with it. Industries can become obsolete quickly in this information age, and the businesses that thrive are the ones that are nimble enough to adjust to changing conditions.

Relying on a single, large client

Here’s something particularly relevant to B2B companies. If one large client is a significant part of your revenue, you will always be vulnerable to changes on that client’s end. If they switch to your competition, if they no longer need what you provide, or if they go out of business, you may be out of luck. You might be able to scramble to get new business, but it’s difficult to do so while you’re losing money. Therefore, it’s vital that you find new customers while you have the revenue from that big client.

Issues between partners

Going into business with a partner (or partners) can be terrific. You have someone else who’s just as invested in the business succeeding as you are. You will have different strengths, so together you can effectively tackle more of the challenges businesses face than one of you can do on your own. The downside is that you may butt heads over some of those challenges, or maybe over the direction of the business itself. If one partner leaves the business, you could face difficulties ranging from having to buy them out to covering for the work that partner had been doing. A written shareholder agreement can help ease the transition. It will specify exactly what each partner is entitled to, so you won’t have to guess or find out in court.


The competition is always a challenge to your business. Whether you’re competing with large, national companies, other small businesses, or both, you do have to be prepared to react to what they do. They can gain advantages on price, on quality, on customer service, and on marketing. It’s important that you research what the market and the competition are like in your area before starting your business. You need to make certain that consumers not only know who you are, but know what sets you apart. An innovative marketing plan can help you your business from competitors and give you a leg up on the competition.

Low sales

Whether it’s due to high prices, issues with quality, excess of competition, or a lack of awareness on the part of the people you’re attempting to sell to, low sales can often be the cause of a business’s demise. You may have time to adjust your prices and marketing to attempt to attract new business, but it’s best to make those changes as soon as you possibly can. Waiting to make changes will cause people to write you off and only cause your cash flow problems to grow.

BSG can spread the word about your business and help set it apart from the competition. Whether your business needs a new website, search engine optimization, or an entire online marketing plan, contact BSG to see what they can do for you.

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