How to Fail Your Way to Small Business Prosperity

You already know the unfortunate statistics when it comes to small business failure rates: half fail within the first five years, and a staggering 80% don't last long enough to see their first anniversary.

However, these numbers don't show the entire picture. It doesn't acknowledge that failure means the opportunity to learn, grow, and even overcome potentially fatal mistakes.

Let's consider several top reasons small businesses fail, some notable quotes, and tips for turning these failures into success.

No Business Plan

"Everyone starts a business with passion, but not everyone starts it with enough planning."

― Pooja Agnihotri, 17 Reasons Why Businesses Fail: Unscrew Yourself From Business Failure

It's human nature to put passion before planning when opening a small business. After all, who wants to look at dollars on a spreadsheet when you can envision the storefront display or the incredible views from your rooftop cafe?

So, how do you push against every fiber of your being to do all of the hard work before it gets fun? You might be surprised to learn you can do both simultaneously, according to Heather Parady’s piece on planning tips for non-planners.

She says, "I cannot sit down for hours and simply plan, I have to mix up action in there, so I don’t go crazy. It also helps because it gives me fresh energy and new ideas for when I actually do sit down and plan."

Parady advocates planning in doses—setting aside a small amount of time daily to prepare while peppering in actionable items to make you feel like you're progressing.

Planning in doses is one matter, but what if you have no idea where to begin? Or if you're overwhelmed with advice from friends, family, colleagues, and the internet?

A quick and easy place to start is with the Small Business Administration, a trove of government-provided insights and resources that break the overwhelming notion of putting dreams on paper down into manageable steps.

A link to the SBA's Write Your Business Plan page, where they pledge to help you "learn how to write a business plan quickly and efficiently with a business plan template," is provided here for your convenience.

Poor Management

"First rule of leadership: everything is your fault."

– A Bug's Life

Don't take this the wrong way, but one of the top reasons small businesses fail may be staring at you in the mirror.

Yes, you, as the manager of your business, could be the architect of its downfall. So, let's look at why and what you can do to prevent it.

You're Big Picture

Starting a business demands big-picture thinking. Managing it successfully takes a continuous series of snapshots not everyone is willing or able to process.

If you're wired to look down the highway to see the milestones you'll achieve, that's fine. But make sure you have someone close who can evaluate road conditions and make adjustments along the way.

You're Stuck

It happens, especially if your business is a successful one. The practices and habits that worked become institutionalized as the only way of doing business. After all, they worked, right?

But as the recent pandemic proved, things can change dramatically. And if you're stuck in your ways or in your own head, unwilling to adjust, change can overwhelm you.

Unsustainable Growth

"You learn more from losing than winning. You learn how to keep going. "

— Morgan Wootten

There's a lot to be learned from losing, but it doesn't mean you have to lose everything. If your business is facing unsustainable growth, however, losing it all is a distinct possibility.

Coming to grips with the fact that you're so successful you may fail is not easy. Whether rapid success is attributed to the right product at the right time, luck, or something else, managing it correctly is tricky for businesses of all sizes.

Look at Peloton and Amazon, two companies that can hardly be considered small that boomed during the pandemic and then struggled to sustain this success. There is a lot to unpack from these unsustainable growth case studies, but some takeaways are clear:

• Rapid growth can lead to rapid debt that can undermine profits during boom times.

• Before expanding during boom times, consider what happens if there's a bust.

• Consumer habits and preferences can change quickly.

While growing at an astounding pace may seem desirable, it's only good if you have the infrastructure to sustain that pace—and the means to adjust if things taper off.


When you run a business, small or otherwise, failure is always an option. While no business likes to consider this, understanding the causes can help you turn failure into success.

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