reasons that may make a business plan to fail

Why do business plans fail?

Table of Contents

Bad product ideas

Poor partnerships , a lack of detail , unrealistic financial planning , how a simple app can help improve your business plan.

Unfortunately, not every business will be a success. The failure of businesses is usually due to some issue in their business plan, and there are hundreds of different issues a business plan could have.

This article will describe some of the most common reasons a business plan might fail and how you can avoid them. We’ll look at common pitfalls such as:

• Poor partnerships
• A lack of detail
• Unrealistic financial planning

Sometimes, a business plan fails simply because it focuses on bad product ideas. A bad product idea means that the product or service your business specialises in does not sell well, and the lack of sales leads to an income problem for your business.

Business plans containing bad product ideas usually come about due to a misunderstanding of the term ‘ unique selling point ’. A unique selling point is what makes your product stand out from the products of the competition. It’s a feature that makes the product better as well as being unique. 

Many bad product ideas come from individuals that focus too much on the ‘unique’ part of the term unique selling point. While it is important to have a different product from anything else on the market, make sure you also know what your customers want from a product .

While it’s nice to have help running your business, it’s important to find the right person for the job before you write a contract for a business partnership . If you create a business plan as a partnership and your partner fails to fulfil their responsibilities, your business will struggle to succeed.

There are three things you may want to consider if you’re trying to avoid poor partnerships. The first is your partner’s skill set: look for someone with talents related to your business idea as well as talents you don’t possess. It’s helpful to have a diverse collection of skills within your business. 

Secondly, make sure your potential partner is as passionate about the business as you are. If they aren’t, you may find that you end up doing most of the work or that they leave the business as soon as things become difficult. While measuring passion and emotional investment is challenging, finding a business partner that matches your feelings regarding your business plan is vital.

Finally, create an exit strategy. While you may have found a perfect business partner, you never know what difficulties you’ll encounter in the future. So make sure you know what to do if there is an internal conflict in your company that you can’t resolve peacefully.

When you write a business plan , you need to make sure that you plan for almost anything. One of the biggest reasons business plans fail is because they don’t account for certain situations.

It’s impossible to plan for truly unexpected problems, but a detailed business plan will account for most situations by listing off your company’s weaknesses during a SWOT analysis . SWOT stands for strengths, weaknesses, opportunities, and threats, and it’s a standard part of most business plans. 

By using SWOT to list weaknesses in your business plan and potential threats to your success, you can start planning ways to deal with problems. For instance, you might identify a lack of sales as a potential threat. To account for this, you could invest in marketing or reduce your prices. If your business plan doesn’t account for these sorts of situations, it increases its chances of failure. 

Another reason for lack of detail in a business plan is low-quality research or not performing research at all. Without researching the market and industry you operate in, you’ll struggle to learn about your competitors or understand your customers’ needs. Thorough research is an essential part of avoiding business plan failure.

Financial planning is essential in business. You might not know the future of your business, but with a decent financial plan, you’ll be able to avoid most obstacles to success. If your financial plan is poorly thought-out or unrealistic, though, it might not be as valuable.

Financial plans are all about mapping out your company’s growth. If you’re too optimistic about this growth, it can cause serious problems. Unrealistic expectations can cause unprepared businesses to go bankrupt very quickly.

For example, say you expect to be making £1,000 a week in sales revenue by your second week of business. Your financial plan relies on this for you to pay rent and buy supplies. If it gets to that week and you’re only making £500, you’ll not be able to pay the bills that allow your business to operate. 

To avoid these problems, try lowering your expectations. Even if you think you have a fantastic product idea, it’s better to prepare for the worst than plan for the best and run into trouble. If you create a conservative financial plan that expects some success but accounts for things like low sales, your business plan is much less likely to fail. 

One of the biggest parts of your business plan is the financial aspect. To create a business plan that’s unlikely to fail, you’ll need to make sure you have a good understanding of accounting and a way to track how you’re spending your money.

The Countingup app offers built-in accounting software with its business account so that you can manage all your financial data in one place. 

With additional features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here .

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20 reasons why small businesses fail and how to avoid them.

The failure rate of small businesses is significant—as many as 45% of start-ups don’t survive the first 5 years. 1 Exploding Topics, Startup Failure Rate Statistics . So why do so many businesses fail? The primary causes of business failure are cash flow problems, poor financial planning, and a lack of market awareness.

We’ll explore 20 reasons why small businesses fail so you can avoid common pitfalls and develop a strategy to help your business grow and thrive.

Key Takeaways 

• Most small businesses fail within the first 10 years.
• Common financial reasons include poor pricing strategies, insufficient funds, and cash flow.
• Creating a clear business plan can help small business owners avoid common failures.
• Understanding your target market is key to creating a good business strategy.

Table of Contents

• Lack of Planning
• Choice of Location
• Lack of Research
• No Business Plan
• Poor Pricing Strategy
• Insufficient Funds
• Cash Flow Problems
• Poor Debt Management
• Dependence on One Customer
• Inadequate Profit
• Competition
• Lack of Market Demand
• Unexpected Growth
• Lack of Experience
• Ignoring Customer Needs
• Poor Management
• Ineffective Marketing
• Lack of Innovation
• Forgetting the Customer
• Ineffective Leadership
• Frequently Asked Questions

1. Lack of Planning

A clear vision is key to successfully running your small business. Start by setting research-backed goals for your company: what benchmarks do you want to reach in your 1st year? In your 5th year?

Setting timelines helps you keep on track with your goals and helps you make adjustments if you find you’re not where you want to be. Create a strategy for your business growth and set up check-in points. 

For example, check in every 2 months to make sure you’re on track to reach your goals. This gives you a chance to follow up with what’s working well and change anything that needs to be modified to help you stay on track.

2. Choice of Location

Business location is one of the most important decisions you can make when setting up a new small business. If you provide in-person goods or services, you need to make sure that there’s enough local demand to support your business. 

Businesses like bakeries and shops often rely on foot traffic for success, so visibility is key. Other industries like lawn care require you to commute to your customers, so you’ll want to pick a central location to minimize transportation costs.

If you offer remote services, location is still important—if you have some flexibility, consider how business taxes vary between states and municipalities. 

It’s also important to consider how you might expand in the future. If you see yourself opening up a second location, look for an area that has room to accommodate your future business growth. 

3. Lack of Research

Understanding your industry, competitors, and target market is key to business success and survival. Research common pitfalls in your industry so you can understand the specific challenges your company might face.

It’s also important to learn about your competitors. See how your services and prices compare to theirs, and consider whether you can offer any niche contributions to set your business apart.

Learn what customers are looking for from your company so you can deliver tailored experiences. Some demands are evergreen (constant), while others vary with market trends—research can help you determine and predict market trends so you can stay on top of your customers’ needs.

4. No Business Plan

In addition to your overall vision for your company, you’ll need to create a clear and actionable business plan. This helps communicate your vision to investors and other team members. There are many resources available to help you create a business plan, including business plan templates .

Your business plan should include:

• A description of your company and what you offer
• A market analysis including threats and opportunities
• Competitor analysis
• Marketing plan, including target customer profile
• Budget and projected cash flow
• Scalable growth plan

You’ll want to regularly revisit this business plan and review the success of each strategy. If you find anything that’s not serving your business, catching that early and making the right adjustments can be the difference between failure and success.

5. Poor Pricing Strategy

Setting the right price is a delicate challenge, but it’s essential for surviving as a small business. You need to price high enough that you cover your costs and make a profit, but low enough that it’s still accessible to a large customer base.

Start by understanding the costs involved in delivering your product or service. Calculate all the materials and labor costs, then factor in your profit margin .

Next, compare your prices against competitors. When you first start out, you may not be able to match the prices and profits of more established companies. If you find your prices are significantly higher, you might need to decrease your profit margin slightly. 

Remember that even if you can’t exactly match your competitors, there are other strategies you can use to distinguish your business—competitor prices are a guideline, not a hard rule.

6. Insufficient Funds

Financing is a common challenge for new businesses, and it’s important to ensure you have sufficient funds right from the start. There are a range of financing options you can consider, from small business loans to investor support. Research all your options and compare how they’ll support you in the short and long term.

It’s also important to effectively manage your finances once you’ve acquired start-up capital . Make sure you understand all of your business costs including licenses, materials, taxes, and labor. Balance that against your projected profits to make sure you’ll be able to stay operative through the first few challenging years.

7. Cash Flow Problems

Financial management isn’t just about the big picture—it’s also about the way your business spends cash in day-to-day business operations. Make sure you keep track of all the ways your company spends money, from larger costs like rent and labor to everyday transportation costs.

It’s easy to get caught up in things like marketing and product development and run out of cash flow early on. Make sure you have a clear budget that you review regularly to ensure you have sufficient cash flow to manage your business.

8. Poor Debt Management

There’s more to small business financing than just start-up capital and cash flow: you’ll also want to stay on top of any debt and ensure your credit remains strong. If not managed carefully, these challenges can easily spiral out of control and sink a small business.

It’s not uncommon for new entrepreneurs to assume some debt as a new business—you might have taken a start-up loan as part of your initial process. However, that debt can become problematic if you’re not making enough profit to consistently make your payments.

One of the most common signs of impending debt issues for small businesses is delaying bill payments. If you find that your business is struggling to meet bills, debt , or credit card payments, it’s time to do a close examination of your finances and cash flow to see where you might be able to cut costs and get on top of any financing issues before they become a larger problem.

9. Dependence on One Customer

Building customer relationships is important, but it can be risky to become too reliant on just one customer. Even if that customer represents a large share of your current profit, there’s never a guarantee that they’ll be able to sustain your company.

Once you’ve found a great customer, analyze how you won that customer and see how you can apply those strategies to finding new customers. Consider what that client was looking for and how they found your company so you can understand what worked well in your next marketing campaigns .

Build a customer profile and focus your marketing on reaching clients who fit that profile. See if they tend to live in a certain area, frequent a certain job or social media platform, or search for particular keywords. Try to diversify your customer base so you aren’t reliant on just one client for your business survival. 

10. Inadequate Profit

Most small businesses have low profits in their first few years, but there’s a point where those profits can become too low to survive. If you find that your profits aren’t enough to cover your expenses , it’s time to think about profit maximization strategies.

One of the first things to examine when you’re facing inadequate profit is your current cost management. Are there any areas where costs can be cut? Consider whether there are more affordable manufacturers, equipment options, or business spaces available to you.

You can also examine your pricing strategies. If you start by pricing low and you’re selling a large volume but still not making a good profit, your prices may be priced too low. Calculate how much you would have to raise your prices to make enough profit, and test out slightly higher prices to see how customers respond.

11. Competition

Even if you offer great products and services, it can still be hard to survive if you’re facing a lot of competition. Conduct a market analysis to see how many competitors are in your industry and area, what products they offer, and how their prices compare to yours.

Once you have a thorough understanding of your competitors, you can devise strategies to set yourself apart. This can include everything from offering competitive prices to providing a higher-quality product. You can also explore marketing strategies or consider how you can offer a slightly different product to fill a market niche.

12. Lack of Market Demand

Even the best businesses can fail if there’s no demand for their product. Market demand also fluctuates, so what’s in demand today can change by tomorrow. Keeping track of market trends and demand can help you stay ahead of the curve with what your company offers.

Start by assessing what’s currently in demand and how you can pitch your product to meet that demand. As customer needs evolve, you may need to slightly alter your products to adapt to changing customer needs.

13. Unexpected Growth

Growing your business is a hallmark of success, but it can also pose risks if you expand too rapidly without a clear plan. Unexpected growth can lead to over-extending your resources, overworking employees, and losing track of customers.

To prevent fallout from unexpected growth, it’s essential to have a scalable business plan. Make sure you can still deliver high-quality goods and services as you expand, so your customers stay satisfied. Keep track of how much money and labor you’re expending on new services so you can bring on new employees as you grow.

It’s all about striking a balance—you want to make sure you hire enough talent to keep up with growth but avoid hiring too early in case your growth slows down. Tracking your expenditures in relation to growth is the best way to create a plan for the future.

14. Lack of Experience

Successful business owners need vision and passion, but they also need experience to translate into their goals into a successful company. Lack of experience and industry knowledge can hold your business back, so it’s important to build a dedicated management team with a thorough understanding of the market.

A business mentor can help you manage the small business owner aspects of your company. Look for someone with experience managing their own business who can advise you on things like developing a business plan , hiring the right talent, and pitching to investors. 

It’s also important to bring on experts in your industry. Look for experienced financial advisors who can guide you through developing your financial strategies. You’ll build experience as you grow, but it’s a good idea to bring in experts for specific jobs like marketing and accounting.

15. Ignoring Customer Needs

The best source for understanding market demand is customers themselves. Responding to feedback helps you build strong relationships with your existing customers and helps you understand what you need to do to gain more customers.

Listen to customer feedback on pricing, services, accessibility, and any other concerns they may have. In some cases, you may not be able to accommodate every suggestion, but it’s helpful to respond and then do a cost-benefit analysis and see how making the recommended changes might impact your business.

If you feel like you’re not receiving customer feedback, consider reaching out. Comment and feedback forms after a completed order can be a helpful tool for gaining market analysis in real-time.

16. Poor Communication

Having a clear vision that you can communicate to investors and customers is important, but it’s just as key to having strong communication inside your business. When your team doesn’t understand your business goals, it’s harder for everyone to collaborate efficiently. 

If you’re operating your small business as a partnership, it’s fine to have different skill sets, but you need to be on the same page about vision and goals. Creating a business plan collaboratively can help ensure you agree on the primary strategies for your company.

Weak communication can lower morale and productivity and prevent your business from growing effectively. Consider making a modified version of your business plan that you can share with your employees. This can include an overview of your business goals and strategies to help everyone get on the same page.

17. Ineffective Marketing

Even with great products, your business can’t succeed unless you effectively reach your target market. Ineffective marketing strategies can hold you back from connecting with customers, while great marketing helps you reach new audiences and grow your business.

It’s important to have a targeted campaign with a clear focus. Start by identifying your target customers and learning about how they interact with local businesses. This helps you determine where to place ads, what to offer, and how to speak to potential customers.

Make sure your marketing strategy has a way to track results. That could include tracking impacts and clicks, measuring follow-through, and consulting with new customers to discover how they found your business so you can build on your most effective strategies.

18. Lack of Innovation

A great product at the start of your business may not remain competitive as the market changes. Innovation is essential for ensuring your business stays relevant and continues to be successful. 

This doesn’t mean you have to drop products if they’re still performing well, but it’s a good idea to consider how you can improve or develop new products if you have the capital to spend on development. This helps you stay ahead of the curve in a changing market.

Even with evergreen products, your business practices can still become stagnant. You’ll need to find new marketing strategies to reach new customers so that you can have a continuous revenue stream. Innovation spans all components of your business, from product development to new marketing methods.

19. Forgetting the Customer

Even if a product seems great to you, remember that in the end, it’s about the customer and how the product will meet their needs. Focus on learning about what the customer is looking for—what’s missing from current products, and how can your business satisfy that need.

If customers offer feedback, try to learn from that and incorporate it where possible. This can involve product innovation or customer service relationships. Customers will remember a great product, but they’ll also remember a personable and helpful business interaction.

Check-in with customers to make sure they’re fully satisfied with their experience. One way to do this is to send a follow-up email or form after their purchase. You can incentivize feedback by offering a small discount for filling out the form—this also encourages customers to return to your business.

20. Ineffective Leadership

While a great team and expert advice are important in supporting your business, it’s ultimately up to you to lead your company forward. If you’re burnt out or losing track of your vision, your team won’t know where to follow.

Strong leadership helps cultivate a positive company culture, a motivated team, and great client relationships. Your employees take their cue from you, so make sure to set a strong model for interacting with customers. 

Creating a good company culture starts with forging strong employer-employee relationships. Get to know your employees, their goals, and their challenges at work so you can help them perform their best. When you create a work environment that’s supportive and growth-oriented, it encourages your team to deliver their best work and help build your business.

The reasons why small businesses fail can include everything from poor pricing strategies to ineffective marketing. Learning how to recognize problems like poor management and inexperience can help you identify issues in your company before they impact your success.

Understanding and recognizing why small businesses fail can help you create strategies to avoid common pitfalls. Tools like FreshBooks accounting software can also help you manage your expenses and avoid problems like insufficient cash flow. Try FreshBooks free to discover an easy tool to help your small business thrive.

FAQs on Reasons Why Small Businesses Fail

Is it true that 90% of startups fail.

Yes, ultimately about 90% of startups fail. A few fail in the first year, and most new businesses fail in the first 2 to 5 years. After 5 years, businesses that survive tend to see a small rise in profits and growth.

Why are small businesses declining?

Some of the biggest reasons why small businesses decline are market competition, lack of demand, and lack of financing. In many cases, larger and more established companies make it difficult for new small businesses to enter the market.

