9 Top Reasons for Business Failure (How to Avoid Them & Earn Massive Revenue Instead)

Julia McCoy

Julia McCoy

Creator and Co-founder

reasons for business failure

“Innovate or die.” 💀

Toys R Us, Blockbuster, Compaq, Enron, Borders, and Pan Am are all big names that pop up when talking about reasons for business failure.

It’s true —more than a gutwrenching 50% of businesses fail by year five.

And it’s not just the big guys — medium and small businesses, plus solopreneurs with bootstrapped brands, suffer from high rates of closing up shop as well.

What are the reasons for these huge business failure rates?

They might not be what you think.

After taking just $75 and growing a freelance writing business into a thriving $5M+ content agency that served 5,000+ clients (which I exited for a 13,000x ROI) 🤯 I saw what works and what doesn’t in the 2020’s.

This post will walk you through the most common causes of small business failure and solutions you can use to avoid business death (and grow like crazy instead).

If you’re raring to avoid business failure and learn the necessary ingredients you need for a successful, sustainable biz NOW, then you need to watch my free training. This class shows you the roadmap for how I built and scaled a seven-figure brand. Watch now.

reasons for business failure

The Top Reasons for Business Failure (with Solutions)

So, why do businesses fail and why do others succeed? Here are the top reasons for business failure with examples and solutions to avoid them.

Reason for Business Failure #1: Doing Business in a Niche That Isn’t Profitable

If you’re asking yourself what is the most common reason for business failure, launching a business in an industry that doesn’t have demand is your answer.

You need to make sure you’re moving forward with a business idea that will have some sort of interest so you can actually find people to serve. 🧑‍🤝‍🧑

However, this doesn’t mean you can’t niche down and still succeed (in fact, I encourage my students to do just that!). It simply means you need to do your market research first before you go all-in on a business idea.

For more details on starting in the right direction, don’t miss our free PDF on the 10 Laws to Self-sustaining Business:

10 laws to a self-sustaining business

Reason for Business Failure #2: Not Using Content Marketing

If you’re not keeping up with the digital era of business, you need to start immediately. Content marketing’s worth is predicted to explode to $600B by 2024.

Simply put, traditional marketing won’t get you where you need to be if you want to make an epic income and free your time, as well as create the impact on this world that you crave. You need to get your brand online and put yourself out there so you can get leads from the internet, period.

Content and Search Engine Optimization (SEO) are more important today than ever before.

And one of the brilliant pieces of content marketing is that it not only increases sales, it also lets you help your audience by writing around your customer’s pain points.

Here at The Content Hacker, we teach a heavy focus on building on your own platform vs. solely on social media. This is because SEO drives 1,000% more traffic than organic social media. 🎉

This lifespan of content by type infographic shows you just how powerful creating content on your own platform really is (blogging dominates with a lifespan of two years vs. just a measly 15-20 minutes on Twitter):

lifespan of content

Reason for Business Failure #3: Losing Trust with Your Audience

If you want consistent cash flow, you need to focus on more than just making sales (in fact, content marketing can and does replace many sales teams).

It starts all the way back at getting an audience to trust you through your content.

Brand trust is vital in today’s world (it’s second now only to price in consumers’ purchasing decisions). Luckily, there are some simple ways to gain that all-important trust from your audience, including:

  1. Rank #1: Show up at the very top of the Google search engine results page for a keyword around a huge pain point.
  2. Only produce great content: Make your content high-quality, consistent, and actually solve a problem.
  3. Be real: Speaking authentically in your content will magnetize people toward your brand, if you’re speaking directly to their hearts and problems.
  4. Don’t spiel: Your online content should be concise, conversational, and nail the art of online writing.

So, focus on creating trust-building content (make this a pillar of your business strategy) and the leads will flow in with excitement and enthusiasm for your brand.

This is one of the ways to supercharge your business organically. You can watch me talk about this in-depth here:

Reason for Business Failure #4: Lack of Tenacity

In almost everything in life, especially business, your tenacity is everything.

You will hit roadblocks. 🚧

You will get knocked down.

(I’ve had my fair share of adversity, more on my story here.)

But here’s what I’ve learned about how to succeed anyway

You have to start believing that when challenging things happen (and they will!) they serve as learning opportunities vs. signs you aren’t good enough and should give up.

Lacking this knowledge is a huge reason for business failure.

Never ever, ever, ever give up — and the world is yours. Show up for yourself and your goals consistently, and decide to create your own success vs. waiting for it to find you.

Reason for Business Failure #5: Not Seeking New Knowledge

Being open-minded is vital to your business success.

In a fascinating study published in The Journal of Positive Psychology, Pepperdine University researchers found that, essentially, people who think they know everything are more likely to not be as intelligent.


And it gets even wilder…

This same study found that many people view others who are unsure about their beliefs and willing to change their views as weak, unstable, or even manipulative – no wonder so many entrepreneurs are afraid of coming off as inconsistent!

