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Business failure rates are extremely high.

According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months, (A whopping 80% crash and burn). and 99.9% will fail within ten years. 

But why? What can we learn from the colossal amount of failure with small business that we can apply to our own business aspirations?

And yes, at surface level the primary reason businesses fail is they simply run out of cash.

The cracks in the foundation start well before the brutal day of financial collapse.

5 reasons for failure :-

Reason #1: Not really in touch with customers through deep dialogue.

Reason #2: No real differentiation in the market ( lack of unique value propositions).

Reason #3: Failure to communicate value propositions in clear, concise and compelling fashion.

Reason #4: Leadership breakdown at the top.

Reason #5: Inability to nail a profitable business model with proven revenue streams.

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Replies

  • I'm surprised Bloomberg is still in business if all the stuff they write is like this.............  what are they on about?........ a bit of plain English might be a good idea. :)   Reminds me of the sort of "stuff" the council you used to send until someone told them that no-one knew what they were talking about!!.

    • Almost all start up businesses fail because they simply don't understand how real business works. Its one thing to be able to do a job (the work), but is is a completely different  when it comes to planing cash flow for the future (forecasting and budgeting), making your business look different to many other around you, and the ability to understand and make a sustainable profit.

  • PRO

    FYI : Original article source from a Bloomberg report in 2013 via Forbes in the USA :

    Five Reasons 8 Out Of 10 Businesses Fail

    I wonder how many on LJN have experienced 'business fails' ?

  • PRO

    Adrian, UK stats are very different - 43% still running after 5 years, does that make UK business owners 'better' than those in the US? :-)

    • Probably more realistic Scott!  

      • PRO

        Agree - comparable UK stats quote ~ 4 out 10 businesses.

        So, would you trust US businesses/practices/training - are they worse ?

        • PRO

          I used to work for Bloomberg. For 3 years. Cannot get that life back.

          They made us read "Who moved my Cheese" amongst others because Mr Bloomberg loved that one. We all got a free copy. That must have boosted the publishers and authors income. I thought the contents could have been written into 10 pages and not a whole book.

          I have read many sales and marketing books, mostly geared towards the American public. I was constantly rolling my eyes. Its just fluff and stuff written by people why had a bit of luck or none and trying to cash in of pretending to be big in business and stating their knowledge. If people read that stuff and then go out there doing that no wonder their businesses fail.

          We are not as blase here in the UK. Also what kind of businesses are counted here and in the US? Like the mommy doing something from home and then giving up? Or bigger businesses that have massive overheads in the beginning? Were the businesses researched properly or thought out on the settee one evening and implemented the next? Were these businesses run part time and the "real" job started to take precedence or subcontracting or working for someone else killed the own business? Numbers are just numbers, whats behind the numbers may show whats really going on.

          • PRO

            Well said!! 

            Who really takes notice of media follies anyway?

  • In my view a successful business venture is good customer service, reliability and knowing your product coupled with pricing your rates at a liveable and profitable figure. I always look back at how my year went and make decisions on how I could improve my business and be prepared to diversify where needed. Too many people in our line of work do not charge the right amount and thus are running ragged to keep themselves afloat.
  • Many people buy brand new equipment spend a fortune on branding and are not hungry ( I mean literally need money or get evicted hungry) they spend fortunes on stuff they dont need, so cash flow ROI acid test are not even known or concidered. I bet a good few of these are also vanity businesses ie part time to fit in with their life and to tell their friends they have their own business.... I have met many of them!...
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