What is the biggest problem facing small businesses today?

One of the biggest problems currently facing small businesses is inflation. High inflation rates mean higher input costs for products, and usually also mean employees will seek higher salaries. It can also mean higher interest rates when trying to secure a first business loan.

Why are small businesses failing in today’s economy?

Many small businesses are failing in today’s economy because they lack planning and financial preparation. While market competition and funding pose challenges to business owners, these can be overcome with financial preparedness and a clear business plan.

Article Sources: 

• Exploding Topics, Startup Failure Rate Statistics .

Sandra Habiger, CPA

About the author

Sandra Habiger is a Chartered Professional Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Alongside her accounting practice, Sandra is a Money and Life Coach for women in business.

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Start » strategy, 5 reasons small businesses fail (and how to avoid them).

Small businesses are on the rise, yet many of them fail within a year. Find out what preventatives are needed to avoid becoming a statistic.

Small businesses are the foundation of our economy. According to data compiled by the U.S. Small Business Administration , in 2022, small businesses comprised more than 99% of all American businesses. However, launching and maintaining a small business is not easy. According to the Bureau of Labor Statistics , 20% of new businesses close within their first year.

Understanding basic business fundamentals and common reasons behind small business failure can help you avoid those mistakes and increase your chances of success.

Lack of planning

A business plan is a document that outlines important information regarding operations, goals, and finances, serving as a guide for measuring progress and making necessary adjustments. Your plan should be well-developed long before products and services are available to customers. Failing to do so can leave your business unprepared to navigate market challenges.

When writing a business plan , include the following:

• An executive summary of your business and a clear company description.
• Information regarding your company’s organization and management structure.
• The products and/or services you will offer.
• Marketing and sales strategies.
• Financial projections for your business, as well as any funding requests.
• An appendix with necessary sources and additional information.

When crafting your business plan, highlight how you will attract and retain your customer base, what makes your company original, and the sales process. Once complete, review your plan regularly and update it when needed to ensure it remains relevant.

Financial challenges

Financial challenges are hard to avoid, and they can make it difficult for your business to flourish and remain profitable. Limited funding or inconsistent cash flow, combined business and personal finances, and issues with budgeting or establishing prices are common financial issues a small business may encounter.

Entrepreneurs should understand various funding options , such as traditional loans, personal loans, microlenders, crowdfunding, and investors. Depending on what stage your business is in, some sources of funding — including a combination of sources — may be more appropriate than others.

Once you’re funded, learn how to manage and track your finances . Having a clear understanding of where your money goes is essential for ongoing success.

[Read more: Cash Flow: What It Is, Why It Matters, and How to Maintain It ]

Budgeting for branding and marketing expenses is vital to the health of your business.

Poor employee management

A poorly managed business can lead to serious ramifications, hindering a company’s chances of success. Bad employee management is harmful to the health of the business and to the employees. It can lead to excessive turnover, stress and anxiety, reduced engagement, and overall poor bottom-line results.

Enhancing employees’ sense of autonomy, competency, achievement, and belonging are great methods to boost morale , build loyalty, and reduce turnover. Management should be trained regularly to build and enhance leadership skills — including providing feedback and recognition to employees to show appreciation for their performance and efforts.

Inadequate marketing

Budgeting for branding and marketing expenses is vital to the health of your business. It can be costly and ineffective if your small business has no branding and marketing direction or strategy, fails to attract customers, or even turns them away.

Identify and understand your market segment and determine how you want to approach potential customers. Test your marketing strategy by creating relevant content and campaigns. Finally, develop a plan to measure the success of your marketing efforts — including tracking metrics like overall website traffic, email open rates, and cost per engagement — and then adjust as needed.

[Read more: 5 Marketing Strategies to Embrace in 2023 ]

Failure to adapt to market changes

Adaptability is essential to keeping up with our ever-changing cultural and economic needs. Because change is unavoidable, business owners must avoid becoming complacent and adjust to market changes for longevity.

Some strategies to adapt to an ever-changing market include:

• Hiring creative and forward-thinking employees who understand and believe in your mission.
• Create a positive work environment providing opportunities for growth and development.
• Staying on top of market changes by conducting research and paying attention to what’s hot, trending, and relevant.
• Knowing your target audience, their needs, and their behaviors, as well as how they may change over time.
• Staying current with technology, and making sure what you are implementing benefits your brand.
• Continuously assess whether your products or services are outdated and decide if improvements — or even an entirely new product — are needed.

[Read more: 5 Qualities Successful Small Businesses Have in Common ]

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Why Start-ups Fail

• Tom Eisenmann

If you’re launching a business, the odds are against you: Two-thirds of start-ups never show a positive return. Unnerved by that statistic, a professor of entrepreneurship at Harvard Business School set out to discover why.

Based on interviews and surveys with hundreds of founders and investors and scores of accounts of entrepreneurial setbacks, his findings buck the conventional wisdom that the cause of start-up failure is either the founding team or the business idea. The author found six patterns that doomed ventures. Two were especially common:

Bad bedfellows.

Other parties besides the founders—like employees, strategic partners, and investors—can play a major role in a firm’s demise. Quincy Apparel, for instance, was undone by weak support from its investors and factory partners and inflexible employees.

False starts.

Many overlook a crucial step in the lean start-up process: researching customer needs before testing products. Like Triangulate, an online dating start-up, they keep rushing to launch fully functional offerings that don’t fit any market needs.

The good news is, firms can avoid that pitfall by rigorously defining the problem they want to solve, getting one-on-one feedback from potential customers, and validating concepts with real customers in real-world settings.

It’s not always the horse or the jockey.

Idea in Brief

The light bulb.

Most start-ups don’t succeed. A foremost expert on entrepreneurship realized he didn’t understand why.

The Autopsy

An examination of start-up failures revealed two common mistakes by founders: failing to engage the right stakeholders, and rushing into an opportunity without testing the waters first.

Founders should take conventional entrepreneurial advice with a grain of salt, because it often backfires. They also should find the right investors and management team and avoid giving short shrift to customer interviews and research.

Most start-ups don’t succeed: More than two-thirds of them never deliver a positive return to investors. But why do so many end disappointingly? That question hit me with full force several years ago when I realized I couldn’t answer it.

• Tom Eisenmann is the Howard H. Stevenson Professor of Business Administration at Harvard Business School, the Peter O. Crisp Faculty Chair of the Harvard Innovation Labs, and the author of Why Startups Fail: A New Roadmap for Entrepreneurial Success (Currency, 2021).

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Written by Grant Olsen | February 2, 2022

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There are all kinds of conflicting statistics and opinions for why businesses fail . The headline of one report might proclaim that “90% of businesses fail in the first 3 years,” while another asserts that by following their tips, “You can enjoy a 90% chance of success.”

It’s difficult to accurately aggregate the numbers and find global statistics on business failures, so we’ll use the United States as a microcosm for trends that are also relevant in Australia, New Zealand, Canada, the UK, and other parts of the world.

Here’s a look at survival rates when viewed at the end of the first, fifth, and tenth years:

• 80% of businesses survive their first year
• 50% of businesses survive 5 years or longer
• 33% of businesses survive 10 years or longer

While these statistics highlight the fact that there’s certainly a risk of failure, they’re higher than some of us might expect. Anytime you’re looking at a vast collection of disparate individuals attempting something difficult, you’re going to see similar trends.

For example, let’s look at how many first-time college students seeking a 4-year degree stay the course all the way to graduation day:

• 33% of students graduate with a bachelor’s degree in 4 years
• 57% of students have graduated with a bachelor’s degree by 6 years

Some of the remaining 43% of students who didn’t graduate within 6 years will likely go on to attain their degree in later years, but it’s too inconsistent of a number to show up in most studies. For thousands of different reasons, hundreds of thousands of students fail to attain their bachelor’s degrees.

So the percentage of businesses that survive 5 years or more is strikingly similar to the percentage of students who earn a degree by 6 years. Sure, things happen that derail many of the businesses and students. But at least half of them are still standing after 5-6 years.

Why Small Businesses Fail to Change

Just as many of those students who earned degrees switched majors during their college experience, it’s critical for business owners to maintain flexibility in their structure and operations. If the COVID-19 pandemic has taught us anything, it’s the immense value of a well-time pivot. Whether your change is compelled by a new idea or the pressures of the times, never hesitate to innovate.

As Dan Fries explains :

Sometimes a crisis, while always tragic, can force some positive effects. It might not feel like that right now, but by responding to COVID-19 will teach you some valuable skills. In other words, this is not the only crisis you are going to face as your business grows, and the lessons you learn in the next few months will be extremely useful when it comes to scaling your startup further down the road. In fact, some of the tools and processes above are likely to be relevant long after the current pandemic has passed.

When businesses embrace this open-minded approach, they usually find themselves among the 50% that are still strong after 5-10 years. As the old saying goes, “If you’re flexible, you’ll never get bent out of shape.”

Yet many business owners remain rooted in their old ways. It’s understandable that they believe in their products or services, and are attached to the business model. After all, it was these elements that inspired them to take entrepreneurial risks in the first place.

But if you love something, you need to take care of it. And part of nurturing your business is being willing to change directions when outside pressures are threatening it. Stubbornness can be mildly amusing in childhood friends or cranky great-uncles, but it can be devastating for a business.

Why do businesses fail when they resist change? Because they’re refusing to acknowledge the primacy of the customer. Let’s review a few examples of roadblocks to success that arose during the pandemic, and how they all connected back to the role of the customer:

• Lockdown prevents a restaurant from serving customers inside the building. This scenario has played out again and again in nations around the world. It presents many dilemmas, but none larger than the inability of a business to directly serve its customers. Successful restaurants found ways to provide new pickup and delivery options, serve their communities, and even send meal kits by mail. They kept providing a quality product, though it might’ve looked much different.
• The supply chain is disrupted. The inability to source the materials or ingredients necessary for your current model is problematic. But the main issue is that it prevents you from delivering what your customers are seeking. If replacements couldn’t be found for the supply chain, a pivot was required. For example, a bakery that couldn’t source eggs might stop selling baked goods and begin selling dry mixes to customers.
• Depleted finances make it harder for customers to make purchases. With customers in many areas struggling to meet financial obligations such as rent and mortgages, it’s no wonder that some had to curtail purchases. By finding ways to lower costs so you can lower your prices, introducing tiered pricing, or creating new product options altogether to meet your customers’ needs, successful businesses continued to meet the needs of those who historically had depended on them.

Whether you’re struggling with cash flow issues or have a broken supply chain, your ability to deliver for your customers will always be the real issue. And discovering new ways to meet their needs will always be the real solution.

The fact is that pandemics will emerge, trends will evolve, and economies will fluctuate. So if you insist on moving your business forward in the exact same way regardless of these external factors, you’ll instead find your trajectory rapidly nosing downward.

The alternative is to commit to meeting your customers’ needs no matter what occurs. While it won’t guarantee a smooth journey, this North Star will guide you through all manner of catastrophes and downturns.

9 More Reasons Why Businesses Fail

We’ve identified the inability to adapt to their customers’ needs as a major contributor to businesses that go under before reaching their 1-year, 5-year, and 10-year anniversaries. When your customer is kept at the forefront, all your other efforts will steer you in the right direction.

But there are many other specific risks facing young businesses. These are risks that you should anticipate early and be on the alert for as time goes on.

With that in mind, let’s now look at 9 other reasons why businesses fail:

1. Poor Planning

Coming up with a great business idea is only the first step because it can’t go anywhere unless it’s supported by a solid plan . Outline where you’ll go in your first month, first 3 months, first year, and first 3 years. Make the milestones measurable so that you’ll know if you’re on track.

Of course, things will occur that necessitate updates to your plan. But the point is that you have a master document that outlines how you’re going to stand out from the competition, how you’re going to deliver value to customers, how you’re going to build your culture, and how you’re going to ultimately thrive.

2. Hiring the Wrong People

We get it—there’s a lot of pressure to build your team in a timely manner so that you can launch a business. But rushing this stage can kill your chances for long-term success.

You need to find people who believe in what you’re doing and have the skills to improve the ways you’re doing it. In the crucial early stages of a business, negative employees can quickly sink morale and overall performance.

3. Failing to Foster a Good Culture

As you assemble your team, communicate openly about the culture you’re seeking to build. Ask their opinions and make a point of incorporating new ideas from your team. The businesses that prioritize profits over people or have a leaders-versus-employees dynamic often fall by the wayside because their toxicity trickles right out of the office and can be sensed by suppliers, partners, and ultimately, customers.

4. Growing Pains

Plenty of defunct companies launched with a strong culture but lost it as the company scaled. There’s obviously no way to maintain all your team’s perks and traditions as new employees swell the ranks, but you can keep the heart of who you are.

Make sure that you continue seeking your team’s input and act on their ideas. New hires will bring innovative suggestions to make things better, while the old guard can share the things that you should most think about retaining.

5. Failure to Stand Out

Even if your business idea is a gem, you’ve still got to communicate it effectively to your audience. Otherwise, you’ll just get lost in the shuffle.

Using the market research from your business plan, craft a unique selling proposition that boldly articulates what makes you different from the rest. Questions to answer include:

• What unique value do I offer?
• Why is my solution better for customers?
• How can I communicate these important differences?

The more you can differentiate your brand, the better your chances for success.

6. Not Focusing on the Essentials

Plenty of businesses lose their way in the first year as distractions pull them from the very things that give them a competitive edge. For example, if your quirky product packaging is beloved by customers, don’t ditch it as your business grows. Instead, find ways to make the packaging more efficient so that it complements your efforts to scale.

When your business stays focused, you’re better able to deliver on your unique selling proposition and to adapt to unforeseen bumps in the road.

7. Not Controlling Expenses

Launching a business is expensive. And growing that business involves a whole new set of financial demands. So it’s understandable that many businesses struggle to keep up with the pace.

You’ll put yourself in a much stronger position by carefully watching your expenses . If something doesn’t help you deliver an even better experience to your customers, it might not warrant the cost. This goes for everything from Netflix on the breakroom television to the vehicles you rent on business trips.

8. Not Managing Inventory

Balancing acts are hard enough for any person, which is why those who perform on the trapeze are referred to as “artists.” But business owners must control the inventory so they don’t lose sales from insufficient numbers or burn through capital by allowing too much inventory to pile up.

You can avoid these fates by investing in inventory management software that helps you track items through the supply chain, in your warehouse, and all the way to final deliveries .

9. Inadequate Profit Margins

It’s possible to bring in substantial revenue and still find yourself in financial danger. One of the factors that have claimed many young businesses is inefficient processes and poor pricing strategies that lead to low profits.

Your business provides distinct value to customers, so you should feel confident setting prices that reflect this fact.

Get the Skills That Won’t Let Your Business Fail

Want more strategies to help your business excel? We’ve prepared a library of free business courses that cover everything from finance to negotiations to advertising. Taught by proven entrepreneurs from a range of industries, they provide the type of insights that usually take years to acquire. In this way, you can fast-track your success and avoid many of the threats that impact other businesses in their early years.

About Grant Olsen

Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on FitSmallBusiness.com and ModernHealthcare.com. Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

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6 Reasons Why Small Businesses Fail and How to Avoid Them

7 min. read

Updated October 29, 2023

Roughly 20% of small businesses fail in their first year, according to recent U.S. Bureau of Labor Statistics data . About 50% fail in the first five years, and only one-third of new businesses are able to survive for 10 years. Research by the Small Business Administration found that about 1 in 12 businesses close in America every year.

If you’re a small business owner, another way to think about these statistics is that 80% of small businesses will survive their first year. Over five years, you have a roughly even chance of survival or failure. Looking out 10 years, you have a one-in-three chance of enduring.

What are the reasons businesses fail to thrive, given a 50/50 chance of survival and assuming a product or service for which there’s a demand? Let’s discuss six reasons businesses fail and some ways you can avoid business failure.

• 1. Leadership Failure

Your business can fail if you exhibit poor management skills, which can be evident in many forms. You will struggle as a leader if you don’t have enough experience making management decisions, supervising a staff, or the vision to lead your organization.

Perhaps your leadership team is not in agreement on how the business should be run. You and your leaders may be arguing with each other publicly, or contradicting each other’s instructions to the staff. When problems requiring strong leadership occur, you may be reluctant to take charge and resolve the issues while your business continues to slip toward failure.

How to Avoid Leadership Failure: Dysfunctional leadership in your business will trickle down and affect every aspect of your operation, from financial management to employee morale, and once productivity is hindered, failure looms large on the horizon.

Learn, study, find a mentor, enroll in training, conduct personal research—do whatever you can to enhance your leadership skills and knowledge of the industry. Examine other business and leadership best practices and see which ones you can apply to your own.

2.  Lacking Uniqueness and Value

You may have a great product or service for which there is strong demand, but your business is still failing. It may be that your approach is mediocre or you lack a strong value proposition. If there’s strong demand, you probably have a lot of competitors and are failing to stand out in the crowd.

