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Home » Top Reasons for Small Business Failure – The EJ Dalius Perspective

Top Reasons for Small Business Failure – The EJ Dalius Perspective

Eric Dalius

Establishing a business of your own can be extremely satisfying because of the freedom it gives you to chart your destiny. However, even though you are free to run your business as you like, it can be surprisingly difficult to achieve success. According to, a horrifying 90% of all startups fail with only a third making it to the 10-year milestone. Some of the top reasons why small businesses trip up:

Insufficient Planning 

One of the principal reasons for small businesses failing is the lack of adequate planning for conducting operations and anticipating common challenges faced by most startups. Entrepreneurs need to appreciate that while they can be experts in any domain, operating a small business successfully requires a lot more expertise than just developing a good product or selling them. The key to sustained success is formulating a business plan that covers the roadmap for various vital aspects ranging from product development, marketing and sales, distribution, logistics, finance, human resources, etc. Of course, being aware of the challenges as well as market opportunities as well as your strengths and weaknesses can help them to refine their plans to align better with the ground realities.

Lack of Sufficient Market Research Can Ruin the Business, Warns Eric J Dalius

For any small business to be successful, it is important to get to know intimately the profile of the target audience in terms of their demographics, buying behavior, expectations, as well as aspirations. Additionally, entrepreneurs need to figure out what their competitors are doing and how you can beat them in the race for sales revenues, margins, and market share. You will be able to develop a winning strategy if you can figure out what it is that you can deliver to customers far better that is aligned to their needs and expectations, says Eric Dalius. Too many entrepreneurs simply jump into the market in the belief that their products are the best and expect overnight success.

Not Having Sufficient Funds 

While you can make a start from dipping into your savings and with contributions from family and friends, unless you can access funds from banks or other financiers, you are likely to run aground for lack of cash. Entrepreneurs will also need to keep a strict watch on the cash flow of their businesses so that the expenses never outstrip the income. A prudent approach to financial planning that underestimates income and overestimates expenditure should be adopted. Remember to keep at least 20% of your budget for exigencies and cost overruns.


Since most entrepreneurs understand that there will be huge pressure on margins in the initial days, costs need to be curtailed to the maximum. However, due to misplaced enthusiasm and belief in their capabilities, they try to do everything on their own. Since it is a very rare person who is equally good in all aspects of operating a startup, the failure to bring on board the required competencies results in the business struggling and ultimately failing. A rational view of what you want to achieve and how you can make it possible is fundamental to small business success.

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