Why entrepreneurs fail and strategies for entrepreneurial success

by Ashvini on June 3, 2011 · 20 comments

in Entrepreneurship

For an entrepreneur, it is possible that his/her  idea has not taken off as he/she expected.In spite of spending lot of money , effort and time, no one is buying his product. Here are few items that can go wrong in any venture.

  • A required government clearance never comes
  • Funding request has been denied by a VC
  • Lead programmer has left your company and joined Google
  • No one has purchased your product
  • You have run out of money before your product has even  hit the market

Failure hurts bad

Failure brings out the naysayers. Nobody likes to talk about failure and people have strong opinions on failure.

It often comes as a rude shock that our awesome idea turns out to be  failure.The entrepreneur feels that he has wasted his time and money. He finds it hurtful to explain to everyone about it.

Fortunately, there something good that comes out of these failures.

Welcome to the club of failed entrepreneurs and there is a long queue

I can tell from personal experience that failure is very very beneficial. If  an entrepreneur has not failed, he has not learned many things. Most of the startups fail and it is a fact. A lot of the corporate America’s today’s top companies started from garage or college dorms. Though many might have failed some of them such as Microsoft and HP became phenomenal successes.

If you ever read any of the Richard Branson’s book, you will be surprised to find how many business he had failed in. But today he is one of the most successful celebrated entrepreneur.

Failure is common and we can learn a lot from it

The point is entrepreneur do fail and there is nothing special about it. Challenges can cause setbacks to your business.

The idea however is not to worried about them but analyze the reasons of failure. It is a fact people who never quit( or serial entrepreneurs) have much higher chances of success than those who try once and quit forever. (You may read books on top entrepreneurs to substantiate my claim). If  the entrepreneurs are aware of the fact that we can fail they can look at their failure from a detached point of view without making it very personal.

Here are some of the things, I feel are common causes of failure. Let us take a look at them

  1. The idea is not well thought and researched

  2. Entrepreneurs being passionate about their ideas are  very eager to start their venture. Hence they probably do not put time and effort into completely analyzing the idea( pros and cons, cost, time etc.) . It may get challenging to continue a complicated and not well thought idea .

    So if the idea is complicated, its better to plan and simplify it as far as possible. Also it would be good to do some market research before starting.

  3. The execution is not planned well

  4. Planning is the most neglected aspect of a venture. Detailed planning involves knowing about  marketing, procuring, hiring and other aspects. A good plan also documents all the risks of a project and strategies to overcome them when they occur.

    As an example, in my own venture, I did not plan for hiring. Just as the venture was about to start, I found that I could not get skilled manpower within my cost range. I had to raise salary to hire them thereby increasing my costs.

  5. Not enough networking

  6. Without networking, it is not possible for people to know about your product/service.Entrepreneurs are generally shy of networking. They believe a good product speaks for itself. It does, but it takes a lot of time to get popular. With smart networking an entrepreneur can get the word out faster.

  7. Not learning new things.

  8. People are scared of new things, mostly out of inertia. An entrepreneur who has a lot of inertia and refuses to learn new things, sets himself for failure. Flexibility and adaptability are the most important traits in this field.

  9. Products have not been marketed well

  10. An entrepreneur often tests the market with his new product. However due to fear of criticism and negative feedback, he sometimes holds back marketing his products and services.  Less marketing means lesser knowledge about the products which indirectly affect the sales.

  11. Positioning of the idea is wrong

  12. Product positioning is important. it might be difficult to sell a  product that is placed  in an already crowded market without any differentiation. In a crowded market, more advertisement is needed to make the product stand out from competitors.

  13. Not listening to customer feedback and complaints

  14. When genuine customer feedback is ignored, product improvement suffers. If product suffers, sales suffer. Not listening to customer feedback and complaints means angry dissatisfied customers. Too many of them and entrepreneur is headed towards failure.

  15. Product specifications are changed too often

  16. An entrepreneur who has less confidence in his product often changes it frequently based on suggestions from customers.Improving is fine but too many changes cause confusion. The sales team often finds it difficult to sell the product with features that are changing constantly.

  17. The idea is too big for the budget

  18. Once I met a person who wanted to start a power plant based on renewable energy. Though the idea was noble and technology was great, I could not see how he could finance such a project. The project was too costly and it was not going to make money in next ten years or so. Sometimes the project does not fit into the budget and starting such a project may lead to troubles later on.

