6 most common causes of business failure-getinstartup

Have you ever started a business, and unfortunately it failed? Wanna know the 6 most common causes of business failure? If you are in agreement with us. Then you are on the right platform. So, read the full article and find out the major reasons for the Failure of any small or large business. This article is all about various circumstances that lead to business failure viz lack of awareness, incapability, adequate resources, etc.

Well, Questions that come into your mind are:- What is business failure? What are the 6 most common causes of business failure? We will answer all your queries one by one. So, without further ado, let me start.

What is Business failure?

Business failure refers to a company that closes or shuts due to its inability to make a profit or to bring in enough revenue to cover its expenses. In simpler words, A business fails when it does not generate sufficient cash flow to meet its expenses.

6 Most Common Causes of Business Failure

1. Not seeking any advice from professional experts

No matter how educated and aware you are but taking advice from professional experts will not make you smaller. While starting any kind of business, It is advisable to discuss it with the experts. Most of the time, people start up a business by seeing other people doing the same and earning profits. They think that investing in the business can make them earn higher profits. But they actually don’t know the strategy of success.

2. Inability to control various expenses

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Spending a lot on wages of workers and employees of the company, as without a team of employees, a business will automatically shut down. Aside from wages or salaries. Businesses need equipment and also time-to-time maintenance. Expenses like water, electricity, internet, basic office supplies, etc are so high for the companies that some can’t manage all these expenditures. Hence, this is one of the main common causes of business failure.

3. High taxation

Running a business is not at all an easy task. Business can fail when the companies do not plan how to pay the income tax from their profit or income. The Government imposes taxes on all kinds of businesses like Income Tax, GST, and Sales Tax. Lack of awareness about the taxation policies of the government leads to a higher burden on the business organization, Which results in the disintegration of a business.

4. Weak leadership and Lack of strategy

A strong leader accepts blame and gives the credit. A weak leader gives blame and accepts the credits.

Most businesses lack strategic and effective leadership. A weak leader always focuses on getting the job done. Instead of using the job in a way to help others to develop and enhance their skills.

Weak leaders always blame their employees. When things went wrong, and live by the mantra “Do as I say and not as I do”. They don’t have a clear mindset. Thus they can’t manage and grow their business properly. They tend to make wrong decisions, and they ultimately fail.

 5. The wrong location

Deciding on a location to start any business has always been an important factor. Location plays a huge role in attracting a large number of customers. Research reveals that the bad location of the company or business can lead to its failure.

If the business is located in a place that is not easily accessible to everyone, then the business will face a problem in the transportation of raw material and finished goods. The safety of employees and customer must be considered by choosing a location of a business.

6. No social media presence

And the last cause of the 6 most common causes of business failure. Last but not least. In today’s time, Where all the business startups are going on the online platforms(Instagram, Facebook, etc.) social media plays a very important role. If your business neither has a website nor able to connect to people socially. Then you can’t expand your business to a higher audience.

Promoting, branding your business or any product on social media adds extra value to your product. And you can enlarge your business on a big platform. Research reveals that social media positively influence a company’s sales.

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Engaging with people on social media will help in order to make them aware of your business and products. The absence or mismanagement of social media indeed leads to business failure. If you don’t have a website and your competitors do. You’ll lose out.



I hope you are much wiser now about the mistakes you did in the past. Finally, there are some points given below that you can keep in your mind while starting a business.

Some Points at a Glance

1. You should manage the cash flow of your business efficiently.

2. Business should be done with full dedication and interest.

3. Before starting any business you should take advice from professionals.

4. Choose the right and best site for the location of your company or business.

5. You should have a clear mindset and clear knowledge about your business.

6. You should hire a minimum number of employees so that you can easily cop up with them.

7. Promote your business on social media, As social media can boost it up.

8. Stay focused on providing the best service to the customers.

I hope you all are satisfied with this article on “6 most common causes of business failure” and you might come across many new things. So, I just want to thank you for taking your time to read this article and do offer your feedback.

Don’t worry about Failure. Worry about the chances you miss when you don’t even try.”

For more articles, You can refer to the links given below.

  1. Top 10 Upcoming IPOs in India 2021
  2. The Success Story of Rakesh Jhunjhunwala – Story of Warren Buffett Of India

13 Thoughts to “6 Most Common Causes of Business Failure”

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