How to Avoid Value Proposition Failure: What sets your business apart from competitors?  How do you conduct business in a way that is totally unique? What are your competitors doing better than you are? Develop a customized approach or service package that no one else in your industry is using so you can present it as a strong value proposition that attracts attention and interest.

This is how you build a brand . Your brand is the image your customers recognize and associate with your business. Your brand identity, including your logo, tagline, colors, and all the visible aesthetics and business philosophies that represent your company should be supported by your value proposition. It should separate you from the pack and present your individual perspective to your customers. Do everything you can to present that unique value proposition to your market so you can capture a market share and begin building your conversion rates.

To publicize your brand and set yourself apart, you will also need to step up your marketing plan and use as many venues as possible to present your brand to the public. You may be far better than your competitors but that won’t make any difference if your prospects don’t even know you’re in the game. Use social media, word of mouth, cold calling, direct mail, and other tried-and-true marketing techniques. Ensure you have a well-optimized online presence, develop lead generation and contact information capture techniques such as offering high-quality content on your site, a subscriber newsletter, and information giveaways.

3.  Not in Touch with Customer Needs

Your business will fail if you neglect to stay in touch with your customers and understand what they need and the feedback they offer. Your customers may like your product or service but, perhaps they would love it if you changed this feature or altered that procedure. What are they telling you? Have you been listening? Or is the market declining? Are they even still interested in what you’re selling? These are all important questions to ask and answer. Maybe you’re offering a product or service that is fallen well below trend.

How to Avoid Losing Touch with Customers: A successful business keeps its eye on the trending values and interests of its existing and potential customers. Survey customers and do market research and find out what their interests are and keep abreast of changes and trends using customer relationship management (CRM) tools. Effective use of CRM can help keep your business from failing.

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4.  Unprofitable Business Model

Akin to leadership failure is building a company on a business model that is not sound, operating without a business plan , and pursuing a business for which there is no proven revenue stream. The business idea may be good but failure may come in the implementation of the idea if there are no strategic guidelines in place.

How to Build a Good Business Model: Research and review the way other businesses in the industry operate. Develop a complete business plan that includes financial forecasting based on predictable revenue, strategic marketing, and challenge management solutions to overcome potential obstacles and competitor activities. Create a milestone chart with specific tasks and objectives assigned along the timeline so you can measure success, solve problems as they occur, and stay on track. A sound business model that incorporates best practices can help your business avoid failure.

5.  Poor Financial Management

SmallBizTrends.com, a business news resource, offers this infographic which states that 40 percent of small businesses make a profit, 30 percent come out even, and the remaining 30 percent lose money.

You must know, down to the last dime, where the money in your business is coming from and where it’s going in order for your business to succeed. Your business can also fail if you lack a contingency funding plan, a reserve of money you can call upon in the event of a financial crisis. Sometimes people start businesses with a dream of making money but don’t have the skill or interest to manage cash flow , taxes, expenses, and other financial issues. Poor accounting practice puts a business on a path straight to failure.

How to Avoid Financial Mismanagement: Use professional business accounting software like QuickBooks or Xero to keep records of all financial transactions, including every expenditure and all revenues received, and use this information to generate income statements (profit and loss statements). Even better if you use a business dashboard tool like LivePlan that makes it easy to monitor your financials. This is valuable information that you need to run your business, know where you stand at all times, and keep it operating in the black. If you lack skill in financial management, consider hiring a small business advisor and professional bookkeeper or certified public account to help manage your financial affairs.

6.  Rapid Growth and Over-expansion

Every now and then a business startup grows much faster than it can keep up with. You open a website with a trending product and suddenly you are inundated with orders you are not able to fill. Or perhaps the opposite is true. You are so convinced that your product is going to take the world by storm that you invest heavily and order way too much inventory and now you can’t move it. These are both additional paths to business failure.

How to Avoid Growth and Expansion Problems. Business growth and expansion take as much careful and strategic planning as managing day-to-day operations. Even well-established and successful commercial franchises such as fast-food restaurants and convenience stores conduct careful research and planning before opening a new location. They measure local and regional demographics and spending trends, future development plans for the area, and other pertinent issues before they move forward. You must do the same for your business to avoid failure.

Conduct thorough research to ensure the time is right and the funding is available for expansion. Make sure the initial business is stable before expanding to an additional location. Don’t order inventory you’re not sure you can sell but have a plan already in place to fill orders quickly should the demand present itself. The key to successful growth and expansion—and avoiding business failure—is strategic planning.

• Avoiding business failure starts with planning

If 50% of new businesses fail, then 50% of new businesses can succeed. Starting a business is an exciting endeavor that requires a clearly defined product or service and a strong market demand for it. Whether you desire to start a new business or you’re already running a business, you must understand that success depends on careful strategic planning and sound fiscal management that begin prior to startup and continue throughout the life of the business.

Mike Kamo is the VP of marketing for Strideapp. Stride is a Cloud-based CRM and mobile app that helps small- to medium-sized agencies manage and track leads, as well as close more deals.

Table of Contents

• 2.  Lacking Uniqueness and Value
• 3.  Not in Touch with Customer Needs
• 4.  Unprofitable Business Model
• 5.  Poor Financial Management
• 6.  Rapid Growth and Over-expansion

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9 Major Reasons Why Businesses Fail by Year 2 and How to Avoid Them

Posted january 28, 2021 by jake pool.

According to the Bureau of Labor Statistics, over thirty percent of private companies fail within two years.

Of course, there are external factors that businesses have no control over. Sadly, the COVID-19 Pandemic is a prime example of one. Since such events are unavoidable, let’s focus on internal factors that companies can act on.

9 common issues to avoid when running your business

As a new business owner, what are the traps to avoid from the start? And what can you do to stay in business? By understanding the following pitfalls you can hopefully avoid them and keep your business running smoothly for far longer than 5 years. Let’s dive in.

1. Insufficient funds due to weak forecasting

Without a doubt, poor financial forecasting is the main reason businesses fail.

It is relatively easy to plan fixed costs such as rent, payroll, utilities, hardware, etc. Entrepreneurs should vet this out extensively when writing their initial business plan.

However, it can be more challenging to forecast revenue generated from sales . Many new business owners are overoptimistic in their planning and vision. This results in an inability to amortize (pay off) an initial investment. Thus, the business fails.

Similarly, companies may be tempted to launch their product or services at a cheap price to be competitive. While it can work in the short-term, it’s not a sustainable business model. Once you start with a low price, it’s difficult to increase.

Goals should be ambitious, but attainable. And the budget should reflect accordingly.

2. The business lacks value

The success of any business hinges of its value. It might sound obvious, but it’s not that easy. As a business owner (or future), you probably think your product or service is great. But it’s not enough.

Before launching a business, always do extensive research (there is a lot of data available) on your target audience. Benchmarking and surveys are also a must.

Here are some generic survey questions to ask:

• Would you talk about this product or service with others?
• Have you ever heard of a similar product or service?
• How much would you pay for this product or service?

If your product is only valuable to you or a small group, or it doesn’t offer more value than your competition, it’s time to rethink things.

3. Inadequate business plan

As mentioned in the first point, budgeting is a key element of a business plan . But it’s not the only factor within the plan that will break a business.

A good business plan should include:

• A comprehensive description of the business
• Workforce needs and compliance (current and future)
• SWOT analysis
• Benchmarking Analysis
• Marketing Plan

But a solid initial business plan isn’t enough. Business owners should review and modify it regularly to keep with the pace of the industry and assess internal goals.

Many failed businesses in this scenario end up listed on business marketplaces like UpFlip because there are entrepreneurs out there equipped to change a poor business plan.

4. No connection with the target audience

The first questions any business owner should ask are — Do I know my target audience and do I understand what they need and want?

If you can’t answer those questions, it’s time to conduct more surveys and research. Otherwise, there is a disconnect, and the business will ultimately suffer and fail. It seems like a bold statement, but the biggest part of a purchasing decision is emotion.

Your product or service may have wonderful features and even value, but if it doesn’t connect with your target audience on an emotional level, it will fail.

For example:

If you run an office furniture business, obviously, the technical aspects of your premiere desk chair would be a sales point. But sturdy wheels and a comfortable backrest won’t differentiate you from the competition. 

Yes, you sell a chair. But also sell the idea of success, professionalism, or even luxury. The target audience must connect with your product on those levels. Otherwise, the business won’t stand out.

5. Competition is too stiff

Even with a comprehensive benchmarking analysis in the initial business plan, competition can evolve quickly. In many industries, there are new players every day in their respective markets.

To avoid failure, benchmarking must be a continuous effort. If your competitors are too big, it’s in the business’s interest to find a niche or some form of added value to your products or services.

Take TOMS Shoes , for instance. They broke into the highly competitive world of mid-level shoe sales by offering a socially conscious selling point to the value of their shoes. For every purchase, they give a pair of shoes to a child.

Note how their model also connects with their target audience at an emotional level.

6. Poor management

The success of a business comes from the top down.

Small business owners are often the only managers within a company. While it may work sometimes, it’s advisable to form a proper management team or at least hire a general manager.

Business owners don’t always have the necessary skills or time to be a good manager. Poorly managing or overlooking certain aspects of the business like human resources, marketing, or accounting can have a disastrous effect.

It’s important to learn to delegate to avoid wearing too many hats.

If you don’t have the money or infrastructure to hire full-time help (or in-house), think about outsourcing certain management tasks to a qualified freelancer via Upwork or a similar platform.

Otherwise, someone who can manage the company will soon take over.

7. Lack of a company culture

There is no happy company without happy employees. You may have a great business model and entrepreneurial skills, but the success of the company also depends on the staff.

It’s key to outline and implement a strong company culture from the beginning. And make sure that the people hired align with it.

Once in place, feed and maintain the culture mentality. Otherwise, you risk issues with high turnover. This has led to the internal collapse of many businesses in a shorter time span than two years.

8. Ineffective sales funnel

Getting leads is essential for any company, but your leads are worthless if they don’t convert. Many new companies focus on collecting data and leads and fail to nurture them properly.

To avoid bloating your sales pipeline , you need an effective sales funnel from beginning to end (and beyond!). It could vary depending on the industry, but be sure to nurture your leads as long as needed to complete the sale.

In the ideal sales funnel, leads convert when ready and become ambassadors of the brand. With a quality, automated system, you can sit back and watch it happen.

Here are a few ideas on nurturing leads:

• Send industry-related freebies (How-to Guides, Tools, White papers)
• Share relevant blog articles based on interest (personalization)
• Wish them a Happy Birthday! (Gift, Voucher)
• Set up a referral program with incentives
• Engage with leads on social media
• Use chatbot technology to answer FAQs when unavailable
• Newsletters (Old fashioned, but efficient!)

In other words, create and maintain a relationship even after the sale!

9. Bad marketing

In the early stages of a business, marketing is crucial. The key is to find the right balance between a reasonable budget and efficiency. Fortunately, this is possible thanks to digital marketing.

The two biggest advantages to investing in digital marketing campaigns are cost efficiency and measurable results (as opposed to traditional marketing methods such as print or tv advertising).

When setting up a marketing campaign, define the target audience, budget, and a realistic conversion rate. Again, if you need help, think about outsourcing for Google Ads or social media campaigns .

Many companies fail because of an inefficient marketing plan that allocates funds to ineffective channels or to ineffective content. And when it’s too late, it’s difficult to redirect funds to make up for the loss.

Awareness is key

As stated, some external factors that negatively affect a business are unavoidable, but there are many internal factors business owners can act upon to prevent failure. The first two years are critical to creating a perennial business.

Be aware of these reasons and don’t become a statistic!

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Small businesses are the backbone of America,  making up the majority of all U.S. businesses. But despite Americans relying on small businesses to meet their everyday needs, almost half of all small businesses close after five years.

There are many reasons why small businesses fail, with financials and lack of planning being the leading causes.

To understand why more than half of small businesses fail within five years, we’ll look at small business statistics , failure reasons and what you can do to keep your business up and running.

Key insights: Small business statistics

• 435,629 businesses applied for business formation in March 2024 ( U.S. Census Bureau )
• Small businesses account for 99% of all U.S. businesses ( U.S Bureau of Labor Statistics )
• Between 2013 and 2023, small businesses employed an average of 46% of the workforce (U.S. Bureau of Labor Statistics)
• 79.4% of businesses survive past their first year ( U.S. Bureau of Labor Statistics , 2018-2023)
• 52% of businesses survive five years after opening (U.S. Bureau of Labor Statistics, 2018-2023)
• 34.7% of businesses survive 10 years after opening ( U.S. Bureau of Labor Statistics )

Why do small businesses fail?

While it can be difficult to pinpoint exactly why almost half of all small businesses fail within five years, there are areas that can make or break a business.

Small businesses may fail because they don’t have enough revenue or aren’t getting their products and services in front of the right customers. They may also fail due to poor business planning or lack of capital. Here are some reasons that small businesses don’t make it past the first few years:

They don’t have a clear business plan

A business plan is a good exercise in mapping out a business’s strategy. It helps business owners outline key aspects of growing their businesses, including stating the value of products and services and outlining the business structure, financial forecast and budget. It also allows the busines      s to show potential revenue and any relevant goals or metrics.

Without a business plan, it can be difficult to scale a business and make thoughtful, strategic decisions.

They can’t get access to financing

Businesses may also not make it past their first five years because they may face financial challenges and need financing. Unfortunately, financing is hard to obtain for businesses under five years old.

According to the 2023 Small Business Credit Survey , 40 percent of businesses five years old and under were fully approved for a loan. By comparison, 53 percent of businesses between six and 20 years old were fully approved, and 66 percent of businesses over 20 years old were approved.

While there are lenders who offer some of the best startup business loans with more accessible eligibility criteria, brand-new businesses may still struggle to qualify. Additionally, as newer businesses are considered higher risk, lenders may charge higher interest rates and fees, making it difficult to fit loan payments into a new business’s budget. So, it’s no surprise that the 2023 Small Business Credit Survey found that 36 percent of businesses aged five years or younger used personal funds or a loan from family and friends to finance their business.

They manage cash flow poorly

Another common reason for closure is when a business can’t properly manage its cash flow. Good cash flow management starts with a business setting up and following a business budget, which will track your business’s fixed and variable costs and estimated revenue.

Some business owners think that a business budget is optional, and they don’t know their exact revenue and expenses. Without knowing where the business stands financially, it may fail at the first sign of a cash shortfall or emergency expense. The Q1 2024 Small Business Index found that while 71 percent of small businesses are adequately prepared for any future threats or disasters, 27 percent of businesses say they are only one disaster or threat away from closing.

They don’t have a target market

Many small businesses go to market without having a clear user or customer in mind or a defined product and niche. Small businesses may also enter a saturated market, making it difficult to stand out from all the other businesses offering the same products. Without market research and a customer in mind, businesses are not likely to succeed and make enough revenue to be profitable.

Small business failure rate by industry

Different industries have varying failure rates, which can relate to the profitability of some industries and businesses .

For example, hotel and accommodation services are one of the top industries for growth potential and have a fairly low failure rate. Similarly, agriculture makes up 5.6 percent of the U.S. gross domestic product and has one of the highest five-year survival rates at 65.2 percent.

Source: Survival of private sector establishments by opening year, 2018 to 2023. U.S. Bureau of Labor Statistics

How to maintain a successful small business

Achieving success with your small business means making a strategy for growth and planning ahead to overcome challenges that may crop up. Here are tips for running a successful small business:

Set goals and double down efforts

Use a business plan or other planning document to set business goals, including revenue, sales and marketing goals. Understand what measurements you’re going to use to determine if you’re successful. Then, put in the effort to make sales calls, go to trade shows or work on product development so that you can achieve your goals.

Develop a marketing plan

Consider the various platforms you will use to market your business, whether that’s direct mailers, social media , TV commercials or print advertising. Think through how you will reach your potential customers and track the success of your advertising campaigns to help you make future decisions.

Keep a close eye on finances

Set a business budget and keep track of all revenue and expenses down to the dollar. You want to know how your money is being used so that you can make the most of your income, cut down on waste and plan for unexpected expenses. If possible, also consider starting an emergency fund that you can use in case of an unexpected expense, slow month or actual emergency to avoid financial strain.

Hire talent

You may not have the time or skill to operate every part of your business alone. Think about hiring a talented employee with more skill in an area than you have. By doing so, you may increase sales while giving yourself time back to focus on the areas that you enjoy or excel at.

Apply for financing

You may not need the funds now, but you can apply for a business credit card or line of credit to use for future expenses, build business credit and establish a relationship with a lender, which can benefit your business in the long run.

