Why Do 75% Of Start-ups Fail To Become A Successful Business?

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With the new wave of entrepreneurship, we have seen a boom in start-ups. People see that entrepreneurship is the quickest way to get rich in real-time. 

Social media platforms leave no stone unturned to glamorise the lives of people who have become successful in their businesses at a young age. 

Behind these glamorous lifestyles, we have the ugly truth of start-ups. Despite making a good amount of money and impact. Some of the businesses are not going to survive more than three years.

So, what is the percentage of businesses that fail? Well, according to the Lending Tree & SBA, 20 per cent of businesses fail in their first year, 30 per cent of businesses fail in their third year and 75 per cent of the businesses close before or after their 20-year mark.

Only 25% of these start-ups can stay in the market or competition for more than 20 years. That being said the average life of a business is about 8.75 years. 

If you want to grow long-term then it is important to know about the reasons that are behind failing businesses. So that you know what are the things that can get fatal for your business. 

In this blog, we are going to list of reasons responsible for the failure of 75% of businesses.

If that is something that interests you then stay with us.

What is the main reason for business failure?

One of the best ways to keep your business running is to know about the areas that can backfire on a business. In this section, we have a list of things that play a major role in the failure of a business.

  1. Poor product packaging 

Do you know how many people will buy a product solely based on product packaging? 81% of people will try a new product if has caught their eye. 

This by no means is a small number. These numbers are enough to make or break a company’s revenue. 

Big Brands and companies are spending a fortune to get it done. You know the best part about product packaging is that it not only helps to improve the customer experience but also helps in improving brand awareness, brand image as well as customer relationship with the brand.

Even a simple custom printed tape can become a good and affordable product packaging that will add a touch of brand story to the customer’s mind.

  2. Poor relationship between customer and brand

What is a brand without its customers? Just a company that has a board of “Out of Business” hung on the entrance.

It is impossible to run a business that has a poor relationship with its customers. For a brand to retain its customers, it is extremely important to make the customer feel valued and appreciated.

If a company fails to do so, not only will lose a customer but also give its competitor a better edge in winning a competition. 

  3. Wrong location

Location plays a vital role in bringing traffic which is important for a business. How do you think McDonald’s became the largest fast-food chain in the world?

Two factors were behind their success one being their customer-friendly meals that were economical and the other thing being Location. 

One of the biggest reasons for the success of this fast food giant was to get a place where they would get good footfall or in our terms traffic.

You must see that the business that you are starting has a chance to succeed in the field you are trying to get into. We do not want to open a 5-star restaurant in a place where people can not even afford to pay rent. 

So think wisely.

  4. Bad management 

Good management is the foundation of a successful business. No matter how good your company’s perks are and how well you pay your employees. If your company has a toxic environment then there is no way that an employee will stay in a company and give their best. 

The number one reason for a company to have a toxic work environment is its management which is insufficient. Bad work culture is the number one culprit behind low productivity and less creativity. 

  5. Bad business execution

It takes a lot of effort to build a business and keep it running and one wrong move can destroy all the efforts that you have put in your company.

But one factor that will lead the company or brand straight into bankruptcy is bad business planning and its execution.

Right planning and execution are the CNS (Central Nervous System) of a business any problem with them would result in severe problems, Paralysis, or even death, in this case, a failed business.

 6. Not customer friendly

Why would anyone buy from a shop or company that has rude employees and they are selling exactly what other competitors are? Why would they bear with your bare minimum attitude towards your customers?

Especially, when your competitors are providing similar services as you. No customer wants to deal with rude customer service or even use products that are not easy for them to use. 

  7. Not enough sales

Sales is the heart and blood of a business that keeps the business alive. Without this, neither a brand nor a company will survive for a long time.

Many times while launching a new business or product, companies launch a very low price in the hopes that once customer starts liking a product they can increase pricing which is a good tactic only when you succeed in doing so.

The problem with this method is the miscalculation that happens during this as this tactic exhausts the funds of a company. There could be many more reasons behind this like wrong handling of funding, high employee turnover, etc.

Having low sales is fatal for any company so it is important to keep an eye on your finances.


In this blog, we have talked about the 6 reasons behind the reason why 75% of start-ups fail to run a long successful business. We have tried to state every reason behind the fall of a successful empire. 

Hope that this blog was helpful in understanding this. 

Thank you for reading til the end.

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