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Why Businesses Fail—Is Yours at Risk?

As much as we don’t like to consider failure and why businesses fail when launching a new company, the facts don’t lie. The Bureau of Labor Statistics notes that only 30% of businesses survive past their tenth anniversary. Broken down, that looks like:


  • 20% of businesses fail in the first year

  • 30% of businesses fail by year two

  • 50% of businesses have shuttered by year five

  • 70% of businesses are closed in the first decade


By Joel S. Smith

Why businesses fail can be attributed to many reasons, but the core reason often lies with the entrepreneur. If you are stressed, scared, and approaching your business from a place of scarcity, you will likely become one of the failed statistics.


The Quest for Business Survival Is Based on Genetics

Human nature being what it is, we are always trying to avoid volatility, uncertainty, complexity, and ambiguity (VUCA). Unfortunately for entrepreneurs, VUCA is often a huge component of life while launching and growing a business. In that state of being, the brain is pushed into a fight or flight mode as it tries to survive. And with 86.3% of small businesses pulling in less than $100K in annual revenue, it’s no wonder so many owners are worried about survival. You might be living from client to client and trying to make ends meet. In that state, you don’t have the time or resources (mental or financial) to focus on growth.


Who you are as a person is reflected in the business you develop and grow. You are the heart of your business, at least in the early days. And if you are unable to get out of fight or flight mode, you’ll likely end up failing, whether next month or in the next decade.


Why Businesses Fail: Reactivity

Since business owners are often living in a scarcity mindset, they’re less proactive and more reactive. Reactivity is no way to be successful or reach goals and is often the reason why businesses fail. Some of the reactive approaches entrepreneurs take include:



A business owner who is launching a business and fears failure and wants to stay ahead of the curve will often put all they have into the business. That means long hours and lots of hustling. And it unfortunately leads to rapid burnout. Because you are too busy trying to get ahead, you may miss opportunities while your nose is to the grindstone.



When too much is on your plate, many people will push it back. “I can take care of that later,” you think. Procrastination is a huge challenge for busy, overworked entrepreneurs. You may put things off because of a very long to-do list or because you wrestle with self-doubt and fears of failure or success. When hard tasks pile up, the result can be a mental shutdown and the inability to move forward.



The inability to make decisions or take action can severely hinder the chances that a business will thrive. Author Adam Davis shared in an Entrepreneur article: “The single greatest key to achieving success involves thorough planning and strategic action. Without either being executed, the chance of success is significantly lower.” Freezing means a leader cannot take that next step, resulting in one of the primary reasons why businesses fail.


How Self-awareness Leads to Success

When you are able to transform being reactive into a more proactive stance, success is imminent. By doing that, you move from a state of survival into an executive state. This can occur through self-awareness, which allows you to see opportunities and solutions you may have previously missed. But how do you start to be self-aware?



People who meditate naturally increase their self-awareness. In fact, awareness is at the heart of meditation. Taking just a few moments each day to be quiet and reflective can do wonders. Not much for sitting, breathing, and focusing? For the workaholic entrepreneur, it can be a chore to launch a practice of meditation, but it can pay dividends. Perhaps you can start by being present during the quiet times of your day: driving, walking, or over mealtimes. Notice what you’re thinking and where your mind goes. That is the start of meditation.



A focus on what’s not working is not only at the core of why businesses fail, but it is arguably one of the reasons most people are so stressed. Set aside just five minutes a day to write down what you’re grateful for. It could be as simple as that you woke up that day or that the sun is shining. Shifting your focus to what you have and away from what you perceive to lack can be a game changer for your life and your business.



JSS & Associates offers outsourced CFO services and is ready to help you avoid the traps of why businesses fail and find success instead. Contact us to learn more.

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