Bottom line

Being a small business owner means joining the millions of small businesses that serve Americans the most, but it also comes with risks. U.S. Bureau of Labor Statistics data shows that from 2018 to 2023, only a little over half of all small businesses survived five years. But knowing the risks of your industry and managing finances and business loans well will give your business the best shot of surviving and becoming successful over many years.

Frequently asked questions

What is the #1 reason small businesses fail, what should you do when your small business is failing, what is the biggest key to success for a small business.

Article sources

We use primary sources to support our work. Bankrate’s authors, reporters and editors are subject-matter experts who thoroughly fact-check editorial content to ensure the information you’re reading is accurate, timely and relevant.

Business Formation Statistics . U.S. Census Bureau. Accessed on April 24, 2024.

2023 Small Business Profile . U.S. Small Business Administration. Accessed on April 24, 2024.

Survival of private sector establishments by opening year . U.S. Bureau of Labor Statistics. Accessed on April 24, 2024.

2024 Report on Employer Firms: Findings from the 2023 Small Business Credit Survey . Federal Reserve Banks. Accessed on April 24, 2024.

Business Employment Dynamics . U.S. Bureau of Labor Statistics. Accessed on April 24, 2024.

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More Like this

Ten common causes of business failure.

Failure is a topic most of us would rather avoid. But ignoring obvious (and subtle) warning signs of business trouble is a surefire way to end up on the wrong side of business survival statistics.

What’s the survival rate of new businesses? Statistically, roughly 66 percent of new businesses survive two years or more, 50 percent survive at least four years, and just 40 percent survive six years or more. This is according to the study “Redefining Small Business Success” by the U.S. Small Business Administration.

Does Your Strategy Suck? Get this Free Guide to Find Out.

Learn how to avoid the most common pitfalls in strategic planning here .

With this information as a backdrop, we’ve put together a list of 10 common reasons businesses close their doors:

• Failure to understand your market and customers. We often ask our clients, “Where will you play and how will you win?”. In short, it’s vital to understand your competitive marketspace and your customers’ buying habits. Answering questions about who your customers are and how much they’re willing to spend is a huge step in putting your best foot forward.
• Opening a business in an industry that isn’t profitable. Sometimes, even the best ideas can’t be turned into a high-profit business. It’s important to choose an industry where you can achieve sustained growth. We all learned the dot-com lesson – to survive, you must have positive cash flow. It takes more than a good idea and passion to stay in business.
• Failure to understand and communicate what you are selling. You must clearly define your value proposition. What is the value I am providing to my customer? Once you understand it, ask yourself if you are communicating it effectively. Does your market connect with what you are saying?
• Inadequate financing . Businesses need cash flow to float them through the sales cycles and the natural ebb and flow of business. Running the bank accounts dry is responsible for a good portion of business failure. Cash is king, and many quickly find that borrowing money from lenders can be difficult.
• Reactive attitudes . Failure to anticipate or react to competition, technology, or marketplace changes can lead a business into the danger zone. Staying innovative and aware will keep your business competitive.
• Overdependence on a single customer. If your biggest customer walked out the door and never returned, would your organization be ok? If that answer is no, you might consider diversifying your customer base a strategic objective in your strategic plan.
• No customer strategy . Be aware of how customers influence your business. Are you in touch with them? Do you know what they like or dislike about you? Understanding your customer forwards and backwards can play a big role in the development of your strategy.
• Not knowing when to say “No.” To serve your customers well, you have to focus on quality, delivery, follow-through, and follow-up. Going after all the business you can get drains your cash and actually reduces overall profitability. Sometimes it’s okay to say no to projects or business so you can focus on quality, not quantity.
• Poor management. Management of a business encompasses a number of activities: planning, organizing, controlling, directing and communicating. The cardinal rule of small business management is to know exactly where you stand at all times. A common problem faced by successful companies is growing beyond management resources or skills.
• No planning. As the saying goes, failing to plan is planning to fail. If you don’t know where you are going, you will never get there. Having a comprehensive and actionable strategy allows you to create engagement, alignment, and ownership within your organization. It’s a clear roadmap that shows where you’ve been, where you are, and where you’re going next.

Running an organization is no easy task. Being aware of common downfalls in business can help you proactively avoid them. It’s a constant challenge. We know, but it’s also a continuous opportunity to avoid becoming one of the statistics.

36 Comments

This article is apt for everyone who’s planning to make a business, i admire this article so much ths more clear, understandable and realistic. I really appreciate this information, thanks for those people behind this informative thing. thumbs up!!!!!!!!!!

I have been looking at countless articles on why businesses fail. This one seems to make the most sense.

Thanks! David

Wonderful article thank to those behind this am really happy to read this article,u will be blessed in Jesus name (amen).

Awesome article

The article is very helpful and I have been assisted by it keep posting helpful thing.

I found this useful to us in Africa; especially Uganda

why is small business fail

Item number 8 is an eye opener for me thanks. More grace!

I found this useful to us in Africa; especially Uganda lol

mind opening article keep on posting

Cash flow or lack thereof is the #1 thing I evaluate when helping a company turn their business around. I am not disagreeing with any one of the 10 but unless you have enough cash you may not have enough runway to fix any one of the other 9 items to turn the situation around.

I thought I would have a look at the article and then add something that was missed as I have good understanding of these issues. Well darn and hats off Todd Ballowe. You have covered all the issues in a very tightly worded manner. Well done.

your article is good. keep on posting such important stuff. the information is helpful. thank you very much.

Right on point about why some businesses fail??

This is the richest article I have ever read while doing my research on the cause of business failure.

thank to the author, Keep up.

am very grateful about this article

The points are well put and straight to the point.

Thanks to the author we are now aware of whats causes our business to fail .

Sir/Madam! The article is fine. If you don’t mind, please specify the internal and external factors that influence a business to success or to failure. Because, in this modern world, specification i every field is appreciated. The tips are good, but quite mixed, please categorize them, thankyou

woo ,this article is awesome.I have found what i was looking for

what must a manager do to sustain a business growth?

this article is so helpful cause it contains sense why bussineses fail

Great article! Covered a lot of perspectives. Most owners believe that “knowledge is power” however they should understand that only “applied knowledge” is only the power that works! -great point. Came across a blog on Buymaster.co which really compliments and adds to this article. Take a look http://blog.buymaster.co/why-small-businesses-fail-or-fail-to-thrive/

thanks this artical is very helpful

Wow , great article. it touches an interesting field that i’m studying “Strategic management Accounting” This field seeks to involve the marketing environment with accounting as the strategy to gain sustainable competitive Advantage in the market. Thus , this articles highlights the importance of strategic tools in the market.

I am just a new comer in business, but I think this article can be a help for me.

Its a nice article but its just that we read these kind of articles only after failing in business and there are mistakes that we do again and again..as much as your articles helps me to understand the common reasons for failure I would like to point out some major reasons in my own way:

1) Lack of Capital- This is by far the most major reason for any business to fail although I am not saying this is the only reason. But it is often seen that people have capital to start up a business but in a long run they are not able to fulfil the internal and external demands of the business like salaries of staff, rent, raw materials etc. 2) Lack of Managerial expertise: This is also a major reason. It is often seen first time entrepreneurs lack management skills like planning, organizing, controlling etc. 3) Competition: This also plays in the success or failure of any business. Before or even after starting a business one must know who there competitors are and what are there strategy like what is the price of the products that they are offering, similarly quality,finish etc. Know your competition. 4) Random: There are many other reasons like understanding the needs and mentality of the customer. Know their likes and dislikes, their paying capacity, handling raw materials, keeping proper money/cash flow and accounting the same at regular intervals, having an open thinking and attitude, and their could be many that might not be present in what all I have stated. Please do give a feedback on this one

i found this article very useful , i have 40 years experiance in managing various business . thank you

Thaxs I loved the article since it opens up peoples’ minds.

Must say, this is an excellent article.

Covers the most important point in perfect details with no extra fluff.

It’s a great article and very knowledgable here are some pointers hope this could help you 1) Lack of Capital- This is by far the most major reason for any business to fail although I am not saying this is the only reason. But it is often seen that people have capital to start up a business but in a long run they are not able to fulfil the internal and external demands of the business like salaries of staff, rent, raw materials etc. 2) Lack of Managerial expertise: This is also a major reason. It is often seen first time entrepreneurs lack management skills like planning, organizing, controlling etc. 3) Competition: This also plays in the success or failure of any business. Before or even after starting a business one must know who there competitors are and what are there strategy like what is the price of the products that they are offering, similarly quality,finish etc. Know your competition. 4) Random: There are many other reasons like understanding the needs and mentality of the customer. Know their likes and dislikes, their paying capacity, handling raw materials, keeping proper money/cash flow and accounting the same at regular intervals, having an open thinking and attitude, and their could be many that might not be present in what all I have stated. Please do give a feedback on this one https://www.meshcowork.com/en/blog/read/620446883/failure-in-entrepreneurship

Thanks I have enjoyed the article ,,, very sensitive to understand especially to students who study financial management

It’s really very helpful. Thanks for sharing this amazing strategy

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How a great business plan will maximize your risk of failure

The business plan is a great execution tool. Yet, requiring a business plan during the early stages of idea development might maximize the risk of failure. Large organizations in particular still require business plans. That is an error. In this post we outline three reasons why companies should drop business plans in favor of a more rapid and iterative approach.

While business plans are less and less common in the startup world, they persist in large corporations. In large companies it’s not uncommon that a team of several people spends a couple of weeks developing a business plan. They will first spend time on market research. Then they will craft a detailed plan with an impressive financial spreadsheet looking 3-5 years ahead. Finally, all of this will be summarized in a beautiful slide deck to convince top leadership or investors of the brilliance of the idea.

Great business plans can look so good and have such convincing arguments that it becomes hard to doubt them. Unfortunately this false illusion of security may also maximize the risk of failure (or waste time and money at the very least). No company wants that. Let’s look at three reasons why requiring business plans is a bad idea.

1) Getting too granular too early = you risk wasting time

One of the dangers of writing a business plan is to spend too much time refining an idea before it is really proven. Unfortunately, “no business plan (however smart it looks) survives first contact with customers”, as Steve Blank the initiator of the Lean Startup movement likes to say.

Rather than refining an idea at the early stages, you should test it immediately and evolve it based on market feedback. Otherwise you risk wasting time working on refining an idea that nobody cares about. The problem is that you’ll only realize that much, much later. 

TIP: Keep your early ideas very rough (e.g. on one page with the Business Model and/or Value Proposition Canvas) and immediately test them. Gradually refine your ideas with increasing  evidence.

2) Selling an idea & plan to leadership or investors  = You risk getting locked-in

Where it starts getting dangerous is when a team sells their top leadership or investors a polished and refined business plan - before rigorously testing the underlying business model and value proposition(s) in the market.

When leadership or investors buy and finance a plan they expect that success is a mere execution problem. They expect that beautiful and detailed spreadsheet in the business plan to materialize exactly how you projected it. In other words, you just got locked into a plan that was entirely made up. You are forced to execute an idea that is yet to be proven. If you want to change direction later on, it will be difficult to convince leadership because you sold them something else.

TIP: Don't sell leadership a polished and refined business plan. Sell them an opportunity and a rigorous process that will turn your idea into an executable business model by producing market evidence. Show them how this approach will minimize the risk of failure, as opposed to a business plan which maximizes the risk of getting locked into one direction that is yet to be proven.

3) Hiring based on an idea & plan = you risk premature scaling

The biggest risk of business plans is that they may lead to premature scaling. This happens when you hire people and spend money on key resources based on a plan rather than market evidence. In other words, you get into "execution mode" before you fully finished the "search" for the right business model and value proposition(s). We wrote about this in a recent post on how Great Execution of Bad Ideas Kills Businesses . 

This type of premature scaling of great looking business plans can lead to enormous financial losses. My "favorite" examples are Flo TV by Qualcomm ($1+ billion loss) or  Better Place , a startup that aimed at getting people to use electric vehicles ($850 million loss).

TIP: Don't invest in execution until you have strong evidence that your idea will work. Otherwise you risk premature scaling and running out of money.

Burn your business plan before it burns you

At Strategyzer, we are no enemies of business plans if they are used purely for execution purposes. Unfortunately we've seen too much damage from business plans used during the early stages of idea development - particularly at large organizations.

There is no place for a business plan when you are still searching for the right business model and value proposition for your idea. It's simply the wrong tool for the task and it might even lead to maximizing your risk of failure.

Business plans should be replaced by a more dynamic approach until you have sufficient evidence that your idea will work. Only then should you consider crafting a business plan. Until then, we suggest you burn your business plan before it burns you.  

Does your organization still require business plans? What's the impact?

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The 6 Reasons for Business Failure, and How to Address Them From a lack of customer awareness to loss of execution focus, how failure happens, and why you should never shy away from analyzing it.

By Lak Ananth Edited by Matt Scanlon Jan 6, 2022

Opinions expressed by Entrepreneur contributors are their own.

In my work with startups and company founders, I have found that the possibility of failure is a constant companion: it's always there, waiting around the corner. However, instead of fearing failure and doing everything we can to avoid it, I've found that a much more effective strategy is to anticipate and prepare for it, do everything we can to establish the reasons for it when it happens, then learn methods of improving.

While there are many ways to fail in business, let's consider some of the most common and what we can do as leaders to transform them into success.

1. Customer failure

After then-Tata Group Chairman Ratan Tata witnessed a family of four crash to the pavement as they rode an overloaded two-wheeled scooter through a slippery intersection in Bengaluru, India, he was moved to create a $2,500 "people's car": the Nano. Tata's vision for this vehicle was to democratize transportation — providing a safe and affordable way for potentially hundreds of millions of people to drive from villages to cities where higher-paying jobs were available.

Ultimately, the Nano was a failure. Only about 300,000 of the cars were sold during its 2008-to-2018 production run, most within the first few years after it was introduced, then sales quickly tailed off. The cause was a failure to fully understand the needs of its customers, and a marketing overemphasis on "cheapest", which is a reliable customer turnoff in this industry.

So, to avoid this brand of customer failure, have a destination in mind, a vision for the destination and the conviction that the journey is worthwhile. But beyond that, you need to know who the customers are for a new product, and that it needs to solve a problem that's sufficiently important to them. Without a customer, you have nothing.

Related: Determining Your Ideal Customer

2. Technology failure

Who can forget the Segway PT stand-up electric scooter, introduced to the world in 2001? It was a marvel of technology, incorporating a groundbreaking network of five gyroscopic and two acceleration sensors with the ability to analyze the environment and the rider's position 100 times per second.

Segway anticipated sales of up to 100,000 units a year starting in 2003. By mid-2006, however, only 23,500 had been sold and the company was acquired by the Chinese electric kick scooter manufacturer Ninebot in 2015.

An enduring lesson here is that it takes more than great technology to make a product successful. There also needs to be an ecosystem to support the adoption of the technology and the support of innovations. What's needed is to take a wider view of the entire innovation realm instead of narrowly focusing on execution. This can be done by focusing on two specific types of risk: co-innovation risk (what else needs to improve for my innovation to matter?) and adoption chain risk (who else needs to adopt my innovation before the end customer can assess the full value proposition?).

3. Product failure

In part using funds generated by sales of records by The Beatles, UK technology company Electric and Musical Industries Ltd. (EMI) first conceived the revolutionary computed tomography (CT) scanner and began selling units in 1972. Demand turned out to be off the charts, growing at more than 100 percent per year, and EMI had all the advantages: it was the first mover, it owned the patents and intellectual property, it had plenty of cash in the bank and it employed the technology's inventor.

Eventually, EMI's first-mover advantage eroded. The same year the company sold its first three scanners (which were limited to imaging human heads), Siemens started its own CT research and development unit, and in 1974 began hospital trials of a CT head-scanning machine. Siemens quickly realized, however, that the next big thing was going to be whole-body scans, and in 1977 it was the first to introduce a CT scanner capable of doing them. Sales for EMI units plunged, and the company exited the medical imaging business entirely in 1980.

EMI's failure was not expanding into the many available product adjacencies it could have tapped for second and third acts. Interestingly, and seemingly ounterintuitively, the first mover may have a higher risk of product failure than a fast follower, which has the opportunity to learn from the first's mistakes. A lack of speed kills, so maximize the pace of translating ideas into action, seeing results and getting feedback, then feeding what you've learned into your hypothesis — making required changes along the way.

Related: 7 Ways to Build Hype Months Before Your Business Launches

4. Timing failure

The Essential Phone, invented by Andy Rubin (founding father of Android), had everything going for it. After leaving Google, Rubin created Playground, a venture fund and startup studio, which he envisioned as a place where remarkable hardware, software, artificial intelligence and design would be merged to create great products. To this end, he attracted $300 million in investment and put together an enviable coalition of partner companies. The result was an innovative smartphone launched in 2017.

