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Why Small Businesses Fail: Top 8 Reasons for Startup Failure
Top 6 Reasons New Businesses Fail
A major reason why companies fail, is that they run into the problem of their being little or no market for the product that they have built. Here are some common symptoms:. As outlined in the introduction to Business Models section, after spending time with hundreds of startups, I realized that one of the most common causes of failure in the startup world is that entrepreneurs are too optimistic about how easy it will be to acquire customers. They assume that because they will build an interesting web site, product, or service, that customers will beat a path to their door. That may happen with the first few customers, but after that, it rapidly becomes an expensive task to attract and win customers, and in many cases the cost of acquiring the customer CAC is actually higher than the lifetime value of that customer LTV. The observation that you have to be able to acquire your customers for less money than they will generate in value of the lifetime of your relationship with them is stunningly obvious.
Why You Need to Plan for Failure as Much as You Do Success
One of the great mysteries of entrepreneurship is why businesses fail. Some people start one successful business after another while others fail to succeed. No one starts a business expecting to fail. Starting a business can be a lot of fun and excitement. Success requires a lot of planning and starting the business the right way.
According to statistics published in by the Small Business Administration SBA , about twenty percent of business startups fail in the first year. About half succumb to business failure within five years. Those statistics are rather grim.