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Is Your Business Lagging – Why 50% of New Businesses Fail

digital marketing

A lot of people would like to start a business. But did you know that based on studies, 50% of new businesses fail?

There are many reasons why this is so, and here are some of the top reasons we discovered why this catastrophe happens:

  • Ineffective business planning
  • Businesses failing to understand their market
  • Failure to adapt
  • Insufficient capital
  • Poor management

Now, let us look closely at how each of the above can cause a startup business’s demise.

Ineffective Business Planning

Planning is an essential tool for entrepreneurs. A business plan is a vital tool that will help you get a picture of what you want to achieve and how and when you want to achieve it.

More than helping you focus on the specific steps necessary for your business’s success, it also aids in achieving both short-term and long-term goals.

If you do not have a clear, documented plan, you are sure to fail. Leaders who have solidly laid out goals and strategies are better equipped to face and take on challenges that their business may encounter in the future.

In making a business plan, you may consider including the following elements:

  • Company description – must be clear and specific
  • Projected needs of both management and employees
  • Opportunities and challenges that you might encounter within your niche
  • Competitor Analysis
  • Marketing Strategies
  • Capital requirement – must include a projection of cash flow

The very first thing you should have before you get your business up and running is a well-laid-out plan. Your company’s business model must first be established, even before choosing the products and services.

Once you have done this, you must also make sure to revisit your plan periodically to see if you are on the right track.

Companies that fail to create and maintain a business plan are guaranteed to fail.

Businesses failing to understand their market

Many businesses either lag or shut off in their first few years because they failed to understand their chosen niche market.

Your marketing strategy must be heavily founded on market data analysis so that you can make decisions that will be profitable for your business.

Do not enter a niche that you do not understand. It would feel like groping in the dark or walking blindly. You will end up stumbling and hurting yourself.

Allot a part of your business capital to marketing strategies that can help boost your business. Remember that your business’s life is the profits, and to earn profits, you need to have people support your business.

Many factors show inadequacy in understanding your market, but here are three things that contribute immensely to your possible downfall:

  1. Lack of Data
  2. Lack of uniqueness and value
  3. Low to No social media presence

Let us consider them one by one.lack of SEO data

Lack of data

Data is king when it comes to businesses. To even start a business, you need to gather a lot of data, and you need to continuously collect them as they are necessary for your daily and future activities.

Before you start a business, you must know your target customers; you need to identify their needs and address them. And how would you know all of these? By gathering data.

If you want to succeed in your business, data collection is necessary. Explore and analyze them. Once your business is up, you should not stop. Keep records of everything from the product with the most sales, customers’ demographics, employees’ performance, and everything!

The more data you have, the more informed your decisions will be. So, better bank on it.

Lack of uniqueness and distinctive value

You know very well that you do not have a monopoly on the products or services that you offer, right? You have hundreds or even thousands of competitors out there. You need to stand out, or you better pack up.

Many businesses struggle not because what they offer is terrible. Some actually provide outstanding products. However, in a sea of choices, they do not get a chance of catching the attention of their market.


Because even though you offer the same items as other stores, you need to ensure that you will remain unique. It can be in your brand name, or your logo, or perhaps your motif.

However, if you want to have an impact, make sure that you show what value you can add to your customers.

Why would they support you instead of the competition? How will they benefit from your product? What are the perks you offer? These are just some ideas you can go with.

Think of what you can give more than what you can get because that former has a more significant impact and would endear you to your customers.

Low to No social media presence

In 2020, around 4.66 billion users went online. More than 3.5 billion people are on social media.

On Facebook alone, there are 50 million active marketers.

There is 65% buyer penetration and around $1.6 trillion spent online.

Indeed, if you want to get quick access to your target market, you need to have a social media presence.

One study showed that 90% of those who use social media marketing for local business promotions increased their exposure, while traffic increased by 75%.

Needless to say that if you want to get noticed, you have to be online.

Then again, the online world can be a bane or boon.

What does this mean?

Sure, it can boost traffic. It can put your business in front of your target market. It can help a lot in making your presence known.

However, it can also cause your business’s downfall if you are not quick enough to address unsatisfied customers, negative criticisms, and unfavorable feedback.

Today, more than ever, the adage “the customer is always right” has more truth to it. With social media being on fire in recent years, one wrong move and your reputation are at stake.