  19. Not having enough dedicated people

  20. Initially, a project needs enough dedicated people. They should be dedicated for the success of the project. An entrepreneur usually hire people. Many times it is difficult to find such dedicated people.

  21. Not having the right experience to take the idea forward

  22. Without domain knowledge, the entrepreneur finds it difficult to execute the project. He will also face scrutiny from his financiers and his customers about his ability to complete his project. It is important to either have domain knowledge or get somebody with the right domain knowledge.

  23. Failing to anticipate the competition

  24. Most of the time, an entrepreneur fails to see the competition.  However it is there and may come  either from the new entrants who are fast and nimble or from existing large companies who have huge resources at their disposal.  Competition is always there and an entrepreneur can ignore it only at his peril.

So how does an entrepreneur make sure that he does not commit these mistakes. In a business there will always be challenges. However with proper planning and execution most of them can be overcome. Here are some strategies using which an entrepreneur can overcome the challenges that I mentioned above.

  1. Become more adaptable, flexible and applying the leanings

  2. By being flexible and adaptable, an entrepreneur is always ahead of the competition. He knows about the new technology and his customer appreciates him for that. He learns from his mistakes and apply his learning to improve himself and his product constantly.

  3. Use customer feedback to improve your product

  4. An entrepreneur who does not bring his ego to the table is a winner. He engages with them and listens to them. He uses the feedback to improve his product and appears as approachable and understanding to customer. Learn to handle negative feedback

  5. Go back to drawing board

  6. It may often happen that marketing strategy is not right or productions costs are high or product is not suited to market. A smart entrepreneur goes back to the drawing board and discusses all potential issues with his team. That way he can ensure that he is on right track.

  7. Cut costs mercilessly

  8. Costs can escalate because of bad planning or overspending. Higher costs leads to poor cash flow. There are plenty of areas where cost cutting may help. For e.g. using email instead of printing on paper is a smart idea. Using public transport for traveling rather than own vehicle helps to cut the gas costs.

  9. Network more, advertise more

  10. An entrepreneur should never shy away from networking and talking about his product. Networking helps to create the buzz about the product.

    If necessary, advertising may also be considered to promote your product. If  the entrepreneur is  selling to consumers, you may decide to advertise in newspapers. If he is selling to businesses, advertising in trade magazines is a good option.

  11. Reposition your product

  12. It is important to find the right niche for your product. Later on fine tune the product to fit into the niche. Once you are top entrant in the niche, start dominating it.

  13. Develop mental toughness and ability to think for yourself.

  14. An entrepreneur needs mental toughness to overcome the adversities and unwanted criticism. Being in the company of positive people helps. Also he needs to have a lot of patience. All these things can be cultivated slowly.

    I hope you liked the post. Please let me know your comments.

About The Author

{ 19 comments… read them below or add one }

tejpal July 31, 2012 at 7:12 pm

if entrepreneurship failure has to be good thing,don’t worry ‘LOSING IS THE STEP TO VICTORY’


Ashvini Kumar Saxena August 3, 2012 at 4:19 pm

Well said Tejpal


Veronica Cervera October 21, 2011 at 5:57 am

In entrepreneurship, failure has to be looked at as a good thing. Failure is often a recipe for success. One has got to endure the pain of losing and failing to prepare for more challenging tasks ahead towards success.


Lynne Quintana June 17, 2011 at 8:40 am

Thanks for sharing this Ashvini, In my own opinion i would say the top on the list for why most entrepreneurs fail is really the idea is not well thought and researched and planned.



clicproject June 9, 2011 at 9:27 pm

Great article Ashvini. I would add to that list: checking to see if there is a market for your product/service in the first place.


Nicola Deiana June 6, 2011 at 8:41 pm

Awesome post Ashvini. I love the 4th point. Often people don’t like learn from others due they are jelous of their success, and that is a big mistake. I love learn from anyone give me new idea, new imput that help me grow my business, no matter if more ‘young or old of me. Most of changes I did on my blogs are because I’m curious and love take inspiration from someone that is more smart than me.


Ashvini Kumar Saxena June 8, 2011 at 12:05 pm

Hi Nicola,

I think younger generation knows a lot of things these days and that “daddy knows best” thing is in the past. While elders can bring in the wisdom , young generation can bring in enthusiasm to create the perfect synergy where everyone is respected for knowledge and not age.

Thanks for your comment.


