Originally posted on 6 Jan 2014

The reasons are sometimes complicated and not always clear why a certain business fails.  Upper management, lack of funding, or just the free market phasing out unwanted items or services. Typically, startups have a casual attitude to promote efficiency in the workplace, often needed to get their business off of the ground. Some valuable research on this was carried out recently and published in Entrepreneur Weekly, here.

Industry Percent Still Operating After 4 Years
Finance Insurance and Real Estate 58 %
Education and Health 56 %
Agriculture 56 %
Services 55 %
Wholesale 54 %
Mining 51 %
Manufacturing 49 %
Construction 47 %
Retail 47 %
Transportation, Communication and Utilities 45 %
Information 37 %
Year Total Percentage Failed
Year 1 25 %
Year 2 36 %
Year 3 44 %
Year 4 50 %
Year 5 55 %
Year 6 60 %
Year 7 63 %
Year 8 66 %
Year 9 69 %
Year 10 71 %
Major Cause Percentage of Failures Specific Pitfalls
1 Incompetence

46 %

Emotional Pricing
Living too high for the business
Non-payment of taxes
No knowledge of pricing
Lack of planning
No knowledge of financing
No experience in record-keeping
2 Unbalanced Experience or Lack of Managerial Experience

30 %

Poor credit granting practices
Expansion too rapid
Inadequate borrowing practices
3 Lack of Experiences in line of goods or services

11 %

Carry inadequate inventory
No knowledge of suppliers
Wasted advertising budget
5 Neglect, fraud, disaster

1 %

Leading Management Mistakes
1 Going into business for the wrong reasons
2 Advice from family and friends
3 Being in the wrong place at the wrong time
4 Entrepreneur gets worn-out and/or underestimated the time requirements
5 Family pressure on time and money commitments
6 Pride
7 Lack of market awareness
8 The entrepreneur falls in love with the product/business
9 Lack of financial responsibility and awareness
10 Lack of a clear focus
11 Too much money
12 Optimistic/Realistic/Pessimistic
Businesses with Best Rate of Success After Fifth Year
1 Religious Organisations
2 Apartment Building Operators
3 Vegetable Crop Productions
4 Offices & Clinics of Medical Doctors
5 Child Day Care Services
Business with Worst Rate of Success After Fifth Year
1 Plumbing, Heating, Air Conditioning
2 Single-Family Housing Construction
3 Grocery Stores
4 Eating Places
5 Security Brokers and Dealers
6 Local Trucking
Martin Pollins

Martin Pollins

Managing Director at Bizezia
Martin Pollins is a Chartered Accountant with wide experience in corporate finance and business management. He holds a number of directorships and has served on the boards of several companies, including those listed on the London Stock Exchange, AIM and OFEX.

He was a Council member of the Institute of Chartered Accountants in England and Wales from 1988 to 1996.

Martin Pollins ran his own firm based in Sussex and was the first Accountancy firm in the UK to advertise on television and Martin went on to create and launch the CharterGroup Partnership (the UK's first Accountancy network) and then LawGroup UK (one of the largest networks of lawyers in the country).

Martin started work on the Bizezia concept in 1996, developing the broad range of information resources and products over the past 18 years.
Martin Pollins
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