The Number 1 Reason Why Most New Businesses Fail (Pt 1)

The Number 1 Reason Why Most New Businesses Fail (Pt 1)

Have you ever wondered why most new businesses fail?

What I’m going to talk about in this post will probably make you feel a little uncomfortable, and maybe a little annoyed, as it will definitely make starting your business a longer process for you. But I guarantee that if you take the advice within it, you will have a successful business that is both attracting new customers AND making money for you much faster!

Okay, let’s explore some of the reasons why most brilliant new businesses fail.

Can you relate to any of this?…

“I want to do this but I don’t know how to get customers to my website or Facebook page”

“I want to run my own business but I’m not making any money from it”

“I’m telling everyone I know about my business and asking them to recommend it but I’m still not getting any new customers”

“I know it’s possible to build a successful business but I just can’t seem to get it working for me”

Did reading those statements have you nodding your head? Did you feel despondent?

You have got so many great ideas, dreams and goals for your business and you are so excited about it


What if no one buys your goods or services? What if you it doesn’t work out for you and you can’t make your business dream a reality?

You probably joined a load of Facebook groups for new business owners and you are hearing all the time that it’s hard to make a business profitable until at least the second year right?

You may have even heard of those who have proclaimed that trying to run a small business is a waste of time these days.

New business owners quit every single day. This is a reality that you must accept, and get used to.

It’s enough to make you think that perhaps those people who say it’s a waste of time are right and that no one these days can make a living from running their own business any more.

But you’d be wrong. Let’s look at some actual FACTS.

FACT: Why you CAN turn your dream into a full-time business (this is important)

There were 5.6 million small businesses at the start of 2018. (

According to, who carried out research for companies house in 2017, 8 out of 10 companies will fail within their first year.

With gloomy figures such as these, out of the 5.6 million new businesses that have started in 2018 only 720,000 will survive into next year.

Whilst the data did not provide any specific breakdowns, analysed data from CreditHQ to find the first-year survival rates for companies in different industries. It was found that information and communication seems to be the best industry to start a business in, whilst those in finance and insurance find it the most challenging in their year first year of operations with a survival rate of 83.2%.

Notice though, that these gloomy predictions are not putting people off? In fact there were more new business registered in 2018 than in the 2 years prior to that.

That means that there is still plenty of room for more business owners.

Businesses just like YOURS!

But how about paying the bills? Can you really make a living from a new business?

    • Levi Roots founder of Reggae Reggae Foods made £1M in his first year of trading, although he had been running a Jerk Chicken Store at Notting Hill Carnival for 16 years before that.
    • Steven Bartlett of Social Chain made £1.4M
    • Richard Branson the face of Virgin started in 1973 with just one record shop and had turned over £1M just one year later
    • Michelle Mone of Ultimo made over £1m in her first year selling lingerie


Not too shabby eh?

But I know that these are just a lucky few business owners who were maybe in the right place at the right time, but how does this relate to you in today’s world

Some figures a little closer to home

I also did a poll of over 5,00 new businesses from all over the world to find out what they were earning in their first year, and here’s what I found out… (earnings being income not turnover).

Businesses with no definite marketing strategy: £0 – £3,000

Businesses using affiliate marketing: £500 – £8,000 per year

Businesses selling own courses or products: £10,000 – £30,000 per year

These are averages of course but we can learn quite a lot from the information here…

Having a strategy really helps to build a business faster. Knowing how to promote your business successfully will earn you more in the early days.

Businesses that are making use of affiliate marketing as part of their marketing strategy are earning money more quickly than those who are not.

Businesses that manufacture or create their own products earn more money more quickly.

(When I first started my business I had a few affiliate links scattered about my blog and a few of my own little mini-courses on my business website that I charged £9.99 for. I was earning a whopping £500 per year. Since learning to market myself strategically I am now making that a day. I share this not to gloat, but hopefully to instill in you the importance of working strategically. You are going to need a plan for your business if it’s going to be successful and make you money).

