10 Reasons Why Small Businesses Fail and How You Can Avoid Following Suit!

In the era of budding entrepreneurship, an increasing number of people are taking the leap into setting out on their own and starting a small business. With a dream of creating something great, unfortunately it’s only a matter of time until these trailblazers are confronted by the sad state of small business in Australia and are endangered by becoming another ‘statistic’.

According to the Australian Bureau of Statistics (ABS), over 60% of small businesses close down inside of their first 3 years of operating. It’s a very scary figure and it’s one that’s thrown at every brave soul who endeavours in their business venture.

So why is this happening?

Greg Hayes, from Hayes Knight Accountants & Advisers, weighed in on the topic and stated that “One of the key reasons is that many small businesses start with a bad idea – an idea that was never going to work. But one of the biggest reasons for failure is a lack of capital. It’s a common story that many people go into business under-capitalised and they just run out of money. There’s also the issue of a lack of proper training. They get carried away with an idea but don’t think it through, they have no clear strategy and they get very much caught up in the day-to-day of what the business requires but pay little attention to long-term plans.”

But where exactly are these small businesses going wrong? CB Insights analysed start-up failure post-mortems and identified the top 20 areas of just where they went wrong. Here are the top 10 reasons from that study:


  1. No Market Need (42%)
  2. Ran out of cash (29%)
  3. Not the right team (23%)
  4. Get outcompeted (19%)
  5. Pricing/Cost issues (18%)
  6. Poor Product (17%)
  7. Poor/lack of business model (17%)
  8. Bad Marketing (14%)
  9. Ignore Customers (14%)
  10. Lose focus (13%)


The stats are there, they’re harsh, but the sad thing is just that, a reality. But that shouldn’t stop you from going out and achieving your goals. Isolation, lack of proper planning and low accountability is enough to stop any successful business dead in its tracks. Thankfully there are tools out there to support your small business to thrive in this difficult landscape. Connect with other like-minded business owners through a local business centre, enrol in a business support program and find the right resources that are designed to give you a leg up.

Small business is tough we know, and that’s why we’ve developed START21. A support program designed to help you succeed with the 21 key steps necessary to creating a healthy and sustainable business. Learn more at one of our discovery sessions.

Visit the Waterman $30 Membership


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