4 Reasons Great Businesses Fail

Top Reasons Businesses Fail

Many businesses and start-ups fail. Even those that seem to be going great in the beginning. In Australia, SME’s account for over 97% of all businesses. According to a study from December 2020, SME’s have an average survival rate of 65% over a 5 year period.

So, what is happening to the other 35%? What causes a business to fail? What helps a business survive? Let’s take a look at the top reasons why businesses fail, and how to stop your business becoming part of that 65% statistic…

Top Reasons Businesses Fail

#1 STRATEGY – Creation And Execution

A Strategy is a long term plan for your business to reach the desired outcomes and objectives. It includes details such as your company vision and mission, your target customer profile, the products/services you intend to build or sell, opportunities in the market, competitors etc.

To be clear, it’s not just about creating a brilliant strategy, it’s also important to execute the strategy. Without action, a strategy is meaningless.

“Vision without execution is hallucination.” – Thomas Edison


A strong vision statement has many benefits for companies. They act as a guide for employees when facing challenges. They allow employees and investors to gain a better understanding of the business and its purpose.

A strong vision statement can also help attract and retain talented team members, as they are drawn to companies with strong values and objectives. Keep your vision simple and concise, all employees should be able to state the vision of the company in one sentence.

A great example of a strong vision is Amazon. They have been successful for a long time because their strategy is tightly tied to their vision. They are known as the most customer-focussed company in the world. They provide a smooth experience for customers, and make it easy for people to find and buy products online.

#2 SYSTEMS and EXECUTION – Principles, Practises, Procedures

Why are systems important in a business? They are essential building blocks that help support your business growth. Whilst they can take some time to initially set up, they allow repetitive and mundane tasks to become more efficient and time saving in the long run. This allows your team to spend more time on important and empowering projects.

For example, your marketing team should have a lead generation system in place. How do you move your customers through a funnel? Having a system for this will create consistency and happier customer engagement.

Hiring is another example, what systems do you have in place to ensure you are finding the right people for your business? A popular system we use at Strategy & Execution is Topgrading – a process for recruiting, interviewing, selecting and retaining top talent.


When cashflow is short, it can consume business owners. It is hard to focus on other important aspects of the business if you don’t have enough cash for day to day. It’s one of the biggest reasons businesses fail.

Cash is one of the four business decisions in Scaling Up methodology. I’ve dedicated a whole blog to this topic. If you don’t manage your cash flow carefully, then you could be making bad decisions that put your business at risk.


Your people are your most important asset. If you don’t have the right team running the business it will ultimately lead to failure.

Are your people happy and engaged in the business? In the 2019 Gallup State of Global Workplace report it was reported that within Australia and New Zealand, 14% of employees were engaged, 71% were disengaged and 15% were actively disengaged.

Employees are often a businesses biggest cost, so growing and keeping talented, motivated and hardworking team members is vital. But how would you know if your team are happy and engaged? Some indicators of low employee engagement are high turnover rates and an increasingly poor work culture.

To help improve employee engagement and the overall workplace culture, you could:

  • Implement leadership training and coaching/mentoring programs
  • Recruit people who are aligned to your company values
  • Improve the communication skills of the team
  • Improve the Psychological safety in the workplace

Many of the issues we have discussed are part of the Scaling Up methodology that we work through with clients at Strategy & Execution. If you would like to stop your SME or Start up from becoming just another statistic of failed businesses, reach out to our team to learn more.


To Scale Up your business! Take our Scaling Up/Four Decisions Needs Assessment to discover how your business measures against other Scaled Up companies. We’ll contact you.

Strategy and Execution Business Advisors and Scaling Up Coaches in Brisbane & Australia

Need assistance to help your team achieve your objectives to grow your business? Contact me at tedb@strategyandexecution.com.au to schedule a free 30-minute discovery meeting.


We have been providing organisations and their leaders with facilitation support and executive education focused on strategy development and strategy execution for more than 20 years. Using business models such as Scaling Up, Exponential Organizations, E-Myth Mastery, Outthinker etc, we support organisations seeking to create or refine excellent strategies and execute them quickly and effectively.

Our expertise is based on a mixture of wide business experience, effective tools as well as a great deal of consulting and executive education. Our approach to working with clients is as unique as our specialist focus. We always seek to challenge our clients’ thinking – but equally are unafraid to roll up our sleeves and help execute the ideas we help generate. Learn more about us here or view our upcoming workshops and events.

If you are preparing for strategy development and/or a strategy implementation challenge and are committed to creating value for your organisation, we look forward to hearing from you. Contact us now