According to press reports, only 5,000 Essential Phones were sold through exclusive partner Sprint in its first month, just 88,000 units in the whole of 2017 (after delays, the phone started shipping in August 2017). Compare this with Apple's iPhone, which sold a million units within 74 days of its release. The Essential Phone was too little too late, and its exclusive partnership with Sprint limited visibility in the marketplace.

When introducing a new product, there is a golden window: that optimum period when a product will be adopted quickly. If you're too early, but most will ignore it. If too late, the market will already be overly saturated, and your product won't be sufficiently differentiated to spur people to buy. The key is to identify market transitions and take advantage of them before the competition does.

5. Business model failure

If you live or work in most any large city, you have no doubt seen the proliferation of electric ride-sharing scooters. Bird was the first electric scooter sharing company out of the gate, placing them on Santa Monica streets in September of 2017. After one year, Bird had sold more than 10 million e-scooter rides and was the fastest startup ever to achieve a valuation of $2 billion. However, in 2020, scooter usage dropped significantly (between 60 and 70%) jeopardizing the industry, which by that time included a slew of companies.

It is simply not enough to have a great product, amazing technology and customers whose problems you are going to solve. To succeed, you must also develop and focus on implementing a sustainable business model that will provide you with sufficient revenue and profit to grow your venture. This depends on getting unit economics right — creating profitable transactions for the company that solve a customer problem. As you work to get these economics right, you have three levers to work with: revenue, cost and differentiation. Each must make positive contributions for you to succeed.

Related: Follow the Laws of Business Building to Secure Your Startup's Success

6. Execution failure

Fully 99% of a business's success is based on just one thing: getting execution right. Amazon learned a very important lesson in this when, in 2013, UPS failed to deliver numerous packages in time for Christmas. The latter company was overwhelmed by an unprecedented volume of packages and wasn't prepared for the surge. To ensure that this would never happen again, Amazon set out to build its own in-house delivery system — transforming UPS's execution failure into a stunning example of execution at scale. By 2020, Amazon delivered more than half of its own packages to customers, and it is anticipated that both UPS and FedEx will deliver fewer packages than Amazon within the next few years.

One of my favorite sayings is, "A vision without execution is just hallucination". I believe that, ultimately, just 1% of a business's success is based on getting the things discussed above right: the customer, the technology, the product, the team, the timing and the business model. Fully 99% of success is based on one thing: getting execution right.

Applying lessons for success

So, it's important to get the basics done, including having sound unit economics, building a team with purpose, understanding customers' pain points, getting timing right and executing well. Unfortunately, companies often remain in the failure zone for some time — especially when they have the funds to keep them afloat, but the best find their way out as quickly as they can. So, when failure knocks at the door, and it will, don't shy away: take it on and break through to the other side… to your long-term success.

CEO & Managing Partner, Next47

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• Not Investigating the Market
• Business Plan Problems
• Too Little Financing
• Bad Location or Marketing
• Remaining Rigid
• Expanding Too Fast
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The Bottom Line

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Top 6 Reasons New Businesses Fail

The first years of a new business are often the hardest. New business owners must struggle to find capital, suppliers, and customers, all while trying to find enough income to pay their bills. In order to be successful, it is essential for new business owners to prepare for these risks.

According to the U.S. Bureau of Labor Statistics (BLS), approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more. These statistics haven't changed much over time, and have been fairly consistent since the 1990s. Though the odds are better than the commonly held belief, there are still many businesses that are closing down every year in the United States.

According to the BLS, entrepreneurs started 1,054,052 new businesses in the year ending March 2023. From the historical data, we can expect approximately 210,810 of these businesses to fail within the first two years. With the right planning, funding, and flexibility, businesses have a better chance of succeeding. We'll go through some of the biggest mistakes that startups can make and figure out how to improve your chances of success.

Key Takeaways

• New businesses have the highest chances of failing, due to the combined pressures of raising capital, finding customers, and bringing in enough income to pay their bills.
• About 45% of new businesses fail within the first 5 years.
• Failure to research the market, and prepare a business plan are common reasons for business failure.
• Many companies do not raise enough starting capital, which is essential for new businesses without a reliable revenue stream.
• For more established businesses, there is also a danger of expanding too fast, without conducting enough market research.

Investopedia / Ellen Lindner

1. Not Investigating the Market

So you've always wanted to open a real estate agency, and you finally have the means to do so, but your desire to open the agency blinds you to the fact that the economy is in a down housing market and the area where you want to work in is already saturated with agencies, making it very difficult to break in. This is a mistake that will result in failure from the start. You have to find an opening or unmet need within a market and then fill it rather than try and push your product or service in. It's a lot easier to satisfy a need rather than create one and convince people that they should spend money on it.

2. Business Plan Problems

A solid and realistic business plan is the basis of a successful business. In the plan, you will outline achievable goals for your business, how your business can meet those goals, and possible problems and solutions. The plan will figure out if there's a need for the business through research and surveys; it will figure out the costs and inputs needed for the business, and it will outline strategies and timelines that should be implemented and met.

Once you have the plan, you should follow it. If you start doubling your spending or changing your strategies whimsically, you are asking for failure. Unless you have found that your business plan is overwhelmingly inaccurate, stick with it. If it is inaccurate, it's best to find out what's wrong with it, fix it, and follow the new plan rather than change how you do business based on quick observations.

The more mistakes you make, the more expensive your business will become and the greater the chance of failure. You may also be called to pivot when market conditions change drastically and impact negatively the chances of success based on the initial business plan. In this case, you revisit your plan and edit it fully based on the decided pivot.

According to a study by U.S. Bank, 82% of business failures are due to insufficient cash flow.

3. Too Little Financing

If you have started a company and things aren't working out, and you have little capital and a struggling business, you're not in a good position to ask for another loan . If you're realistic at the beginning, you can plan to start with enough money that will last you to the point where your business is up and running and cash is actually flowing in.

Trying to stretch your finances at the beginning may mean that your business never gets off the ground, and you'll still have a lot of cash to repay. Lean management strategy is warranted in this phase in particular but can be applied even after this phase. Try to think of multi-channels for funding and financing. Get educated about this area and be creative searching alternative sources of financing.

4. Bad Location, Internet Presence, and Marketing

A bad location is self-explanatory if your business relies on location for foot traffic . Just as dangerous, however, is a poor Internet presence. These days, your location on the internet and your social media strength can be just as important as your company's physical location in a shopping district. An online presence will let people know that they can give you their business, so if the need is already there, the availability and visibility of your business is the next important step.

This is similar to marketing . Not only must you make sure that marketing reaches people, but it must also reach the right people. So make sure the type of marketing lines up with the audience you want to reach. Big billboards may not be the way to go for an internet company, just as online ads may not be the way to go for a heavy-construction business. If the need is already established, make sure you're reaching the audience who needs your product or service.

5. Remaining Rigid

Once you've done the planning, established your business, and gained a customer base, don't become complacent. The need that you're fulfilling may not always be there. Monitor the market and know when you may need to alter your business plan. Being on top of key trends will allow you lots of time to adjust your strategy so that you can remain successful. One must only look at the music industry or Blockbuster video to know that successful industries can undergo huge changes.

6. Expanding Too Fast

Now that your business is established and successful, it's time to expand, but you must treat the expansion like you're starting all over again. If you're expanding the reach of your business, make sure that you understand the areas and markets into which you'll now be reaching. If you're expanding the scope and focus of your business, make sure you understand your new products, service and intended consumer as much as you do with your current successful business.

When a business expands too fast and doesn't take the same care with research, strategy, and planning, the financial drain of the failing business(es) can sink the whole enterprise.

Why Do Most Startups Fail?

Most new companies do not survive the startup phase, with 20% failing after the first year. Surveys of business owners suggest that poor market research, ineffective marketing, and not being an expert in the target industry were common pitfalls. Bad partnerships and insufficient capital are also big reasons why new companies fail.

What Is the Biggest Risk for Small Businesses?

One of the biggest hurdles for small businesses is running out of working capital. Since small businesses tend to have a low cash flow, they also have less financial cushion if they face economic hardship, and need to borrow or find investors when they face financial difficulty.

How Do You Find the Best Market for Your Industry?

Finding the right target market is a major hurdle for new companies, and entire industries exist to help market your products to the right consumers. Marketing professionals use focus groups, surveys, and in-person meetings with potential consumers to find out who their customers are, and what products they are looking for.

Though the rate of business failure in the first two years is around 20%, it doesn't mean that you have to fail. Through research, planning, and flexibility, you can avoid many of the pitfalls of a new business and be a part of the approximately 25% that make it to 15 years and beyond.

U.S. Bureau of Labor Statistics. " Table 7. Survival of Private Sector Establishments by Opening Year ."

U.S. Bureau of Labor Statistics. " Table 5. Number of Private Sector Establishments by Age ."

U.S. Bank. " Closing Strong: Year-End Cash Flow Strategies, Monitoring, and the Role of Spend Management Platforms ."

Square. " How to Identify Your Target Market ."

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3 Common Reasons Strategic Plans Fail & How to Avoid Them

By Timothy Ball , David Dinolfo , on January 3rd, 2024

In today’s business landscape, implementing a successful strategic plan is more complex than ever before. With challenges arising from conception to execution, even the most well-thought-out strategies can derail, resulting in failure and disappointment.

As we look across the many factors that must be considered when developing a strategic plan, the question arises: why do strategic plans, even those with the best intentions and utmost diligence, fall short of expectations? Understanding the common reasons behind the failure of strategic plans is key for any business leader aiming to navigate the business landscape successfully.

Below are three common reasons why strategic plans fail and how to avoid them.

Poor Communication

One of the most common reasons strategic plans fail is poor communication.

Oftentimes, strategic plans are only communicated at the board level and not shared throughout the whole organization. If your plan is not communicated thoroughly, your employees won’t know what their responsibilities are related to the strategic plan. Additionally, when things actually do start to change, employees may start to ask questions about why things are changing and whether that’s really part of the job they signed up for and the mission and vision of the organization they thought they joined.

In order to avoid this common pitfall, organizations should roll out their strategic plan with a proper introduction. Below are some considerations to keep in mind when developing the communication portion of your plan:

• Clear and Concise Intro— Be sure to integrate a clear and concise introduction to your strategic plan, including timelines, key objectives, future communication plans, presentations, etc.
• Get Employees Involved— Work groups, roundtables, surveys, and 1:1s can all be useful tools to answer your people’s questions, keep them on the same page, and collect useful feedback.
• Status Updates— Communicating a major strategic plan should never be one and done. You must factor in that as the plan changes (which it will), you should be communicating these changes to your organization in planned status updates.
• Change Agent Programs— Change agent programs are a great way to spread positive and accurate messaging company-wide. Picking leaders within your organization that you know are bought in to what the organization wants to achieve allows positivity to flow throughout the company in the background.
• Handle the Naysayers— Every organization has members who will pick apart any plan no matter what it contains. Handling these naysayers should always be a part of the communication strategy from the start. One way to handle complaints is by identifying a member of your strategic planning committee to hold 1:1s with people who may be disgruntled. This allows for an opportunity to handle the issue or complaint directly and provide accurate and consistent messaging.

Inadequate Resources

Another common corporate strategy pitfall is undergoing a major plan with inadequate resources. There are a number of different resources that come into play when undergoing the strategic planning process.

• Financial Resources — A lack of financial resources can prevent a company from growth opportunities. Are you aware of your investment capabilities? Do you have strong relationship with lenders and investors?
• Human Resources —Inadequate staffing, a lack of skilled personnel, and high employee turnover can all kill a strategic execution. Without a competent and motivated workforce, it can be really challenging to implement any strategic initiative.
• Technology Resources —Up-to-date and accurate financial reporting and data management are often overlooked in the strategic planning process. An outdated technological infrastructure can certainly hinder efficiency. Maximizing the capabilities of technology plays a vital role in supporting your corporate strategies for any business. Organizations must have real time access to accurate and relevant information to be able to analyze trends and make informed strategic decisions.
• External Advisors —Aligning yourself with like-minded professionals and experts is an important resource and an outlet for knowledge sharing. Having an external source to provide guidance and feedback is an important extension to any corporate strategy.
• Market Access —Inadequate partnerships, alliances, relationships with customers, suppliers or other stakeholders can also significantly hinder your ability to execute your strategic initiatives. Companies must ensure they are leveraging market resources to allow them to grow and penetrate new markets or distribution channels.

Unrealistic Expectations

Lastly, strategic plans will nearly always fail if they are based upon unrealistic expectations. Of course, it’s okay to reach, just not so far that you are setting yourself up for failure.

Oftentimes, organizations set overly ambitious growth targets without considering market conditions or internal capabilities. Additionally, setting unrealistic goals can also impact the morale of your organization’s employees. You will immediately disincentivize anyone from trying to achieve them because they know that are unattainable. Unrealistic goals can result from the following:

• Unachievable Funding and Resources —A limited budget, manpower, and technology will always hinder the execution of an ambitious strategy. It’s important to align those objectives with your available funding and resources.
• Aggressive Timelines —Expecting quick results and immediate returns is often unrealistic. Strategies can take time to develop and implement and can take even longer to yield the results. Additionally, unrealistic timelines can lead to rushed decision making, poor quality and a lack of thorough execution. Corporate strategy is a long game and must be approached in a thoughtful and intentional manner.
• Capacity Restraints —Limitations in staffing and production can also hinder the strategic execution. If you don’t have the people and systems in place to implement the plan, it simply cannot be accomplished.
• No Room for Flexibility/Adaptability —Assuming flawless execution of strategy without considering potential risks and challenges is unrealistic. You must be able to respond to changes, pivot, and move forward.

As you undergo the development and implementation of your strategic plan, keep the above factors in mind. Strategic planning is a complex process that should be undertaken with careful consideration. If you need further guidance or have any questions on your own strategic planning process, we are here to help. Please do not hesitate to  reach out  to discuss your specific situation.

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.

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7 reasons why some business plans fail.

Salmaan Mian

• August 23, 2021
• Business business plan business plans
• 7 Reasons Why Some Business Pl ...

Often enough, some business plans fail to achieve their objectives. Whether the plan is for securing a loan or investment or hiring new senior staff, there are few reasons why business plans fail.

This blog will examine the 7 main reasons why some business plans fail and what you should avoid doing when writing one.

Introduction

Business plans fail for various reasons. They have to be carefully thought out and well written with minimal mistakes. They should start with a great business idea and contain comprehensive market research and analysis. Sections on the operations, team and financials are also crucial and have to be well presented .

Many common mistakes can make business plans fail to achieve objectives . Business plans fail due to common mistakes range from spelling and grammatical errors to more fundamental issues such as a flawed business idea.

Business plans are different for each company, whether you are looking to create a business plan for a restaurant or a new tech start-up, you should tailor the business plan and avoid these common mistakes.

1)    Bad Business Ideas

One of the primary reasons why business plans fail is due to bad business ideas. Most ideas sound great in theory however sometimes they are simply not viable. Furthermore, some founders do not realise they have invested in a bad idea once it is too late.

To ensure that a business idea is feasible and can be turned into a reality, you should use product validation . Before officially launching the business, founders can do thisby approaching potential target consumers, potentially saving time and money.

2)    Inexperienced Team

Some business plans may present a strong argument for a new business and its need in the market. Instead, some business plans fail to present an appealing team that has the competencies and experience required to execute the business plan and successfully grow a business.

To ensure your business does not fail for this reason, you should create a detailed operations section in which details of the team are included. The section should highlight all the skills, experience, and expertise of the management team so readers also believe in them as well as their vision.

Investors will occasionally reject proposals from start-ups with inexperienced teams. Some investors want to be certain that your team has the relevant qualifications, capacity, and knowledge to manage the business. It is crucial to present an effective, capable, and complete team in a business plan to convince users this will be successful.

3)    Ineffective Executive Summary

The first section of a business plan will usually always be an executive summary. This section is should grab the reader’s attention and convince them to continue reading. However, having a bad executive summary can discourage users from continuing to read the business plan and cause it to fail.

Some users only read the executive summary which emphasises why it is so important to create a high-quality section. If the executive summary is weak, then it will leave a bad first impression for the users and make it difficult to recover from.

To create an effective executive summary , you should write it once the rest of the business plan is complete. This will allow you to summarise the entire document and create a captivating introduction for your users.

4)    Bad Financials

Financial forecasts are a key section of a business plan as they provide details on profitability, potential growth, and long-term vision for the business. The financials are usually the most interesting section of the entire document for investors and creditors. Pro-forma profit and loss statements, break-even, and return-on-investment calculations are all parts of the financials in an effective business plan .

If you fail to prepare a pitch deck and the financials in a business plan, investors are unlikely to take your pitch seriously so it is essential to focus on these sections if you are looking to raise capital.

Preparing financials will require time and research. They should be realistic, backed with research and accurate. It is important to clearly highlight these details as investors will also want to know what you will be spending their capital on.

