Why Business Plans Fail

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A good business plan is critical to success in starting a new business. It should include adequate funding, market information, competitive knowledge, a workable time line and anticipation of contingencies. Businesses fail if the business plan is not well thought out.

Inadequate Capital

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Your business plan will fail if you do not have enough money. You must have sufficient funds to operate your business until you begin to turn a profit.

Incomplete Plan

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If you overlook important information, or ignore it, your plan will surely fail. Take time to think through every factor that can affect the future of your business.


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It’s easy to think too big. Overestimating how far your funds will go or how quickly you can show a profit is another trap to be avoided.

Overextending and Overspending

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Trying to grow too fast is another business mistake. Steady measured growth can prevent this kind of failure. Avoid spending too much, too soon.

Insufficient Market Knowledge

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If you don’t know your market, your business plan cannot meet with success. Misunderstanding or underestimating competition can lead to failure.


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Your plan must consider location carefully. More small businesses fail because of poor location than for any other reason.