3 Reasons why Businesses Fail: An In-Depth Analysis

by | Dec 20, 2018 | Uncategorized

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3 Reasons why Businesses Fail: An In-Depth Analysis

Warren Buffet once said:

“I want to know where I’m going to die so that I never go there”.

Buffet was aware that avoiding fatal mistakes is a better strategy than studying and implementing successful actions to keep your business profitable. Sometimes, it is not about what you can do, but knowing how to deal with what you cannot do, because it will be THIS that will set you apart from your competitors.

We at BJ AIMS did a post-mortem analysis investigating the causes of failure for 80+ companies across different industries over time. This helped us to identify patterns, in order to provide our clients with better marketing solutions.


Here’s what we found to be the main 3 causes of failure—

  1. Didn’t address a market need.
  2. Ran out of cash.
  3. Didn’t assemble a good team.

Read in further to understand them better, so that you can avoid these fatal mistakes.

The first reason: They don’t solve a market need. This is really important. Most businesses fail because they don’t address a market need. A lot of people set up businesses because they’re copying someone else or think it looks interesting. But their business ends up in trouble because they did not build it on the right foundation.

One shouldn’t start a business based purely on what one wants, what the current trend is or what looks interesting.

In order for our business to succeed then we need to solve a market need. In order to solve a market need, we need a market. A market is the group of clients you want to target.

Then, you need to solve a market need.


The second reason: Lack of cash flow. Cash in a business especially in its early days fuels the business. One should try to implement a cash-forward scheme that will help their business to constantly re-invest into the company at its growing stages.


The third reason: They don’t assemble a good team.

It’s a really interesting multidimensional concept- To building a team and manage a team, while creating a good culture. Often, teams seem to miss out on the key ingredient- good communication. Even if the individuals are brilliant, what matters is how they perform when put together. The best partnerships are those where each person contributes while showcasing their strengths and managing their weaknesses. That’s the third reason why most companies fail because they don’t assemble and nurture a strong team.

These are the hard principles that businesses should abide by. In 50 years business is still going to be based on these core principles. Often everyone wants to know the Right Ingredients for success. But they fail to realise that it is equally, if not more important to know the possible danger zones of each business. One should always calculate the risk and be smart about steering their business in the right direction.


Our clients come to us for Marketing Consultations and we constantly update our learnings and knowledge to provide them with marketing solutions that are best for them.  This is why we are often considered an extension of their own business that works to multiply their brand!

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