5)    Spelling and Grammar Mistakes

Correct spelling, grammar, and punctuation are paramount when creating a business plan. Although users of a business plan do not expect business directors to be wordsmiths, they pick up cues about the underlying business and its owners by scrutinising a business plan. When they read a plan with spelling or grammatical errors, it could directly affect their decision.

Proofreading the document multiple times or hiring professional proofreaders will help avoid spelling, grammar, and punctuation mistakes. This will minimise mistakes and by extension, improve the appeal of the business and its directors. Software like Grammarly can also be used to correct spelling and grammar mistakes.

6)    Lack of Market Research

It is important to back your research with facts and statistics, it’s equally important to ensure your facts are true. Business plans should contain everything about your business your market, customer habits, competitors, size, and market share as well as overall market trends.

Often enough, some business plans fail if they do not contain adequate market research and analysis. You should prepare figures, charts, and statistics to support any assumptions or projections made.

Most investors and creditors will check your figures against the industry data for confirmation, so it is crucial they are correct and up to date. Investors will refuse to invest if their data does not match your market research and analysis.

7)    Poor Presentation

Even if your written content is flawless, the presentation has to match up. Presentation mistakes such as uneven margins, missing page numbers, charts and graphs without labels, or a missing table of contents can all put off potential investors or lenders. Rereading the document thoroughly can help correct these simple mistakes.

If in doubt, you should ask someone else to check your plan before presenting it to an investor or creditor. Remember that while you will spend significant time working on your plan, most readers will quickly read the document before they make an initial decision about it. This highlights the importance of having a neat presentation without obvious omissions.

A state-of-the-art pitch deck software, available on Android and iOS , could be used to improve your pitch deck presentation. The use of this software can significantly enhance your presentation when combining a pitch deck and business plan for investors.

What to avoid when creating a business plan

• Having an uninteresting executive summary
• Spelling and grammar mistakes
• Showing a lack of market knowledge
• Unrealistic financial projections
• Poor presentation

If you are worried that perhaps your business plan fails, you should seek professional help. Professional business plan experts can help guide you through the entire process by providing feedback, and presenting your plan in an attractive, professional, and effective structure.

Ultimately, to maximise your chances of successfully achieving your objectives with a business plan, you have to ensure a few key details. Firstly, you need a solid business idea with extensive market research and financial planning . You will also need to avoid making spelling and grammatical errors as well as present the business plan methodically. Although not a guarantee, following these details will significantly improve your chances of success.

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Home » The Tony Robbins Blog » Career & Business » 14 reasons why businesses fail

14 reasons why businesses fail

Learn more about business failure – and how to avoid it.

WHY BUSINESSES FAIL

So why do businesses fail ? What makes one entrepreneur succeed while another experiences business failure ? It comes down to a combination of preparation, strategies and knowledge. 

1. Not having an effective business plan

If you don’t have an effective business plan, you can’t properly communicate your vision to your team. Tony Robbins advocates not just having a business plan, but having a business map for entrepreneurs to take their small businesses to the next level. Your business map will help you master vital stages of the business cycle, like scaling. Explosive growth can be tempting, but not scaling in a mindful manner is one of the biggest reasons why businesses fail – you have to strike the right balance between growth and infrastructure.

2. Not putting the customer first

One of the top reasons why businesses fail is that they fall in love with their product instead of their customer. To circumvent business failure , fall in love with your client and figure out every single way you can meet their needs. Anticipate what they want, what they need and, when possible, determine what they might not even know they need yet. Turn your customer into a raving fan – somebody who will tell everybody about your product or service or company. Once you grasp that your customer’s life is your business’ life , you can truly envision how to succeed.

3. Not hiring the right people

Hiring the right people has a massive effect on nearly every area of your business. One of the most obvious examples is sales: If you don’t have enough sales, you can’t pay your team or yourself and you cannot grow. Confident salespeople are a key to increased sales. It’s also astounding how many businesses fail due to inventory mismanagement. Hiring someone who is skilled at inventory management or using a good inventory management software is an easy way to solve this issue.

4. Doing it all yourself

Yes, you are an entrepreneur, but that doesn’t mean you have to do everything on your own. A business is only as strong as the psychology of its leader – and the ability to let go and trust others is an essential leadership trait . If you need to control everything, it’s likely you won’t succeed over the long term. Delegating is a top skill to manage a business effectively : it helps you manage your time, focus your energy on what matters most and spot potential up-and-coming leaders within your company.

5. Lack of flexibility

Remember Blockbuster? Radio Shack? Tower Records? These giants of their industries all fell victim to the same reason for business failure : inability to adapt to a changing market . Entrepreneurs who fall in love with a service or product and refuse to change directions when the market demands it are likely to fail. The key to long-term success – in business and in life – is flexibility and a willingness to pivot when necessary.

6. Lack of innovation

Peter Drucker and Jay Abraham, among the greatest business minds of our time, maintain that business failure – and success ­– all starts with two key factors: innovation and marketing . Innovation means finding a better way to meet your clients’ needs than anybody else. Anybody can make some money for some amount of time. But if you want to become successful and sustain that success over years and over decades – if you want to build a brand – then you have to find a way to add more value than anybody else in the game. And that comes from constantly innovating.

7. Not understanding your industry

This is one of the driving factors behind why businesses fail to innovate. Certain industries require more innovation, while others may have different product life cycles. Consider the technology industry. The life cycle on an average product is about six months. And in some sectors, like the app business, it’s just one month. People expect continual innovation and improvement , and if you don’t deliver that to them, someone else will. It’s a different world we live in today, where the only constant is change. And if you aren’t staying ahead, you’re falling behind.

8. Fear of business failure

Business failure is one of the main , if not the biggest, fears of any business owner. If it weren’t for that fear, we wouldn’t even be asking, “ Why do businesses fail ?” However, as you develop your entrepreneurial and managerial skills, you will find that one of your greatest assets in running a successful business is overcoming your fear of business failure . Without minimizing the validity of your fears, you need to learn to view business failure as a learning opportunity rather than an insurmountable obstacle. Remember, life happens for you, not to you .

9. The wrong mindset

One of Tony Robbins’ central philosophies is that our mindsets create our realities ; what we believe influences what we are able to achieve. As entrepreneurs, when we embrace strategies for turning business failure into success, we transform our mindset from one of defeat into one of empowerment . And when we are empowered, a failing business is not the concluding chapter in our story; it is only the beginning. Don’t let your limiting beliefs disempower you. Instead, stay hungry in your search for success . Your hunger will inspire you and pay off in the end.

10. Lack of vision

Marketing guru Jay Abraham understands the question of why businesses fail. It’s a high-velocity and high-leverage mindset that prepares business owners to navigate the ever-changing seas of business. Rather than adapt your dreams to the economy, you must set and achieve your own goals, independent of circumstances. How can you accomplish this? By recognizing that business success hinges on loyalty to a vision .

11. Lack of passion

A passion-driven mindset lets you persist in honing your ethics and beliefs while learning from all the reasons why businesses fail . By adhering to your passions, you’re able to see your circumstances clearly – the positives and negatives. With this level of focus, you create an unstoppable drive to accomplish your goals. This focus allows you to take risks, acknowledging that feelings of doom and failure arise not from circumstances but from feeling stuck in the status quo. Don’t get stuck – persist.

12. Ineffective marketing strategies

Whether your company is large or small, marketing is the next critical step . Why do businesses fail in their operations? If you cannot find a way to market your product or service, then your business will have a hard time getting off the ground. Because the truth is, you could have the most innovative product or service, but the best product doesn’t always win. Do you think McDonald’s has the best burger? Probably not. But their marketing strategies are top-notch.

13. Not understanding your X factor

To market effectively and prevent business failure , you have to understand what your “X-factor” is . What are you here to deliver and how can you improve your customers’ lives? Take, for example, FedEx founder Fred Smith. Even in FedEx’s early stages when profits were slim, Smith invested in three market studies for testing the value expedited shipping would add to his product. Smith’s research paid off: He discovered his X factor and FedEx is now a household name, in large part due to its corner on the market via expedited shipping.

14. Asking the wrong questions

To help discover what your true value is as a business, go one step further and ask yourself the right questions . This includes core questions like: What does the marketplace need? Who is my customer? What can I do to make my company talkably different ? And perhaps one of the most important questions you can ask yourself is, “What business am I really in?” Let’s look at an example of a wildly successful company that needed to ask itself that very question: Apple.

How Apple came back from business failure

Today, everyone has heard of Apple. It’s one of the most valuable companies of our time, with a market cap of nearly $2 trillion and a stock that is soaring above its competitors. But it wasn’t always that way. Apple is actually the perfect example to look at when considering why businesses fail .

Apple’s founder Steve Jobs was fired from the company in 1985. Before re-hiring Jobs in 1997, the failing business operated at a loss and inched toward bankruptcy. In fact, Michael Dell was advising decision-makers to shut Apple down and give its shareholders their money back. But Apple persisted, and Steve Jobs asked himself one of the most critical questions in his lifetime: “What business are we really in?”

At first, the answer seemed obvious – Apple was in the computer business. But how were they supposed to win back customers when 97% of all computers across the United States were run by Microsoft?

That’s when they realized that no matter how good their product was, Microsoft was embedded and entrenched in the masses. After all, it was one of the main reasons Apple found itself in bankruptcy.

So Jobs asked, “What business do we need to be in?” And Apple decided that it needed to be in the business of connecting people to their passions – to their photographs, their music, to each other. When he did this, he avoided one of the top reasons why businesses fail : lack of flexibility.

Answering this question created one of the most life-altering shifts for Apple. The company transitioned into building basic, cool technology that connects people to what they love. Upon rehiring Jobs, the company arranged a partnership with Microsoft which signaled the company’s turnaround. When Apple launched the iMac just one year later, the firm returned to profitability and made its mark. Before long came the iPod and iTunes, then the iPhone. Their net sales soared. S ince that point Apple has never stopped innovating, and their marketing campaigns have propelled the company to an entirely new realm. Had Jobs viewed his firing as the death toll of his career (and company), the firm would have never experienced its revival.

Today, is Apple really in the computer business? Only 10.4 % of their business is computers, which means almost 90%  is not – the vast majority is made up of iPhone , iPad and Apple Watch sales. Honestly answering the question “ Why do businesses fail?” was vital for Apple to change course and become profitable.

If success is about innovation and marketing, then you have to decide who your customer is, what they need, what business you are in and what business you really need to be in. Answering these questions can change your entire business, because the answers will ultimately allow you to change your offer. As we say, change your offer, change your business – and change your business, change your life.

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Seven reasons why strategic plans work—and seven reasons they fail

Morrissey goodale outlines seven key features of successful and unsuccessful strategic plans for architecture/engineering firms.

Every architecture/engineering (AE) firm I work with these days is feeling the pressure of unprecedented challenges and opportunities. Whether it’s the astonishing acceleration of technological advancements, the ever-increasing list of client demands, the growing sophistication of the competition, or the increasingly complex regulatory environment, AE firms must be more strategic than ever to remain competitive. Without a holistic strategic plan, even the strongest firms risk falling behind, losing market share, and ultimately failing to meet their business objectives.

In this high-stakes environment, effective strategic planning is not just a best practice—it’s a necessity. It provides a roadmap for navigating the complexities of the market, ensuring that firms can capitalize on new technologies, meet evolving client demands, and comply with stringent regulations. Understanding the reasons why strategic plans succeed or fail is crucial for any   AE firm looking to thrive in this dynamic landscape.

From my seat, here are seven reasons why strategic plans succeed and seven reasons they fail.

The plans that succeed:

Have clear vision statements and goals. successful strategic plans are anchored in clear visions and specific, measurable goals. well-defined visions provide direction and purpose, while concrete goals offer targets to aim for. this clarity ensures that everyone in the firm understands its objectives and can align their efforts accordingly. now, i get that financial performance is a result of balancing the learning and growth of employees with process improvements and market positioning, etc., but firms that aren’t afraid to get specific about revenue and profit targets—well, they tend to achieve more revenue growth and profitability. from what i can tell, it’s no coincidence., include comprehensive market analysis. effective strategic planning involves thorough market analysis. firms that understand industry trends, competitor activities, and customer needs accurately identify opportunities and threats. this knowledge allows them to position themselves advantageously in the market, tailor their services to client demands, and stay ahead of competitors. if you are serious about expansion of markets, services, and/or geographies, you have to bring the outside world in to make grounded assessments and sound decisions., invite all employees to participate at some level. engaging as many people in the firm as possible in the planning process (e.g., all-employee survey, etc.) fosters a sense of ownership and commitment. while their insights and feedback enhance the plan’s relevance and feasibility, it’s even more important that they support and contribute to the plan’s success. if there is such a thing as a reasonable person, they don’t need to get everything on their wish list to buy in, but they do need to be listened to., are flexible and adaptable. the ability to adapt to changing circumstances is a hallmark of a successful strategic plan. ae firms operate in dynamic environments where disruption has become the norm. flexible plans that allow for adjustments enable firms to respond to new challenges and opportunities without deviating from their long-term goals. the world happens—that’s a nice way of saying “you-know-what happens”—and when it does, you better not be wearing lead shoes., efficiently allocate resources. allocating resources efficiently is critical for the execution of strategic plans. you need the requisite financial resources, human capital, and technological tools. successful firms ensure that they have the necessary resources to implement their strategies effectively, which often involves prioritizing initiatives and making tough decisions about where to invest. they pay attention to the law of diminishing returns—set out to do three things, you’ll get them all done; set out to do five things, you’ll get one of them done; set out to do ten things, you’ll get none of them done., include the monitoring and evaluation of performance. regular monitoring and evaluation of progress are essential for strategic plans to succeed. firms that set up key performance indicators (kpis) and conduct periodic reviews track their progress and make necessary adjustments. this continuous feedback loop helps them identify what is working and what needs improvement, and it keeps the plan from becoming a “check-the-box” activity., have leadership’s full commitment. strong leadership is fundamental to the success of strategic plans. leaders who are committed to the plan and working on the firm, not just in it, inspire and motivate their teams. they play a crucial role in communicating the vision, setting the tone, and driving the implementation. their dedication ensures that the strategic plan remains a priority., the plans that fail:, are overly ambitious or unrealistic. strategic plans fail when firms set goals that are overly ambitious or unrealistic. while aiming high is important, goals must be achievable and grounded in reality. i’m all for stretch goals, but when the cognitive dissonance is simply too much, frustration, diminished morale, and a sense of failure results when targets are not met., ignore internal weaknesses. some executives refuse to look in the mirror for an honest assessment of their firms’ internal weaknesses. whether it’s fragile egos, fear, or hubris, they don’t want to accept that every aspect of their firm isn’t simply spectacular. but ignoring issues such as skill gaps, inefficient processes, or cultural misalignments undermines the execution of the plan. an honest assessment of internal capabilities is crucial for realistic and effective planning., botch communication. poor communication is a significant barrier to the success of a strategic plan. when the plan is not effectively communicated to all members of the organization, misunderstandings and misalignments occur. clear, consistent, and timely communication is necessary to ensure everyone is on the same page. communication is not a nice-to-have—it’s a must-have., avoid change. change in our industry is often met with resistance, particularly in established firms with ingrained practices and cultures. strategic plans that require moderate to significant change routinely fail when there is not enough buy-in from the team. overcoming resistance through change management strategies (including being clear about what is not changing), training, and support is essential., misinterpret risk. failing to anticipate and manage risk often leads to the downfall of strategic plans. risks can come from various sources, including economic downturns, regulatory changes, or technological disruptions. firms that have been blindsided by unforeseen events often lack a reasonably robust risk management framework that takes into account how likely and impactful these risks are., underestimate execution challenges. crafting a strategic plan only gets you to the starting line; then you need to get your hands in the dough. underestimating the complexities and obstacles involved in execution leads to front-end loading the plan with unrealistic amounts of work. remember, you have day jobs., misalign incentives. misaligning incentives with strategic goals is a surefire way to torpedo a strategic plan. for instance, if employees are rewarded for short-term results rather than long-term strategic achievements, they may not prioritize the strategic plan. aligning incentives with strategic objectives is crucial for ensuring everyone works toward the same goals..

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How Trump's conviction could change the dynamics of the 2024 race

By Olivia Rinaldi , Jacob Rosen , Katrina Kaufman

Updated on: May 31, 2024 / 11:57 AM EDT / CBS News

Former President Donald Trump has been found guilty of 34 felony counts of falsifying business records in his Manhattan criminal trial, adding another layer of uncertainty to an already unprecedented campaign.

As a c onvicted felon , Trump is not prevented from continuing to campaign for president , since the Constitution does not prohibit candidates from running for president even if they are convicted of a crime. In fact, there is precedent for a candidate running from behind bars: In 1920, Socialist Party candidate Eugene V. Debs ran for president from a federal penitentiary in Atlanta.