Around 85% of consumers say that they rely on online reviews. Your online image must be intact to attract new customers.

Before trying out your product, many people will search for your page and see your rating. Make sure that the positives outnumber the negatives, at the least.

Low reviews can definitely turn off your prospects, so you have to deal with customer feedback and customer satisfaction the best way you can.

So, yes. Increase your online presence, but make sure that it is the right image that you will project. Use this tool to enhance your reach or be left behind.

Being online puts you at the scrutiny of so many eyes, and there are those that you may fail to impress. But if your overall performance is excellent, your good qualities will outshine the poor ones.failure to adapt to digital marketing changes

Failure to adapt

If you want your business to fail, be stubborn.

We know that it can be challenging to pivot sometimes, especially if you feel like you have the best business idea. However, if all metrics point in a negative direction, quit it.

Better stop pursuing your initial plan and start adapting to a new process.

You cannot insist that something will work when all indicators say otherwise.

Go out of your comfort zone, try something new. Look at what the competition is doing, and see how you can be at par.

During this time, you need all the data you can study and decide on the next actions to take.

If you need to overhaul your business to stay afloat, so be it. Find new opportunities, design new strategies. Keep growing, or be out of business.

Just look at what happened since the pandemic, which started last year. So many businesses shut down, and not all of them are startups.


They failed to adapt to the current condition.

However, it was also a time of growth for other businesses. Many entrepreneurs took this as an opportunity to expand. They either added more essential products and services or switched to a different delivery system.

It is all about adaptability.

Insufficient capital

You do not start something without considering how much it will cost you. However, many entrepreneurs fail to understand this.

They would think that for as long as you have enough for the basics, such as the rental fees, initial inventory, and all other stuff, it would be enough.

It may be sufficient to get started, but you must understand that many other costs will keep coming when you start running your business.

That is why business planning and sticking to it is vital.

The thing is, sometimes, it is not that you do not have enough capitalization. In fact, for those that you would need, you have enough.

However, as your business grows, you might start investing in things that were not initially in your plan. Or you did not foresee sudden growth in your business that you had no choice but to expand prematurely.

Perhaps, you did not factor in the surge in prices or did not expect credits and bills to pile up.

Whatever the reason is for lacking in capital, it is a disaster, and many businesses fold because of it.

Poor management

Finally, we’ve come to this point – poor management.

Even if you have the best business plan, adequate capital, a good location, and all, it will fail if you cannot manage your business well.

Many businesses, especially the small ones, are often headed by just one senior or veteran business owner who does all the management tasks.

Being a veteran may be a good thing, but it can also lead to pride and wanting to control everything based on personal preferences, which may blind you to what is going around.

It can also cause you to think that you are the one who knows everything and can’t trust essential tasks to others.

This attitude of self-sufficiency can lead to a business’s downfall.

As a manager, you have to learn to listen, observe, and analyze. You cannot do it alone. You have blindspots. You need other people to help you out in running the business.

You have to be open to suggestions, learn to bend when necessary. Delegate tasks, search for talents among your employees, and work with them.

Being the one on top, you also have to be aware of everything. Do not be complacent. You have to regularly review customer and employee data to make sound decisions.

Poor management leads to poor performance, leading to dismal profit. So, if you want your business to survive, consider your management style.

So there you go! We covered some of the main reasons why many businesses fail.

Let’s make a quick run through one last time.

Ineffective business planning, or the lack of it, fails to give a clear view of the company’s goals and objectives. It is like a hamster on a treadmill; you keep moving without going anywhere.

The inability to understand the market will cause you to be left behind by the competition and make you invisible in a world full of choices.

Failure to adapt to the new trends and current situations just because you think you have the most foolproof plan there is, even though indicators say otherwise.

Insufficient capital, or the mishandling of it, could drain your business fast.

Poor management decisions and strategies cripple the functioning of the business.


Starting up a business is never easy. It takes a lot of courage to get your ideas out there and spend your hard-earned money to make it work.

That is why you have to ensure that you do not do this without a solid strategy.

Many businesses fail in the first few years of operation, failing to realize that many of the reasons that brought them down can be addressed at the onset.

In the end, it all boils down to solid planning, retaining Top Digital Internet Marketing services, using a vast number of reliable data, and sticking to it.

These are the things we know to be real about small business failures. If you do not want to be part of the statistics, we suggest avoiding them.

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