5 Simple Reasons Entrepreneurs Fail

As I think back to my many entrepreneurial endeavors that failed (e.g. post mortem of a failed product), several clear themes come to mind. It isn’t that any one issue or challenge was the culprit, rather there were a number of items that colluded together. Also, most were within my control and I still failed.

Here are five simple reasons entrepreneurs fail:

  1. Not giving it 100% – it’s hard enough to succeed when working on something full-time that entrepreneurs working on an idea part-time are even more likely to fail because they won’t make enough progress to figure out how to make it successful
  2. Premature scaling – resources are scarce so a self-inflicted death is more likely when staff or resources are added before a business model is found (see startups shouldn’t hire a VP of Sales)
  3. Building product in a vacuumcustomer usage is oxygen for a product and too often entrepreneurs add features based on whims that don’t add value to customers while also slowing down future product development (e.g. code debt)
  4. Lack of resourcefulness – it isn’t easy recruiting team members, raising money (if necessary), signing customers, building partnerships, etc and many entrepreneurs run into a brick wall without breaking through it
  5. Poor market timing – this is the toughest of them all as it is outside the entrepreneur’s control but sometimes it’s the right idea at the wrong time and sometimes it’s just a bad idea, and it is always difficult to tell

There’s no fool-proof way to be successful but the five simple reasons entrepreneurs fail comes up over and over again. Learn from these issues and increase your chance of success.

What else? What are some other reasons entrepreneurs fail?

40 thoughts on “5 Simple Reasons Entrepreneurs Fail

  1. Amazing how much is within control of the entrepreneur. More than people typically give credit to, especially in flame out situations.

  2. Hey David,

    Agree 100% with the list, the items show up on many lists I have seen over the years. The question I would love to see someone delve into deeper (real life examples, stories, statistics, papers, etc) that help the individual or team know when the right time is to jump full-time .

    Often this is interpreted as a request for a timeline, but I don’t think products/businesses move merely on a timeline (you have to work on the idea, no?), but it would be more valuable to see it in “checklist” format. What do you think is the minimum list of questions that must be answered by the individual or team to say “YES, I am ready to go full-time”?

    Good stuff.

  3. Thanks David! I’m building my business in the “nooks and crannies” between caring for my children (ages 1 and 4). I think another reason is not taking oneself and one’s business seriously. I have seen that it’s hard for people (and myself) at times to believe that I have a “real” business when I also have a very real job of caring for my kids.

    I know that other people have day jobs, and taking their start-up seriously probably handicaps them. I’ve worked very hard to overcome internal and external boundaries around whether or not my business is “real.”

    I appreciate your post and will use it as a road map to know where some of the biggest landmines are.

    In case you are interested, here’s my business page! http://www.wishingwellcoach.com


  4. I think we (entrepreneurs) fail because we don’t adapt to change. At the beginning you have one thing in mind, an expectation, an idea of where you will be and what you will offer/sell. You stick to this idea completely, but that is not the key. I believe it is important to keep an open mind and be ready for change. What you start with, you can expect that it might not be what you will have 3 months later. Be ready to change your product/service, your service, your approach to the way you sell, etc. Also a tip is to do something different, step out of the box. Try things that won’t affect your business if it doesn’t work ie. A new sales pitch, the worst that could happen is a no.Thanks for the great post. It will definitely help people who have been in my situation 3 months ago. Good luck to all!

  5. I’m so glad you used “colluded” it’s such a lovely word.
    And I hate scaling! None of my ideas seem to be scalable so they go back to being hobbies, fun etc.
    The 100% thing is very true too. It’s hard to give something your all when you can’t and that just creates an impossible situation.
    I think too that too many times people focus on the financial aspect – “How much can I make with…?” – not the value of the product being created – “How valuable is this to…?” You need an awesome thing, that you care about, put a lot of value into and that people actually want.

  6. The problem I would have with this article years ago when I started my first business would be my own pride and ego. I know better than… I looked at that already… Thanks for the information, I won’t make that mistake… I have since learned (at least in Oak Ridge TN) that the Chamber has someone from the SBA to help guide new or wanting to open business owners. And she is pretty good (had run her own business). Oh! and I am a little more humble today. I will visit some of those other articles soon. Thanks, Dave

  7. I am the Operations guy, so when viewing a small start up business, I can see how not laying ground rules can bring on the laws of attraction. This can make running a business even more of a chore than need be.

    If you do not have simple policies established such as call in procedures then one can not be angry when they are working away and wondering why there is one employee missing. Once the other employees see this happen, well, soon you will be working alone with no help.

    I also think that when you open a new business, that you have to set limits. For many, they want to give 110% to make things succeed and this is great but when you are doing foolish things it is counter productive.

    My mother-in-law has a salon and she never set a clear opening and closing time and she tries to please everyone to make her customers happy. Well, the customers arrive to get their hair styled at 9:30 p.m. and sometimes they wrap things up around midnight. Is that enough? No! Even on the days off, people arrive to see if she can do something for them. Now people are asking to get work done and they will pay her later. She is setting herself up to burn out.

    Good post!