To get back to my survey of new business owners, even conservatively, and with no real marketing strategy it is possible to make money from your business, our average business owner was making £3,000 per year in their first year. That’s not too bad at all is it?

Imagine having an extra £3,000 next year. What would you do with it? Vacation for your family? Special gift for someone? Pay off some debts?

Let’s put some figures behind those facts and see how you can build your business in real life terms

Let’s say you are a tutoring business and you create a digital course. Let’s say you charge £200 for the course. If you sell just 10 courses a month you will earn £2,000/month. Over a year that’s £24,000 – and that’s just for one course.

Now let’s say you also sell someone else’s course, a top player in your industry whos course you took and found to be invaluable. Let’s say that course is £2,000 and you get 50% commission for each one you sell. If you sell just 10 of those in a whole year you will have earned $10,000. Wow, your income is now £34,000 and you haven’t even left the house.

As you can clearly see, having a strategy is helping to bring in extra revenue from places you may never have considered, and it consistent revenue too.

I like to show things in monthly terms because a successful business is based on recurring revenue. You need to manage the months, quarters and years in terms of growth. You also need to be able to predict your revenue if you are to build a successful business.

The average earnings in the US are $57,000 a year according to the US Census Bureau and just £29,000 in the UK according to

So if you’re making $34,000 (£26,000), I think we can safely say that you’re doing okay.

And bear in mind that this is a conservative estimate taken from brand new business owners in their first year. What if you sold 15 courses a month and make 20 affiliate sales? Your earnings have now reached $56,000 (£43,000) – and that’s from one course and one affiliate link. What if you had 2, 3 or 4 of each?

Potentially you would now be making well over £100,000 per year from your new business. Do you still think it’s not possible to make money from your new business or that starting one is a waste of time?

I’ve made thousands of pounds from just my online courses. Here’s a snapshot of my PayPal receipts for just one week.

Paypal receipts









Do you notice the recurring payments? These are amounts that I receive month in, month out from people who are paying for courses that offer a monthly payment option. You can easily set these up too.

Is there perhaps something you can add to your current business that can bring in an extra revenue stream?

So, take a deep breath and gather yourself. You now know that you CAN make a living doing this 🙂 and there’s more than enough room for you as a new business owner too.


So, tell me honestly, why most new businesses fail.

There are a lot of gloomy facts about the failure rate of new businesses. Here are some facts which were gathered by between 2011 and 2016


  • A bit more than 50 percent of small businesses fail in the first four years.
  • In fact, of all small businesses started in 2011:
    • 4 percent made it to the second year
    • 3 percent made it to the third year
    • 9 percent made it to the fourth year
    • 3 percent made it to the fifth year
  • Leading causes of small business failure:
    • Incompetence: 46 percent;
    • Unbalanced experience or lack of managerial experience: 30 percent;
    • Catchall category (includes neglect, fraud, and disaster): 13 percent; and
    • Lack of experiences in line of goods or services: 11 percent.


Although these numbers do fluctuate over time, and within industries, the honest truth is that more than half of new business do not last into their fourth year and according to one Gallup poll 80% of new businesses folded within their first year.

I started my business in 2012. I was part of a community of over 200 new business owners. Today there are just 5 of us left. Just 5 who are making a living out of our businesses. That’s a whopping 97.5% failure rate, or, as I prefer to look at it, a 2.5% success rate.

What happened to everyone else?

Well I guess they are back doing whatever it was they were doing before. Very few new business owners are able to make a full time living out of their business and most of the ones I started with quit their businesses years ago.

What was the problem, I hear you cry?

This is the annoying, but massively helpful part of the post so listen up!

They focused on getting their business to make them money right away.

Are you a little bit confused right now?

At this point you are probably saying to yourself “well how’s that a problem, isn’t that what you’re supposed to do?”

Here’s why that seemingly logical thinking is actually 100% wrong…

Don’t miss part 2… Subscribe to our blog and we’ll drop you a quick email when it’s published – >


Click here to find out... The Number 1 Reason Why Most New Businesses Fail and how you can avoid becoming one of them.


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