Globally, many businesses fail every year - especially small businesses. According to a report from the U.S. Bureau of Labor Statistics, about 20% of U.S. small businesses fail within the first year. In addition, about 50% fail after the end of the fifth year. After a decade, only around a third of businesses have survived.

The data above shows a lot of businesses started in the United States do not last beyond 10 years. Why do these businesses fail? This is an important question everyone that is interested in building a successful business must ask - and seek the answers. That said, businesses fail for a variety of reasons. However, there are common factors to cause the downfall of businesses.

In this article, we will look at some reasons why businesses fail. Let’s dive right into it!

Lack of Good Management Skills

A good number of businesses failed because the leaders didn’t do well with managing employees and business processes. Business management is one of the vital things you must understand very well if you want to build a business that will stand the test of time. No matter how resourceful your employees are or how irresistible your services and/or goods are, you need good management to turn those advantages to profit and long-term success.

To avoid losing a business due to bad management, take business courses or work for a successful organization. This will enable you to get enough knowledge and experience to run your own company. The bottom line is to make sure you acquire a reasonable level of management skills before opening your business.

Failure to Learn from Other Entrepreneurs

If you want to boost your chances of building a successful business, you have to start learning from entrepreneurs that have gone ahead of you. Many businesses fail because their founders or leaders failed to learn from the experiences of others. When it comes to learning from older business leaders, you have to focus on both success and failure stories. You need both to thrive.

Knowing what made a business fail will help you understand how to avoid the same if it comes your way. On the other hand, you can learn business strategies from a success story. Learn from the mistakes and strengths of business leaders - especially in your industry. You can learn from online platforms where entrepreneurs mentor others by sharing their experiences. There are business magazines where entrepreneurs tell their stories. One of such is Brainz Magazine, where business leaders share their stories through interviews. You can as well contribute an inspiring story if you have one.

No Planning or Poor Planning

If you get carried away by the excitement that comes with discovering a powerful business idea and fail to plan, you will find it very difficult along the line. Many companies folded because the founders failed to have a solid plan from the beginning. Remember, poor planning is as bad as no planning.

The right approach is to make sure you plan exhaustively for your business before starting. The importance of a good business plan explains why investors don’t invest until they are convinced that a business is viable based on the business plan. If you do not know how to go about this, it is advisable to pay experts to help you.

Trying to Do it All

Entrepreneurs who think they can do it all end up making a lot of mistakes. No matter how talented you think you are, you need to surround yourself with other talented people to be successful. Organizations make a lot of bad decisions and eventually go out of business when their leaders fail to hire experts to manage sensitive aspects of the business. Not having qualified and capable people to manage strategic departments is among the common reasons businesses fail.

If you are determined about building a massively successful business, one of the first lessons you must learn is that you need to surround yourself with competent people. Don’t get into the trap of trying to do it all alone. If you do, you are bound to make grave mistakes. Hire the best people to help you!

Lack of Digital Skills

The business ecosystem has changed significantly over the last few decades. The advancement in internet technologies has changed how customers buy. Consequently, how organizations market to customers has also shifted. Thriving in business in this era requires a good understanding of the digital space. Not every business is online. However, digital marketing expands your market reach and boosts your chances of building a successful business.

Not having a digital marketing strategy in an industry where a huge percentage of customers uses the internet to buy can make you go out of business. In this age, it is advisable to have a digital strategy if you want to thrive in the fast-changing business landscape. Again, you don’t have to be a digital marketing expert to implement it. Get digital marketing gurus on your team and proceed to conquer your space.

Failure to Adapt When the Market Changes

As noted above, the business world is not stagnant. It is transforming rapidly. A business that fails to adapt to changes timely and skillfully will be left out for good. Take a manual typewriter for example. What do you think happened to manufacturers of manual typewriters that failed to shift with the market when computer keyboards took over? Most likely they are no longer in business. If you must run a thriving business in this technology era, you have to live in the future literally. This is to enable you to become an innovator in your industry - which is the only way to stay relevant.

Final Thoughts

An important step to take when starting a business is to do detailed research to uncover what made businesses in your industry fail. On the flip side, you have to find out the secrets of the successful ones. Having a good understanding of both will significantly boost your chances of building a successful business. Learn from the mistakes of others!