Trump is the first former U.S. president to be found guilty of felonies, and the first major party candidate to run for office after being found guilty of a crime. Here's how his conviction could change the 2024 campaign:

How Trump can campaign after his conviction

Now that he's convicted, Trump is all but certain to appeal the decision handed down by the jury, and he is likely to be able to return to the campaign trail as the process plays out. 

The next development in the case will come at sentencing, currently scheduled for July 11. Justice Juan Merchan has wide discretion over when sentencing occurs and what the punishment looks like. Trump faces a maximum of up to four years in prison and a $5,000 fine for each of the 34 felony charges of falsification of business records. The sentencing options available to Merchan include prison, probation, conditional discharge, fines or house arrest.

The judge could put limitations on his travel, such as restricting Trump from leaving the state and taking his passport, but Merchan has said he doesn't want to interfere with his ability to campaign.

"I would think that the judge wouldn't dare interfere with his right to speak to the American public because it's the right of the voters to be informed as well," said John Coffee, a professor at Columbia Law School and an expert on corporate governance and white collar crime.

In a recent survey of dozens of cases brought by Manhattan District Attorney's Office in which falsifying business records was the most serious charge at arraignment, attorney and author Norm Eisen found that roughly one in 10 of those cases resulted in a sentence of incarceration.

"I think that is fascinating," said Caroline Polisi, a criminal defense attorney and professor at Columbia Law School. "A lot of commentators say the reason he won't be incarcerated is because the logistics of it with respect to the Secret Service would be too much. On the other hand, if you're saying he should be treated like any other defendant, we have a lot of data saying that 90% of other defendants would not get jail time in this situation."

The impact of the conviction on Trump's ability to campaign could largely hinge on what sentence Merchan ultimately hands down, and when Trump would serve it.

"In the context in which he is found guilty and then sentenced to no jail time, I don't think it's going to cause a bit of difference," added Polisi. "There might be some minor issues. He might not be able to vote for himself. But other than that, I don't think it's going to cause any problems."

When determining Trump's sentence, the judge could take into account his numerous gag order violations — which led Merchan to threaten him with jail time if the violations continued — and his lack of demonstrated remorse or respect for the legal system. Throughout the trial, Trump referred to Merchan as "conflicted" and "corrupt" and to the case itself as a "sham." 

"In New York, a 78-year-old defendant, who's a first time offender, committed a non-violent offense, and has an otherwise, well, distinguished record — in some regards being an ex-president is distinguished. In that kind of world, there'd be no chance of an incarceration sentence," said Coffee. Trump turns 78 on June 14. "They can use probation, they can use fines. But there may be a view of many judges that you have to show that no one's above the law, and even the future president should have a taste of prison."

Even if Merchan does order Trump to serve time behind bars, the sentence could be deferred until his appeal has run its course.

"In other cases, when you don't have someone running for the White House, it would be more or acceptable to put him immediately into incarceration," said Coffee. "You certainly could put special conditions on what he could do or put him under house arrest, but I think until we get to the actual election, we're going to have to let Donald Trump run around and campaign."

The conviction's possible impact on Trump's poll numbers and support

Trump has predicted that a conviction in this trial could boost his poll numbers. 

"Even if convicted, I think that it has absolutely no impact. It may drive the numbers up, but we don't want that. We want to have a fair verdict," Trump told CBS Pittsburgh in an interview earlier this month.

Trump's support among his Republican base has been remarkably resilient in the face of his various criminal cases. In the months following his four indictments last year, Trump maintained his commanding lead in the Republican primary, capturing the nomination despite the dozens of criminal charges he faced.

Many Trump supporters who CBS News has interviewed since the trial began have said a guilty conviction will not change how they vote in November, adopting the former president's grievances as their own.

"Stormy Daniels has already been reviewed and stuff. It's kind of coincidental," Michigan resident Lori Beyer said at a recent rally in Freeland, Michigan, adding she would vote for Trump regardless of the conviction. "I don't think it's going to impact it, as far as I'm concerned."

Whether a conviction changes the minds of voters who are not committed to the former president remains to be seen. A recent CBS News poll found that the majority of Americans believed Trump is "definitely or probably" guilty of the charges he faced in New York. The overwhelming majority of Democrats — 93% — believed Trump was guilty, while 78% Republicans said he was not. Independents were split, with 53% believing he was guilty and 47% saying he wasn't. 

Opinions about whether Trump was guilty or not were already highly partisan, according to Kabir Khanna, deputy director of elections and data analytics for CBS News. Most people who believed Trump was guilty also thought the jury would convict him, and vice versa. 

Additionally, Khanna said people who followed the trial closely were the most polarized in their views.

"Together, these factors could blunt the impact of the verdict on the views of an already divided public," Khanna said. "Some voters may be swayed by the news, but I wouldn't expect a sea change." 

Other polling supports that notion. A NPR/PBS NewsHour/Marist survey released Thursday found that 67% of registered voters nationwide said a Trump conviction would not make a difference in how they vote. Among independents, just 11% said a guilty verdict would make them less likely to vote for Trump.

The conviction also gives the Biden campaign a potentially potent new weapon in their arsenal: the ability to label Trump a convicted felon. Mr. Biden remained largely silent about the Trump trial while it was ongoing, but NBC News reported last week that he planned to become more aggressive about Trump's legal woes after the trial concluded, while acknowledging that Trump would be on the ballot regardless of how his legal cases played out.

Trump has used the trial to help boost his fundraising, and will likely look to capitalize on the conviction. The Trump campaign and Republican National Committee saw an influx of donations after jury selection began, with the two entities raising $76 million in April. His campaign had about $50 million cash on hand at the beginning of May as he prepared to get back out on the campaign trail after the trial.

The former president repeatedly used the developments in the trial to raise money, including when he was held in contempt for violating the gag order against him.

"I'd get arrested ONE MILLION TIMES before I'd let those filthy dogs get their hands on you," one typical fundraising appeal read. 

Trump's other criminal cases

The New York case might be the only one of Trump's four criminal prosecutions to reach a conclusion before voters cast their ballots in the fall, giving the guilty verdict added weight.

The two federal cases brought by special counsel Jack Smith remain in limbo. 

In Washington, D.C., Trump faces charges related to his actions to remain in power after the 2016 election. Trump has argued that he is immune from prosecution, and the Supreme Court is currently weighing his claim.

The high court heard arguments in the immunity dispute on April 26 and is expected to issue a decision on the matter before the end of the court's term, likely in June. If the case is allowed to move forward, there is a slim possibility that the district court could schedule the trial before November. If the justices side with Trump and find him immune from prosecution, the charges would be dropped.

In Florida, Trump faces federal charges stemming from his retention of classified documents after he left the White House. Judge Aileen Cannon, who was appointed by Trump, has indefinitely postponed the trial. She ruled in early May that picking a trial date would be "imprudent and inconsistent with the court's duty to fully and fairly consider" numerous unresolved pre-trial motions. Those motions include Trump's efforts to dismiss the case altogether, as well as issues related to what classified information can be revealed at trial.

In the third case that remains outstanding, Trump faces state charges related to the 2020 election in Fulton County, Georgia. The trial in that matter is also on hold as Trump seeks to have District Attorney Fani Willis removed from the case. Georgia's Court of Appeals recently granted Trump's appeal of a decision that had allowed her to remain, bringing the trial to a temporary halt.

Trump's two federal cases could largely be in voters' hands if they are not resolved by November, a fact that raises his personal stake in the outcome. If he wins and returns to the White House in January 2025, Trump could order the Justice Department to seek to drop the charges altogether.

Trump has pleaded not guilty in all of the criminal cases against him.

• Donald Trump

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Wisconsin fake elector on why he signed phony electoral document for Trump

More From Forbes

The Top 10 Reasons Why Businesses Will Fail Over The Next 10 Years

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Unfortunately, business failure is common – and it’s not just startups and small businesses that fold every year. Fifty percent of the Fortune 500 companies that existed 20 years ago have disappeared, and the life expectancy of multinational companies is limited and shrinking.

Let’s explore the top 10 reasons why businesses fail – plus one important bonus tip.

1. Complacency

Arrogance is a company killer. As soon as leaders become complacent, their companies begin to fall behind. To succeed, companies need humble leaders who still maintain a smidge of fear that motivates them into action. Leaders should be aware that they can't afford to cling to any past or current successes because sitting back on their heels will cause their companies to fall behind.

2. Not prioritizing sustainability

The number one job of any business is to help make our world a better, more equitable place. Every business must address the world’s most pressing sustainability challenges. Consumers and investors are already demanding more accountability from organizations when it comes to sustainability and diversity, equity, and inclusion – and this trend will continue to grow as they increasingly vote with their wallets.

3. Not putting customers first

Everything a company offers must provide value to customers and make their lives better and easier. Putting customers first also means not being afraid of letting go of existing products and services and getting rid of anything that doesn't add value to customers.

Best High-Yield Savings Accounts Of 2024

Best 5% interest savings accounts of 2024, 4. not relentlessly innovating.

Our world is moving incredibly quickly, and new and innovative ways to deliver products and services are emerging every day. Companies must relentlessly innovate so they can keep their competitive edge. Many companies are hesitant to change established products, services, or processes – but if they don't, there will be plenty of innovators that are more willing to change. Those companies will take the lead.

5. Not thinking of themselves as tech companies

We have never lived in a time with so many transformative technologies. Tech trends like machine learning, robotics, blockchain, and the metaverse are revamping every business in every industry. Because of the rapid pace of change – and technology becoming first and foremost in the business world – every business must think of itself as a tech company and put these digital transformations front and center.

6. Not treating data as a key business asset

Data is the lifeblood of successful companies. They use data to help make better business decisions, understand customers and market trends, create smarter products and services, and improve their business processes.

But all this data comes with a huge responsibility. Companies must keep information safe and comply with all applicable security legislation. The companies that succeed in the future will need to have a solid strategy in place that makes the most of their data while protecting partners and customers.

7. Failing to attract and keep talent

Recruiting and keeping top talent is a challenge for today’s organizations – but it’s always been true that people are the heart of every company. Companies that succeed are working on developing the right culture, and are prioritizing diversity. They are also implementing flatter, more agile hierarchies and management structures where people feel good and can be their most authentic selves.

8. Not developing future skills

The skills required to succeed at work are evolving faster than ever, and the half-life of today’s skills is rapidly decreasing. Every organization needs to ensure its people are continually developing the right skills, or they will simply be left behind.

9. Failing to build strong partnerships and integrate with others

No business can operate in isolation, and in today’s world, it's more important than ever to build strong and resilient partner relationships and supply chains. For business leaders, this may mean partnering with traditional competitors – a type of cooperative competition called "coopetition” – to tackle their industries’ biggest challenges.

10. Lack of authenticity and transparency

To build and maintain a successful organization, you must have the trust of your stakeholders and customers. Gaining this trust requires transparency, authenticity, and honesty – even when things go wrong. Organizations must communicate their purpose and mission, and be transparent about the business processes that affect customers.

A great example of this issue is transparency around a company’s use of data. The companies that try to hide the way they use data (or exploit users’ data for nefarious purposes) will fail, and the ones that are fully transparent about how, when, and why data is being used will thrive by building consumer trust.

Hidden Cause of Failure: Lack of Business Plan and Execution

Many businesses will fail because of a lack of short-term and long-term planning. Your business plan should include where your company will be in the next few months to the next few years. Include measurable goals and results, as well as specific task lists with dates and deadlines.

In my work with a large variety of organizations, I help them prepare for the future and translate their goals into a very simple plan and strategy that everyone can understand and deliver.

Find out more about trends that are shaping our world in my book, Business Trends in Practice: The 25 Trends That Are Redefining Organizations , winner of the Best Business Book of the Year 2022. To stay on top of the latest on the latest business and tech trends, make sure to subscribe to my newsletter and connect with me on Twitter , LinkedIn , and YouTube .

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Launch of NASA Astronauts in Boeing’s Starliner Is Scrubbed

Butch Wilmore and Suni Williams were minutes away from lifting off from the launchpad at Cape Canaveral in the first astronaut flight of a vehicle that has faced years of costly delays.

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Kenneth Chang

Here’s what to know about Starliner’s 2nd scrubbed launch attempt.

NASA astronauts were stranded on the launchpad on Saturday during an attempt to ride a spacecraft into orbit that has never carried humans before. The goal of the flight was to add another spacecraft capable of carrying humans to the agency’s fleet. The vehicle, named Starliner and built by the aerospace giant Boeing, has already faced years of technical setbacks and costly delays.

Starliner was set to lift off atop an Atlas V rocket at 12:25 p.m. Eastern time from Cape Canaveral Space Force Station in Florida. But a computer that autonomously manages the last part of the countdown observed something not quite right at 3 minutes and 50 seconds before the scheduled launch time, scrubbing the flight.

A flight controller declared “Hold, hold, hold,” and others worked to ensure that the rocket was in a safe state and prepared for the astronauts to disembark.

For the final four minutes, three identical computers perform the same commands for final operations, like retracting propellant lines and releasing the bolts that hold the rocket down until launch.

But one of them was slow in starting up, indicating a problem. For safety, all three computers are required to be operating properly for liftoff.

Early Saturday evening, NASA, Boeing and United Launch Alliance, the manufacturer of the Atlas V rocket, said they needed additional time to analyze the issue and would skip a backup launch opportunity on Sunday. The next opportunities will be on June 5 and June 6.

The space agency retired its space shuttles in 2011. For nine years, astronauts could get to the International Space Station only aboard Russian Soyuz rockets. Then in May 2020, two NASA astronauts, Bob Behnken and Doug Hurley, flew to the I.S.S. in a SpaceX spacecraft, Crew Dragon. That capsule has since become the only way to get to orbit from the United States.

With a successful Starliner demonstration mission, NASA aims to have a second vehicle ready to carry crews to orbit from the United States. Here’s what you need to know about Saturday’s flight:

Starliner had what is known as an instantaneous launch window — it must launch on time to allow it to catch up with the International Space Station.

If Starliner still has not launched by June 6, there will be a longer delay of about 10 days to replace the batteries in the Atlas V’s flight termination system. The termination system destroys the rocket if it goes off course; in case of an emergency, Starliner’s engines would carry the capsule and astronauts to safety.

The two crew members on board Starliner are Butch Wilmore, the commander, and Suni Williams, the pilot. They are experienced NASA astronauts, with Wilmore having spent 167 days in space, and Williams 322 days there. After liftoff, they will spend about a day in orbit before docking with the space station Sunday afternoon. They will stay for about a week, allowing for more tests of the spacecraft and its systems.

The two astronauts were supposed to launch on May 6. A problem, since repaired, with a valve on the United Launch Alliance Atlas V rocket that was to carry their Starliner capsule to orbit caused the flight to be called off after Wilmore and Williams were already on board.

Around the time the astronauts were strapped into their seats in the Starliner on Saturday, U.L.A. flight controllers reported a sensor issue with a valve on the launchpad that regulates the flow of propellants to the Atlas V’s second stage. The team switched to a backup system, which seemed to resolve the issue and allowed the countdown to proceed. There was also a brief problem closer to liftoff with the fans in the astronauts’ spacesuits, but Boeing engineers resolved that issue.

Starliner itself is years behind schedule, as the work by Boeing and NASA to confirm that the spacecraft was safe to fly stretched far longer than either had expected. Technical pitfalls included inadequate software testing, corroded propellant valves, flammable tape and a key component in the parachute system that turned out to be weaker than designed, and most recently a helium leak in the spacecraft’s propulsion system. Boeing fixed and studied the problems, enabling Saturday’s launch attempt.

The delays have left Boeing facing more than $1.4 billion in unexpected charges. The launch attempt comes during a tough 2024 for the aerospace giant. Just days into the year, a panel on the body of a Boeing 737 Max 9 blew off during an Alaska Airlines flight. The pilots safely landed the plane and there were no major injuries, but the episode has had widespread repercussions for the company, particularly its aviation division.

Niraj Chokshi contributed reporting.

Now, the tedious process of reopening the hatch and getting Suni Williams and Butch Wilmore out of their seats. This is going more slowly than during the scrubbed launch attempt last month. In May, the launch was called off earlier in the countdown, before the hatch was closed. Today it was moments before liftoff, and more work is required for the astronauts to safely disembark. We’ll conclude our coverage for now and provide an update once one is announced by NASA, Boeing and U.L.A. later today.

The computer that autonomously handles the last part of the countdown observed something not quite right at 3 minutes, 50 seconds before liftoff and issued a hold. If it is a straightforward fix, the next launch opportunity is tomorrow at 12:03 p.m. Eastern time.

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The crew access arm is moving back to Starliner to allow the astronauts to safely exit the vehicle. We don’t know yet what happened to stop the countdown.

Starliner will remain on the ground today. What remains to be seen is whether it may launch tomorrow, or another day.

Hold on the countdown.

Michael Roston

They’re moving the countdown to T-4 minutes, at less than two minutes left in the countdown for the 12:25 p.m. liftoff.