But when you’re standing firm in your high achiever’s mindset, you can remind yourself that what others think of you is absolutely trivial to your own success. Obsessing over it is detrimental and a huge reason for small business failure.

Stubbornness in seeking new knowledge will cause your business to fail, but luckily, it’s a simple fix. ⚒️

Pinpointing what you need to know but don’t know, and seeking out knowledge in those areas to fill the gaps, is critical to growing your brand (and quite frankly, your personal development).

Ready to seek out a mentor for help starting and scaling a business to six and seven figures? After serving 5,000+ brands in content marketing for 10+ years, I’ve learned what works and what doesn’t when it comes to growing a massive brand online. You can get there by following my proven roadmap that will skyrocket you from struggling business owner to thriving entrepreneur. The skills, strategy, and system are yours for the taking inside The Content Transformation System.

Reason for Business Failure #6: Mindset

Believing that you’re an expert at something before you actually are isn’t necessarily just a personality trait – interestingly, it ends up happening to most of us at some point!

This is part of a phenomenon called the Dunning-Kruger Effect, which I cover in-depth in the mindset phase in CTS because understanding how to beat self-sabotage is something many failing business owners never do.

dunning kruger effect

Simply put, the beginning of your journey into learning or pursuing anything is usually where your excitement and confidence peak. But as your knowledge grows, reality sets in, and things start to feel hard and frustrating, even if you love what you’re doing.

This happens to nearly everyone — and once you’re aware of it, you’ll be more equipped to combat it so your business scales instead of flops.

Reason for Business Failure #7: Spending Vs. Re-investing

A huge entrepreneurial downfall is getting a bit of revenue and spending it excitedly vs. re-investing it back into your business. You’ll want to keep reinvesting back into your business over and over again as it grows if you really want to see huge results.

This could look like:

  1. Expanding your capabilities by building a rock star team from scratch
  2. Hiring expert business mentors to teach you skills you’re lacking
  3. Investing in a book ghostwriter and getting yourself published 📕

…and more really exciting (and fun) ways to spend that money on your own brand.

Reason for Business Failure #8: Lack of Strategy

As cliché as the saying “Failing to plan is planning to fail” may be, it’s overused for a reason — it’s 100% accurate.

Having a business strategy can help you with many things like knowing how to:

  1. Establish a solid niche, business persona, and target audience offer.
  2. Identify exactly what you’re doing every day so you’re not spinning your wheels and getting stuck doing grunt work (which is a one-way ticket to burn-out city). 🥵
  3. Get complete clarity on your business so you have the lucidity to see where it’s headed and help it get there.
  4. Identify which skills you need help with and create a plan to learn them or delegate them to an expert.
  5. Launch your website and get clear on branding.
  6. Find, hire, and delegate tasks to a fantastic content writer.
  7. Know when to let someone go and the red flags to look out for.
  8. Create a powerful content marketing calendar that brings in organic leads and revenue.

Don’t spend countless days Googling different business methods, chatting with friends, and trying to make a piece-meal plan that 1.) Isn’t proven to work and 2.) Drains your time and energy. This is how small business owners fail.

(FYI… my coaching program includes all of the clear-cut methods above, plus a proven system to plug them all into.)

Starting, running, and growing a business takes some real grit, and it’s not easy. But, it can be simple if you use a strategy. Make sure you never leave home without one. 💖

Reason for Business Failure #9: Not Going All In

One of the main reasons startups fail is the business owner’s lack of willingness to go all in.

In fact, 20% of businesses fold in the first year alone.

reasons for business failure

Look… becoming aware of the top reasons for business failures is the first step to avoiding them, so I’m proud of you for researching this — it’s clear you’ve got the instinct for business success.

You just need to know how to build your skills and a brand around that instinct.

The Content Transformation System is your how.

It’s also clear that being an entrepreneur means trying to save money wherever you can.

…But if you keep just sitting on this idea…

If you keep putting it off until you feel ready (waiting for the right place, time, situation, etc.)…

If you keep trying to piece it all together on your own, burying your instinct to go all in on something you KNOW could be big

It’s going to cost you FAR more in the long run.





But why would you keep doing the same things and expect new results?

It’s entirely possible that the only thing standing between you and the six- and seven-figure business of your dreams is one 👏 single 👏 decision 👏.

Take it from me. Going all in on anything is never an easy choice. But if it were easy, everyone would be doing it. No business would be failing.

If You’re Ready to Go All In…

Are you willing to learn and do the things 95% of people won’t?

If so, my coaching program for creative entrepreneurs will give you the keys to the kingdom of a sustainable business that brings you the income and freedom you need to make an impact on this world. The exact skills, strategy, and system I use for proven success in a content-based business are at your fingertips.

Snag your spot now (seats are limited each month), and let’s do this! I’d be honored to be part of YOUR journey to the other side of “all in.”

If you’re ready for a proven pathway to success, I invite you to apply to The Content Transformation System now.

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