Why do some businesses fail? Here are the top on my list:

  • over-confidence - people have a tendency to think their idea is great, and assume everyone else will as well; or we’re just over-confident in our abilities
  • lack of expertise in the industry - making assumptions about how the industry works or what it wants is dangerous
  • lack of planning - don’t wing it, do research, write a business plan, or some version thereof
  • not identifying our assumptions - related to the last, people tend not to realize the degree to which they are making assumptions
  • not lean enough - your goal should be to test out your assumptions as quickly as possible, and adjust accordingly
  • setting goals and calling that your strategy - strategy is about identifying obstacles and figuring out how to overcome those obstacles
  • lack of focus - too many features, too many target markets, too many other side-projects
  • confirmation bias - we tend to listen to information that confirms our preconceptions, and ignore the rest
  • gut decisions - decision making based off of data is almost always better than gut decisions; track and measure what you do
  • attributing success to oneself, and failure to ‘bad luck’ - dig in to find the reason for success or failure
  • bad partnerships - e.g. not setting the right expectations; inability to have frank discussions
  • not enough capital - we overestimate the market’s response and underestimate how much everything will cost
  • the offering lacks value - isn’t as unique as you thought, isn’t as valuable, etc.
  • not profitable - related to planning above, you simply didn’t do a good job forecasting and anticipating the market’s response