5 Warning Signs of Business Failure

5 Warning Signs of Business Failure


Failure rarely comes unawares. More often than not, failure, when it impends, sends warning signals that are easy to observe – for the smart entrepreneur.

Failure attacks and crushes most businesses for either of two reasons:

  • The entrepreneur is unaware of the major indicators of business failure
  • The entrepreneur notices the indicators but ignores them

The first reason is common; ordinarily, an entrepreneur will certainly not ignore any indicators of impending doom. But most entrepreneurs don’t know these signs, and this ignorance is what makes their businesses fail.

Do you know these indicators? There are many of them, but here are the five major ones:

1. Reduced demand

This could be because either your products or services are not up to the expected standards or they are just too expensive, compared to those of your rivals. However, there may be other reasons for this.

When your best customers are buying less than they usually do, it’s a sign that your business is heading for a halt. So, always record the purchases made by each customer, especially the best ones. This will help you detect easily when they start buying less than usual.

Also, when you’re finding it hard to attract new customers to your business, it shows your business isn’t catchy enough and will fail anytime soon.

2. Intimidating competition that you just can’t beat

When new rivals break into market with brand new ideas that pale yours into insignificance, or when your competitors introduce killer innovative strategies that you can’t beat in ten years, your business will most likely fail.

As the competition gets thicker, you soon lose all your customers to your rivals, and your business soon peters out of market.

However, with lots of brainstorming and a determination to succeed, you’ll keep your business going.

3. Lost passion

Passion breeds the zeal and determination to make things work. It keeps you focused even when many obstacles are in your way. It keeps you hopeful that success will come sometimes later.

But when you lose passion, you lose optimism too. And when you’re no longer optimistic, your business will most likely fail.

4. Too many complaints from customers

Nobody likes to pay for mediocre services. We all want value for the cash we pay for any product or service. So, it’s normal that we complain when they fall below our expectations.

Only unsatisfied customers complain. And in most cases, customers aren’t willing to give a second chance after a disappointment.

When you start receiving too many complaints from your customers, that’s a sign you’ll soon be closing shop. Yes, your customers will go elsewhere.

5. Mistakes

While it is natural to make mistakes, you’re not expected to repeat them. Why? Because you should have learned from them.

Not learning from past mistakes is one of the shortest routes to failure, as you’ll keep falling into the same mistakes over and over.

As an entrepreneur, never wait till you fall into mistakes before learning. Rather, learn from other people’s mistakes to avoid falling into the same mistakes.

All these indicators bring about one result – reduced profits. And when your profit reduces, your business melts gradually to its end.

Always check your business for these signs and you’ll never be hit unawares. It won’t hurt if you conduct the check every week. The more frequently you check, the less likely it is that your business will fail.

Published by Valentine Belonwu

My name is Valentine, founder of this site, an entrepreneur working as a moderator at Bizsugar a small business community news site. Connect with me on Google+ at Valetine Belonwu


  1. sapna · December 24, 2012

    Hi Valentine

    I think you touched all the points very clearly.

    But actually It goes something like this:

    1.Entrepreneur is overwhelmed by the competition
    2.Start making tactical plans, l
    3.Looses focus from his core area, start making mistakes, .Repeating them more often.
    4.Could not sustain his passion after several complaints
    5.Ultimately become pessimistic for the business he has nurtured

    Thanks for thought provoking post.


    • sapna · December 24, 2012

      Disclaimer: These are MY personal views.

    • admin · December 25, 2012

      Hi Sapna,
      Most of our today entrepreneurs gets overwhelmed with competitions by others and thus this leads them into making costly business mistakes and this could bring about they ruin. The post is just to guide them and aware them of this common mistake.
      Thanks for your awesome comment 🙂

  2. Shorya Bist · December 24, 2012

    Hi Valentine,

    Nice article mate.Quite convincing points.I think to understands your week points from the beginning is very important in business.

    No business stands without any risk.There are some decisions which is to be taken at times which is just a risk to take a chance to go reach a next level but times decision are made wrong that can be a reason-Not right time ,not right position , etc..

    Thank You
    Shorya Bist
    From Youthofest

    • admin · December 25, 2012

      Hi Shorya,
      I understand fully your point. In business there are some decision that can be of the making or breaking of the business. in most times such decisions are being ignored and mostly it makes businesses stagnant and in rather most cases such decisions lead to the growth of such businesses.
      Thanks for your awesome comment 🙂

  3. Neamat Tawadrous · December 25, 2012

    Hi Valentine,

    Thanks for such a great post. It’s a good reminder to always look for the satisfaction of our customers and pay attention to our decisions. I like what you have to say about learning from other people’s mistakes to avoid falling into the same mistakes.

    I think, and that is my opinion, that if an entrepreneur lost his/her passion, he/she has lost the business. The passion “the WHY” is the driving force to succeed in business.

    Great Post, thanks for sharing.

    Be Blessed,


    • admin · December 25, 2012

      The passion of the entrepreneur towards the business is the driving force that moves the business forward, without it the business will go sour and its headed for its ruin. Also satisfying customers should be the first priority of the entrepreneur in his business if its otherwise the business is as well headed for ruins because he will sure loose customers to competitors

      Thanks so much for your comment.

  4. Tom Watson · December 26, 2012

    I agree. A lot of folks prefer to put their head in the sand, and avoid the failure that is staring them in the face. You really need to do the opposite, and attack the issue head on.

  5. Margarita · December 26, 2012

    Hi, Valentine,

    I am coming form Neamat’s blog. The most dangerous sign of failure to me is #3. If we lose passion, we might lose purpose. Then we are really lost. Mistakes are good when we learn from them. You are absolutely right. But when we keep repeating the same mistakes all over, this is a big warning sign. Enjoyed the post very much. thank you!

    • admin · December 26, 2012

      Hi Margarita,
      Thank you for stopping by. It is much better to face the mistake than to escape from it because it will not be solved by it self but that doesn’t mean we should keep repeating same mistakes!

      Thanks for your awesome comment 🙂

  6. Kabenlah Cudjoe · January 26, 2013

    Loosing passion in what you do is truly leading to disaster. I think this is the strongest point since loosing passion will certainly lead to mistakes with customers complaining as well.

  7. Trevi Lim · April 26, 2013

    I believe one of the most important factor that your business is in trouble is lack of cashflow. The business may be profitable and sales revenue is growing but the lack of cash is the main reasons why business fail. CASH is the highest determinant factor.

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