Daniel M. Wood June 6, 2011 at 5:23 pm

Hey Ashvini,

Great article.
Entrepreneurship is really interesting.
Research has shown that the one difference between successful entreprenuers and those who fails is planning.

If you take the time to make a comprehensive plan for your business your chances of success increase dramatically.

When you fail it is only an opportunity to update and improve your plans. As you do you will slowly move closer towards your goals. As you do you will start to find more and more successes. Before long you will have broken through and become the successful entrepreneur you deserve to be.


Ashvini Kumar Saxena June 6, 2011 at 5:43 pm

Hi Daniel,

Thanks for your comments.
I learned the benefits of planning when I attended a course on project management conducted by a distinguished teacher. I just now love planning a project.

Thanks for adding your experiences and thoughts to my post . I appreciate that and would love to see you back .



Brad Harmon @ Big Feet Marketing June 5, 2011 at 8:23 pm

You know, Ashvini, the late great Jim Rohn used to say that it’s a shame that failures didn’t hold seminars. There’s so much to learn from the failures of others and, of course, our own. The most successful people in the world were often some of the greatest failures at some point in their life. For me, I’ve always learned more from my shortcomings than I have my successes. You’ve given us a great list of things to ponder when (not if) failures happen to us as entrepreneurs.


Ashvini Kumar Saxena June 6, 2011 at 10:58 am

Hi Brad,

I know I had big failures two times till now ( Once in my college days and recently in a business). There are so many things I learned from the failures. Success is good but it is what failures make us a better and humble person.

Thanks for providing info about Jim Rohn. I will look at his quotes and readings.

Thanks for comments as well.


Alka June 5, 2011 at 7:47 pm

There is so much to learn from this post……awesome tips as always.


Ashvini Kumar Saxena June 5, 2011 at 10:00 pm

Thanks Alka. Great that you found it useful.


software buzzer June 5, 2011 at 1:54 pm

Startups should come as soon as possible :) , but if they fail, there should be a backup plan .But Failure is stepping stone of success. Just take it positive and move ahead .abraham lincoln failed in elections in first time. So never give up and move ahead with confidence and believe and live in your idea :)


Ashvini Kumar Saxena June 5, 2011 at 9:52 pm

Hi Suresh,

I think that motivation is necessary and drive too. But there is a point in every battle that motivation is not the only force that can make you win. . Belief is necessary but sometimes more is needed to win is needed. Better analysis and planning is always needed. So it is better to learn as much about planning as to have great motivation.

Thanks for your comments.


Sonia June 5, 2011 at 8:53 am

Geez, this was me for the past 10 yrs. I think I have tried just about everything and the worst part about it is, I knew in the first 10 minutes that it wasn’t for me. Don’t get me wrong, I don’t start something to let it fail, but most times, I allowed myself to get “talked” into trying this or that business. Most times it was some BS MLM program and I normally start running for the hills when I smell those type of business’.

I think when some people start out with an idea or business, they are so excited that they jump “head” first instead of “feet” first. Someone paints this great picture of something you “could” have and once you start, you realize that you actually have to “work” at your business to make it succeed. Then you have all the competition ahead of you to deal with only to discourage you further. If you give up, your heart wasn’t in it and you might not be cut out for it, but as you mentioned Richard Branson, kept on trying no matter what obstacles were in front of him.

In today’s world, it takes allot of ingenuity, tact and hard work to make an idea come alive. Sure you need money, backing and support, but I have seen some men and women come up with business ideas with little or no money. There is an old saying: “Where there’s a will, there’s a way”. Excellent Post Ashvini! Sorry for rambling!


Ashvini Kumar Saxena June 5, 2011 at 9:59 pm

Hi Sonia,
Wooh, that is a big comment and your experience really speaks up. In my opinion motivation and self drive is must. And listening to motivation gurus make sense till we can judge if they are really helping.
I once was about to fall into MLM program but somehow by luck didn’t. Any business needs work and planning. Great planning + great drive has higher probability of success than just two of them together.
I appreciate your long comments and no need to be sorry :)).

Looking forward to your gems in future too.


Aswani June 3, 2011 at 4:59 pm

Excellent stuff Ashvini…I am learning a lot from you. Glad to have known you. Keep it up…Cheers..!


Ashvini Kumar Saxena June 5, 2011 at 9:48 pm

Aswani, thanks for your comments. I am very happy that my posts are so useful :)


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