3 Common Reasons Why Businesses Fail (and How to Avoid Them)

These problems are frequently tied to one another — especially because they all stem from a lack of strategic vision.

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Leading a business was never an easy thing to do. But it’s even harder today, with all the consequences of the pandemic still impacting across the land. That’s why, in times like these, you have to walk with a steady and firm pace, following a well-thought strategy that allows you to avoid the many pitfalls that are on the way.

Unfortunately, there’s no way to know where all of them are in advance. COVID-19 impacted our world in such a way that it’s impossible to see the entirety of its effects. There are, however, many pitfalls that businesses have known for a long time that you can’t fail to acknowledge today. Since all your efforts should be focused on navigating the complicated pandemic waters, being aware of common reasons why a business can fail is key to keep moving forward.

As a part of BairesDev, I know how important that is. We were born in the aftermath of the Great Recession, so we had to be vigilant of old and new challenges. While new challenges will surely present themselves in time, I can present you with what I believe are the 3 most common reasons why businesses fail — and give you tips on how to avoid them.

1. Abundance of Meaningless Work

During a context as dire as the one we’re living in today, every step you take has to produce some value and have some meaning. In other words, it has to take you closer to achieving your ultimate business goals. Unfortunately, a lot of companies don’t have that in mind and walk aimlessly day after day, trying to achieve short-term objectives instead of building towards a long-term goal.

For example, let’s think about a company that offers Java development services. A short-term approach to doing business could be focusing on how many lines of code the development team writes per day or how many bugs they can squash during a regular week without regard to the overall picture. Thus, the Java developers might write a lot of code but that, once merged, doesn’t work, or focus on bugs so much that they forget to check if the project is working as intended after the bugs are fixed.

Don’t get me wrong, writing code and fixing bugs is a must for any Java development project — but without a strategy that brings all the efforts together, a lot of the work may end up being meaningless. Without a coordinated effort, you might miss your final goal — even if you achieve individual objectives.

The solution: Before working on any project or any task you might have at hand, it’s important that you understand how the work involved relates to your bigger business objectives. Think about the expectations and calculate the results to see if they fit in with your vision. The idea is for you and your staff to share a strategic vision of what you’re doing day in and day out. By doing that, you’ll be getting rid of the potential misalignments and reduce the chances of meaningless work.

2. Poor Staff Management

A company (any company) is as good as the people working there. It’s impossible to overestimate the importance of the workforce since they are the engine of any business. That doesn’t mean, however, that hiring talented professionals will be enough for your business to rise to success. In fact, you can fail even if you have the most experienced experts in your field. The reason? Poor staff management.

This can be seen in two different aspects. Let’s go back to the example of the Java development agency to understand them. If that company specializes in mobile and gaming development using Java, then it has to look for people prepared to work in that field. Hiring Java developers that have vast experience in using the language for cloud-based applications won’t do any good. Yes, the language is the same and the developers can surely be trained to use it for mobile and gaming — but that will lead to a loss of time and resources that could be easily avoided by hiring the right professionals.

And what about that same company putting good Java professionals in the wrong positions? Let’s say that the Java company has a coding rockstar with plenty of experience so it ends up promoting it to project manager only for the developer to fail because it doesn’t have the necessary organizational skills to lead a team. In this case, it wasn’t the developer’s fault but the managers that failed to see the bigger picture that required more than just coding skills.

The solution: Understand the kind of people you know to get the work done and develop ways to identify your staff’s potential. For your employees to thrive, you need to know who can add value to your business — and where they can have the most impact. Inform all your staff-related decisions (from recruiting to promotions) with that human-centered strategy and you’ll end up playing to people’s strengths.

3. Constant Changes In How Things are Done

I left this one for the end because it’s the trickiest one on this list. One of the things we all have been repeating since the pandemic started is that businesses need to increase their agility to boost their resilience. In other words, companies need to develop an ability to change as new market demands arise and shift directions. So, in a context like this one, change isn’t just a good thing — it’s something we all need.

But, on the other hand, too many changes can be disruptive. Once again, let’s go back to the Java company example. If the team is working on a mobile app but keeps changing its features, adding functionality, and expanding the scope, then the project might never reach its end. And what about changing development methodologies because it “feels” like it might be a good change? A radical example would be the Java development company becoming a Python development agency because the executives believe there would be much business.

The tricky part, then, is knowing how much change is good for your company and how much it can hurt you. Any changes you introduce have to be backed up with data and an overall strategy that leads its implementation and that aligns with the overall vision you have for your business. Otherwise, you might end up getting tangled up in changes that can quickly become your company’s demise.

The solution: Clearly define who you are and what you offer as well as the success metrics you’re going to use and the roadmap that will take you to your ultimate business objective. Of course, always allow room for flexibility but have it be strategic flexibility that doesn’t introduce changes just because but rather because they are the result of data-informed decisions.


As you can surely see, all of these problems can be frequently tied to one another, especially because they all stem from the lack of a strategic vision. Having a base plan organizes your entire work and how you view the people that do it but also serves as a backdrop with which you can compare new plans that might bring benefits.

That’s especially true now in times when we’re all struggling to recover from the effects of the pandemic and when uncertainty runs rampant. And even if the new normal comes along and things start to feel steady once again, keep these suggestions in mind, as they are the foundations of any healthy company.

I’m a tech writer, IT enthusiast, and business development manager living in Miami.