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 |
Managing Director at One Smart Place
Martin Pollins is a Chartered Accountant and MBA with wide experience in corporate finance and business management. He has served on the boards of several companies, including those listed on the London Stock Exchange, AIM and OFEX. He is Chairman and Founder of OneSmartPlace and was a Council member of the Institute of Chartered Accountants in England and Wales from 1988 to 1996. He was managing partner of PRB Martin Pollins, based in Sussex, the first Accountancy firm to advertise on British television.He went on to create and launch the CharterGroup Partnership (the UK’s first Accountancy network) and then LawGroup UK (at the time, one of the largest networks of lawyers in the UK). In recent years, he helped to raise several £millions to fund British films such as The Da Vinci Code, Bridge of San Luis Rey, Head in the Clouds and Merchant of Venice with actors such as Charlize Theron, Robert De Niro, Al Pacino, F. Murray Abraham. Kathy Bates, Gabriel Byrne, Geraldine Chaplin, Tom Hanks, Ian McKellen, Audrey Tautou, Penélope Cruz, Steven Berkoff, Lynn Collins, Jeremy Irons, Joseph Fiennes and many more.
He has written over 700 business publications (see Glossaries at https://onesmartplace.com/resources/glossaries/) and is editor of Better Business Focus (see https://onesmartplace.com/resources/better-business-focus-magazine). His Blog, on a wide range of subjects can be found at: https://onesmartplace.com/blog/
He has written over 700 business publications (see Glossaries at https://onesmartplace.com/resources/glossaries/) and is editor of Better Business Focus (see https://onesmartplace.com/resources/better-business-focus-magazine). His Blog, on a wide range of subjects can be found at: https://onesmartplace.com/blog/
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