Less than 5 minutes to launch. Weather is good, and the rocket is ready to fly. I bet Butch Wilmore and Suni Williams are ready to go, too.

Now the suit fans are working, and the countdown continues.

There is a problem with the fans that blow air into the astronauts’ spacesuits. Boeing engineers are working on that.

If you live on the East Coast and have a good clear view of the sky to the east, you may have a shot at seeing the Atlas V rocket’s ascent during its first 10 minutes, according to United Launch Alliance

Get Ready! Live on the East Coast and wonder when you will see the #AtlasV near you? Our visibility graphic shows when the rocket will rise into view. pic.twitter.com/MKpdkbe4rh — ULA (@ulalaunch) June 1, 2024

Here’s the flight plan for Starliner’s journey.

If all goes well, an Atlas V rocket carrying Starliner will lift off on Saturday at 12:25 p.m. Eastern time from the Cape Canaveral Space Force Station in Florida. It has to launch at the exact moment — what is known as an instantaneous launch window — that would allow it to catch up with the International Space Station passing above.

Starliner then detaches from the second stage of the rocket 15 minutes after launch. Then 16 minutes later, Starliner fires its thrusters to enter a stable orbit around Earth.

Starliner will take more than a day to meet up with the space station. During that time, the two NASA astronauts, Butch Wilmore and Sunita Williams, will perform tests, including manually flying the spacecraft.

On Tuesday evening, the spacecraft will slowly approach the station, with docking scheduled for 1:50 p.m. Eastern on Sunday.

Starliner, along with Mr. Wilmore and Ms. Williams, will stay at the space station for about a week, allowing for more tests of the spacecraft and its systems.

“We’re pretty much on a timeline, making sure we’re going to get everything done,” Ms. Williams said during a question-and-answer session before the postponed launch attempt on May 6.

The countdown has now reached 30 minutes until a rocket is set to lift Butch Wilmore and Suni Williams on the very first flight of the Boeing Starliner with astronauts on board.

Boeing’s Starliner capsule has had a long, difficult road to human spaceflight.

In late 2019, Boeing appeared to have a good chance at beating SpaceX to become the first private U.S. company to take astronauts to orbit.

In the four and a half years since, a lot has gone wrong. Here’s a timeline of the setbacks that caused Boeing to fall so far behind SpaceX in providing American astronauts a ride to low Earth orbit.

December 2019: A ‘high-visibility close call.’

On Dec. 20, 2019, Boeing looked to be in the homestretch.

A Starliner capsule — the same spacecraft that is to take the NASA astronauts Butch Wilmore and Suni Williams to the space station on Saturday — was on the launchpad atop an Atlas V rocket.

The test flight to the space station had no astronauts on board, and its mission was to assess the spacecraft’s navigation, propulsion and docking systems. If the flight were to pass this last technical hurdle, a trip with astronauts aboard could take place within months.

The Atlas V rocket launched flawlessly, releasing Starliner.

And then the mission immediately went awry .

The spacecraft’s clock was set to the wrong time, making Starliner think it was in the wrong location. The capsule fired its thrusters to try to get to where it thought it should be. At the same time, a communications glitch thwarted efforts by flight controllers at mission control to diagnose and fix the problem.

The Starliner spacecraft used up too much propellant, and the planned docking at the space station was called off.

During the troubleshooting, Boeing engineers discovered another software error that would have fired the wrong thrusters during a maneuver leading up to re-entry. NASA labeled the incident a “high-visibility close call” that could have destroyed the spacecraft if the errors had not been patched from the ground during the flight.

An investigation revealed multiple failures in Boeing’s processes that should have caught the mistakes before the launch. An exhaustive audit reviewed one million lines of software code.

NASA officials admitted that maybe they had placed too much trust in Boeing, which had decades of experience working with NASA.

Summer 2021: Corrosion on the launchpad.

NASA and the company decided that a second uncrewed test was needed before a flight with astronauts aboard. The spacecraft was rolled out onto the launchpad in July, but a problem aboard the space station prompted a delay to early August. Then ahead of an Aug. 4 launch attempt, mission managers discovered corroded propellant valves on Starliner that would not open. The test flight was called off and another lengthy round of troubleshooting followed.

May 2022: Another launch, more problems.

The second uncrewed test finally launched on May 19, 2022.

During a maneuver to put Starliner in a stable orbit, two thrusters failed, but the spacecraft was able to compensate. It proceeded to dock at the space station and returned to Earth successfully.

July 2023: Parachutes and tape.

Before the test flight with astronauts aboard, then scheduled for July 2023, two more issues emerged. Protective tape that was wrapped around wiring insulation turned out to be flammable, and a key component in the parachute system was weaker than designed and could break if Starliner’s three parachutes did not deploy properly.

About a mile of the tape was replaced, and the parachute design was upgraded and strengthened, and then retested.

May 2024: Still not ready to fly.

“We’ve been taking our time to go through everything methodically because it is a test flight, and we want it to go well,” Steve Stich, program manager for NASA’s commercial crew program, said during a news conference on May 3.

Mark Nappi, the program manager at Boeing for Starliner, said: “We are ready to perform the test flight. And I’ve never felt readier on any mission that I’ve ever participated in.”

But Starliner was still not quite ready.

The countdown on May 6 was proceeding smoothly until a balky valve on the second stage of the Atlas V rocket — unrelated to Starliner — started acting up, vibrating audibly at about 40 times a second.

The launch was called off, and the rocket needed to be taken off the launchpad for the valve to be replaced. That work was completed within a few days.

But a thornier issue emerged.

As the propellants were drained from the tanks of the Atlas V rocket, engineers discovered a small helium leak in the Starliner’s propulsion system.

Helium, an inert gas, is used to push propellants to the thrusters, and if too much helium is lost, the thrusters may not work properly.

The leak was traced to a seal on a helium line leading to one of 28 small thrusters known as reaction control system engines.

“Much like you would have on any piece of your plumbing at home, a faucet or anything like that,” Mr. Stich said during a telephone news conference on May 24. “There’s a seal that keeps that interface tight.”

Tests showed no leaks in the seals leading to the other 27 reaction control system engines, and engineers were confident that the single leak was manageable. There are no plans to replace the seal, which would require pulling Starliner off the Atlas V rocket and would lead to an even lengthier delay for the flight.

“We could handle this particular leak if that leak rate were to grow even up to 100 times,” Mr. Stich said.

The helium leak led NASA and Boeing to take a wider look at the Starliner’s propulsion system, which revealed a “design vulnerability,” Mr. Stich said. If a series of unlikely failures occurred, the spacecraft might not be able to bring the astronauts safely back to Earth.

If there were problems with the larger engines intended to be fired for a maneuver to drop the spacecraft out of orbit, one of the backup plans was to use eight of the smaller thrusters. However, the analysis showed that an additional failure might mean there would be only four of the smaller thrusters available.

The engineers then developed another backup plan to bring Starliner out of orbit with only the four thrusters. NASA and Boeing officials said that after weeks of studying the problem, they were confident they could manage problems that might arise from the leak.

And on Saturday, finally, maybe, Mr. Wilmore and Ms. Williams will fly on Starliner.

It’s now one hour until Starliner’s first launch with astronauts on board.

The hatch is closed. The launchpad team is now checking for leaks from the seal on the capsule's hatch.

Niraj Chokshi

Reporting on Boeing and other companies in the aviation industry.

Boeing’s aviation safety record is under heavy scrutiny this year.

Boeing has had a tough 2024.

Just days into the new year, a Boeing 737 Max 9 experienced a near-catastrophic failure near Portland, Ore., when a panel on the plane’s body blew off during an Alaska Airlines flight. The pilots safely landed the plane and there were no major injuries, but the episode has had widespread repercussions for the company.

The Federal Aviation Administration grounded all Max 9 jets within the United States for several weeks, a headache for Alaska and United Airlines, which rely on the plane. The agency also immediately increased its scrutiny of Boeing and limited the rate at which the company can build the Max at its Seattle-area factory.

On Thursday, Boeing delivered to the F.A.A. a description of the company’s plan to improve quality and safety. That followed earlier efforts to reassure the public of the quality of its planes by describing stepped-up inspections, expanded training, simplified planning and processes, and work to reduce defects.

The F.A.A. said it would hold weekly meetings to monitor Boeing’s progress, which the agency will also be able to track with six real-time indicators like employee proficiency, parts shortages and how much rework had to be done on components it builds.

The company has also shaken up its leadership: The chairman of its board stepped down and its chief executive said he would leave by the end of the year.

Boeing has been in talks to buy Spirit AeroSystems, a troubled supplier that makes the body of the Max, and which had been a part of Boeing until it was spun off two decades ago.

The Alaska Airlines episode ended a relatively smooth run the company had enjoyed since late 2020 when it resumed flights of the 737 Max 8. The company’s reputation had been damaged after two fatal crashes of that plane, in 2018 and 2019, in which 346 people died. The Max was banned globally for nearly two years after those crashes.

Much of the fallout has been limited to Boeing’s commercial planes business, which is distinct from the company’s other two divisions: one that makes military aircraft, missiles, satellites, spacecraft and rockets, and another that provides maintenance and services to the company’s customers.

Everything is good now. Countdown continues. Launchpad team has resumed work on closing the Starliner hatch.

Replenishing of liquid oxygen has resumed. There seem to be some issues with attempting to restart the flow of liquid hydrogen. The two propellants mix together in flight to make the rocket move.

Liquid oxygen and liquid hydrogen propellants in the rocket's second stage continually boil off and needs to be topped up. However, communication to the valves that regulates the flow of the propellants was not working correctly so the valves were closed. The ULA launch team is switching to a backup communication system. If that works, then the launch will proceed. If not, Wilmore and Williams will probably have to wait again for another day.

The problem is like a gas pump that cannot discern when the tank is full, and involves a valve that is on the launchpad, not in the rocket.

Dillon Rice, the commentator for United Launch Alliance, said it looks like a sensor issue and not a problem with the actual valve. They are looking to use backup instrumentation and that is expected to resolve the issue.

The closing of Starliner's hatch is being delayed as the rocket's managers troubleshoot the valve issue. There is still cushion in the countdown for this to be worked out and lift off on time.

United Launch Alliance, the maker of the Atlas V rocket, is working on an issue with a valve in the second stage. The countdown is continuing.

If you were watching the last launch attempt on May 6, you may be feeling a sense of déjà vu: It was around two hours before launch with Wilmore and Williams strapped into the capsule that a valve issue on the rocket’s second stage led to a scrub of the flight.

This appears to be a different valve than the one that interfered with the May launch.

“Crew insertion is complete.” The astronauts are strapped into their seats, and ready to go when the rocket and spacecraft are ready.

Some of the astronauts’ luggage is not going to make it to the space station.

On Friday, NASA announced some shuffling of cargo that Starliner is taking to the space station.

The astronauts on board, Butch Wilmore and Suni Williams, will give up some personal items during their short stay in orbit in order to make room for a spare part for a water recycling system on the International Space Station.

The space station receives regular deliveries of cargo. Much of it arrives packed into uncrewed cargo vehicles launched from the United States and Russia. That includes a Russian Progress spacecraft that docked Saturday morning with about three tons of food, fuel and other supplies.

Other times, items are packed along with astronaut crews headed to space.

On Wednesday, a pump failed in the system on the space station that collects and processes the astronauts’ urine, the first step in turning it back to drinkable water. That pump had been expected to last until the fall, and a replacement was set to be delivered by a cargo spacecraft in August.

“It failed a little bit early, which put us in a position where we’d have to store an awful lot of urine,” Dana Weigel, NASA’s program manager for the space station, said during a news conference on Friday. “Obviously, adding two more crew members to that further constrains the storage capability we have on board.”

The pump equipment, which weighs about 150 pounds, was flown to the Kennedy Space Center and loaded onto Starliner. Two suitcases of clothing and toiletries for Mr. Wilmore and Ms. Williams were removed to make room for it.

“The key for the flight was not to perturb the mass properties,” Ms. Weigel said.

The astronauts will use supplies and clothing already at the space station during their scheduled stay of about a week.

The one weather concern are the winds blowing from the east. If the launch gets aborted right after liftoff, engines would carry Starliner away from the rocket. It would then land under a parachute in the water. The winds could blow Starliner over land. Although Starliner is designed to land on land when it returns from orbit, that would not be acceptable during an aborted launch.

What is Boeing’s Starliner spacecraft?

At first glance, Boeing’s Starliner looks much like the command module used during NASA’s Apollo moon missions in the 1960s and 1970s.

That’s not a random coincidence. The ability of that cone-shaped vehicle to keep astronauts safe during re-entry into the Earth’s atmosphere has been well documented.

At 15 feet in diameter, Starliner is slightly bigger than the Apollo spacecraft. The capsule and the service module — the part of the spacecraft that provides power and propulsion during the flight before being discarded just before landing — are together 16.5 feet in height.

The spacecraft is large enough to carry up to seven astronauts, but NASA missions will carry a crew of four. Boeing has the option of selling a fifth seat to a private customer who wants to tag along.

Each Starliner capsule is designed to be used for up to 10 missions; by contrast, the service module — the cylindrical component below the capsule which contains power, propulsion and life support systems — burns up in the atmosphere, and a new one is needed for each trip.

Boeing has built three Starliner capsules. The first was used only to demonstrate the ability to quickly fly astronauts to safety in case of an emergency on the launchpad. That capsule will not be used for any missions to orbit.

The Starliner used for this mission previously flew in space in 2020 during the first uncrewed test flight, which was cut short because of technical problems. Sunita Williams, the pilot for this mission, has named the spacecraft Calypso, a nod to the research ship used by Jacques Cousteau, a French undersea explorer.

The third Starliner, still unnamed, was used for the second uncrewed test in 2022 and will fly four astronauts to the space station for the first operational mission, scheduled for next year.

Butch Wilmore and Suni Williams arrived at the launchpad, rode the elevator up and are now preparing to get into the capsule. It’ll take a while to get them fully strapped in.

Starliner's return to the launchpad was delayed last month as Boeing analyzed a leak of helium from the capsule's propulsion system. The helium continues to leak, a Boeing spokeswoman said, but at a slower rate than during the last launch attempt. It is not considered a problem at this time.

The Starliner astronauts have been patient. Then they had to wait again.

For Butch Wilmore and Suni Williams, the wait for this trip on the Boeing Starliner has been longer than they expected.

On May 1, a reporter pointed out that Mr. Wilmore and Ms. Williams, two veteran astronauts, trained longer for this mission than Neil Armstrong, Buzz Aldrin and Michael Collins had for the Apollo 11 moon landing.

“It almost feels unreal,” Ms. Williams replied.

Then the wait stretched out for almost another month after the first launch attempt on May 6 was called off because of a misbehaving valve in the rocket.

Mr. Wilmore and Ms. Williams initially remained at the Kennedy Space Center in Florida, hoping that the valve could be quickly fixed and that a second attempt could follow within a few days.

But engineers found a small helium leak in the Starliner, requiring arduous troubleshooting.

The two astronauts returned to their home base at the Johnson Space Center in Houston on May 10, but remained in quarantine to minimize contact with other people, and the chances of becoming ill.

“They’re in good spirits,” Steve Stich, program manager for NASA’s commercial crew program, said during a news conference on May 24.

Mr. Wilmore and Ms. Williams spent some of their additional time on the ground in a simulator for the Starliner spacecraft, practicing how to handle a failure of some of the spacecraft’s thrusters — a possible consequence if the helium leak worsened while they were in space.

“They’ve flown all those cases in terms of rendezvous and deorbit and entry, and they’re ready to go,” Mr. Stich said.

Ms. Williams was born in Ohio but grew up in Massachusetts. She was a test pilot in the U.S. Navy and has more than 3,000 hours flying 30 different aircraft. She was selected as a NASA astronaut in 1998. She has spent 322 days in space and for a while held the record for total time on spacewalks by a woman.

Mr. Wilmore, a native of Tennessee, was also a Navy test pilot, and he flew combat missions over Iraq and Bosnia in the 1990s. He was selected as an astronaut by NASA in 2000. During his two previous missions, he spent a total of 167 days in space.

Their last trips to orbit were years ago.

Ms. Williams had two long-duration stays on the International Space Station, the second ending in November 2012. Mr. Wilmore served as the pilot of a space shuttle mission in 2009, and then spent five and a half months on the space station from September 2014 to March 2015.

After a glitch-filled test flight in December 2019 with no crew aboard, delays shuffled the astronaut assignments. Indeed, none of the astronauts that NASA named in 2018 to fly on the test flight are on the upcoming test flight.

In 2020, Mr. Wilmore was named commander of the test flight. In 2022, Ms. Williams was shifted to the test flight, serving as the pilot. (She originally was assigned to serve as the commander of the second flight, the first operational one that would take four astronauts to the space station for six months.)