  8. I am not trying to self-promote here but, as a Life Coach, I wish I’d had a Life Coach with me when I first established a business many years ago; (In Marketing and Design actually) and during subsequent growth spurts.
    Someone looking in can be such great benefit. Consider having someone alongside you to champion you in your exciting venture.

  9. Great list. I especially agree with #1. You need to give your business your all to make it work. That’s why I recently quit my job to pursue it full-time. That way I can dedicate all my time to it. Also, removing the safety net of my job, makes my business’s success the only option. Can’t get better motivation than that.

  10. Good points. But I often wonder about the role of luck in the success or failure of start-ups. Is it possible that some failures are best explained by chance?

  11. This is really interesting. I agree with all that you’ve listed above. We’ve just started a business selling personalised gifts and I think we’ve definitely been guilty of ‘building product in a vacuum’…we get so excited by developing new ideas that we have spent money doing so that would have been better invested elsewhere…but easy to say retrospectively, eh! I think another major one is not keeping a very close eye on cash flow. We’ve learnt that one the hard way too!

  12. This is a good list. Without going into detail, I am uniquely qualified to comment on this particular subject. And I am compelled to mention a couple additional things.

    If you must use your own money (unless it’s to get out of a jam, and even then it should be a temporary use), you have already failed.

    If you have to go to the bank yourself (except to fix the above “jam”), you have already failed.

    If you must rely on a partner for anything (except, yeah, that thing), you have already failed.

    If you do not have a solid business plan in place before you start your actual business, you have already failed.

    Expect to be plagiarized. Do not live in fear of it. Plan for it.

    Expect to adjust. Many times over.

    Expect to fail. Plan for it, many times over.

    Hope to succeed. And not in the way you expect.


  13. Truly accepted. Major point is giving 100% to the business & should not start the business without the planning or understanding. Long term planning is key to survive.

  14. Great article and congrats on featuring on the front page of wordpress.com Keep up the interesting content.

  15. It is amazing what I find when scanning the pages of the wordpress community when in fact a year of the hobby level of my family project is on the verge of the proverbial next step. I am looking for team members contacting three bloggers and having two wanting to contribute,right place right time or is it fate or luck? Of course I am searching for more folks. 110% when trying to make a startup work goes without saying, Business plan.my hosting rep one day said to hit the pause button and asked me if I had a business plan to which I replied I would kinda hope this might work and then after that,,,,,,NO you don’t have a plan!!!! Believe me I do now. Anyway the post and comments ring true to heart and provide a lot of good advice. I need to vist more of your blog. Perhaps this might be of interest to some http://ourauthors.myallacrossamerica.org/

  16. Interesting article. I agree there is no full-proof way to success. You hit lulls in every walk of life, however a person should never cease trying and giving his best shot.

  17. I really enjoyed the post and can look at all five reasons you have given and relate it to my publishing aspirations and branding as a writer. Whilst I enjoy writing and I am passionate about it. I want to make enough money from writing to support myself (this is where us creative types get a bit squishy and the art versus money debate starts up) and I need to think of my book as “a product”.

    Not giving it 100% – As a writer, you just have to write! Talking about it, won’t cut it.

    Premature scaling – Don’t spend thousands on flashy stuff before you know that the book has at least some legs.

    Building product in a vacuüm – Beta Readers – Are people going to read it! Is there a want for it.

    Lack of resourcefulness – Make do, mend and beg. Check that anything you are spending money on is worth it. You’ve hired an editor – did you check out their references and even email some people.

    Poor market timing – Do you write “shades of grey” style erotica? Now, is or isn’t the best time to launch, you don’t want to get lost in the thousands of the copies that this book will generate.

  18. I also believe that a lack of business acuemen and interest can inhibit the best of idea’s. Much like Gary Vaynerchuk (see Wikipedia) I also believe passion is the key to unlock many doors.

  19. Reblogged this on Rajnie's Blog and commented:
    I like articles that explains complex things in simple words. This is an example of such an article. The first point is the main reason for everyone who fails and not only entrepreneurs. Thanks for writing this David. Cheers.

  20. Hi
    Nice post and its a indeed a fact, especially when the race to succeed has got so intense.
    Please feel free to remove this comment when you are done reading if you like. I work with a web design and development company, if you ever need any changes or a new website or application , Do give us the opportunity@
    webtransformers.com. We offer everything from development in different programming languages along with High performance SEO work. Apart from that Good Luck with your endeavor.

  21. For the reason #5 Poor Market Timing, it is true that the world of business and customer demand’s are very fast changing…that’s why research important…how to sustain in business…anyway thank you for the very valuable info.

  22. I would say another reason for failure would be impatience. If the entrepreneur expects an overnight hit with little to no work, then they are completely unaware and out of touch with how much work really goes into launching your own business.

  23. Great post for a young entrepreneur like myself! However, I am currently making the first mistake by working on two startups at the same time – I know it’s a mistake but somehow I just can’t seem to give up one for the other..

  24. I agree on all these points. Great post and summarization!

    Though what if you realize that your idea was not scalable (dead end everywhere) despite your efforts and it wasn’t something that motivated you anymore, would admitting failure (for the lack of better word) and pulling it out of the market still a failure? Or the entrepreneur’s failure for not having the “right” idea? Would that actually fall under failure or the ability of the founder to immediately see the problem?

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