Why 90% Of Businesses Fail In The First Year

Are you curious to know why 90% of businesses don’t make it and how you can be part of the 10% that succeed?

If yes, then you’re in the right place because, in this article, we’re going to talk about why most businesses in their early stages end up failing within the first five years and how you can put the chances on your side to succeed and be among the 10% who end up having a successful business.

To know the secret, you need to read the full article to find out!

Let’s dive in to explore the reason for their failure!

1. They Don’t Have A Clear Mission And Vision.

The first reason why many businesses fail within their first few years is that they don’t have a clear mission and vision. 

A business that you create must have

  1. A very clear mission and vision.
  2. The purpose of this business and 
  3. Why does it exist?

A lot of entrepreneurs who are getting started in business usually have a simple goal for them. Most of them just want to make more money. It’s totally fine to have a side income, but if this is your only mission, then you won’t be successful in the long run. 

There has to be a very clear mission and vision behind the business that you’re building that your customers and your clients can buy into

because right now, customers and clients don’t really care about businesses that exist for the sole reason of profit.

Suppose you decided that you want to offer marketing as a service, well it’s important to know that there still has to be a mission associated with your marketing agency.

Let’s understand this with an example of a digital marketing agency. This digital marketing agency’s goal is to help healthcare professionals become the leaders in their communities and grow their brands and attract new patients. When a healthcare professional stumbles upon this marketing agency and considers buying into their services, they immediately feel like “this is the marketing agency for me”.

The reason why they believe that is because the business has positioned themselves and their mission to directly align with their customer’s goals.

Businesses that don’t have a clear mission and vision, who don’t know why they exist and the purpose behind their existence, usually fail within the first year. So have a clear mission and vision and work according to that!

2. You Have To Have A Very Good Understanding Of Your Customers

The second reason most businesses fail in the first year is that they don’t have a very good understanding of their customers.

If you’re starting a business from scratch, it’s natural that you might have very limited knowledge. To overcome this, you have to conduct some detailed market research. You have to really study and understand:

  1. Who your ideal customers are?
  2. What are their fears?
  3. What are their goals?
  4. What are their challenges?
  5. What keeps them up at night?
  6. What drives them right what?
  7. What kind of problems do they need to solve?
  8. How are you going to solve those problems?
  9. How are you going to present your solutions to these customers?

Remember, you can’t just say I want to sell to everyone and anyone. You have to be very clear on your ideal customer and how you can target them. This will allow you to successfully market to these customers & clients and successfully create products, services, and solutions that will help them solve their problems or achieve their goals.

This is how you can build a highly profitable and highly successful business!

Businesses that don’t have a good understanding of their customers usually end up falling fast.

3. Lack The Right Guidance To Succeed

The third reason why most businesses fail in the first year is they lack the right guidance to succeed.

As a startup entrepreneur, this might be your first time creating a business from scratch. You might be doing everything all by yourself, like making a logo, managing social media, creating content, branding, marketing, and generating sales. You might be thinking you’re doing everything perfectly, but in reality, you might be doing things in the wrong way.

So if you don’t have the necessary knowledge, training, and guidance to walk through those steps well, you’re going to have a tough time. You’re going to go through a long journey of trial and error and spend weeks, months, and sometimes years without seeing much success in your business.

How do we overcome that? 

You have to be aware of the areas in your business where you lack knowledge and then get the necessary support to be able to overcome those gaps.

If you’re getting started, we recommend that you always have a mentor or a support system that will help you along the way.

For most entrepreneurs who are running six-figure businesses or seven-figure businesses, every single entrepreneur, no matter what, always had some type of mentorship, guidance, or support system that they turn to in times of need.

Having mentors will help you:

  1. Save a lot of time. 
  2. Save a lot of money. 
  3. Will give you the right steps and course to succeed in as little time as possible and as efficiently as possible.

4. Lack Of Commitment

The fourth reason why most businesses fail in the first year is a lack of commitment.

Often, businesses don’t fail because they had a bad product or a lousy service or their clients didn’t really resonate with whatever they were providing! 

The real issue for many businesses is that they lack the Commitment to put in the work that will attract the right clients to whom they can sell their products and services.

You can have many examples of people who started building the website or a business, and then halfway through, they just gave up, and it just never got finished because when it came the time to actually do the work, put in the day-to-day actions, and do the boring stuff, people backed off.

Make sure that you’re going to implement habits and processes to be able to hold yourself accountable for doing the routine tasks right. The day-to-day action steps might not be glamorous, exciting, or fun necessarily, but they help you achieve that goal of building your business.

Remember, every action within your business should bring you closer to fulfilling your purpose. Whether it’s sending emails, selling courses, replying to comments and DMS, or providing value to your audience, everything should bring you closer to our mission of helping people or impacting the world in this positive way.

Most of the time, it’s not about the business idea, the product, or the service. It’s really about execution! How well are you executing that idea!

To sum up…

Why most businesses in their early stages end up failing within the first five years is:

  1. They Don’t Have A Clear Mission And Vision.
  2. They Don’t Have A Very Good Understanding Of Their Customers
  3. Lack The Right Guidance To Succeed
  4. Lack Of Commitment

Remember, it’s not about having this incredible genius idea that the 10% have and 90% don’t, but rather it’s about having a clear mission and vision, understanding your customers, execution, and Commitment that will make your business successful.

For Professional Muslim

So if you’re a professional Muslim who wants to build a 6-figure halal online business that gives you freedom, income, & impact, then watch this free masterclass 👇.

Written by Abby El-Asmar

Abby is a business & marketing consultant – and the founder of Ummahpreneur. His passion is to nurture a new generation of Muslim entrepreneurs that will impact the world in a positive way while uplifting the Ummah!

March 11, 2022

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  1. Nishad Alam

    Hmm.But what about new entrepreneurial ideas? Aint that the number one requirement? How are you supposed to sell your products while they already exist in the market?

    • Abby El-Asmar

      I would say that having a completely new product isn’t a requirement. There are thousands of successful digital marketing agencies making over 6 figures/year. Once you have clarity on your target market, the service/product you provide, and how you plan to provide more value than your competitor – the rest falls on execution!


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