It’s not often that I disagree with Peter, and actually I’m not really disagreeing with Peter. I’m disagreeing with one of the entrepreneurs he cited in his most recent post. The entrepreneur, Justin Kan of Justin TV, claimed that "90 percent of start-ups fail because the founders get bored, discouraged, or something else, and they move on to other things, not because of some catastrophe." Well, I don’t know where Justin got his statistics, but let me give you the top five reasons new businesses fail.
1. Poor management (far and away the #1)
2. Misidentified the customer and the pain
3. Didn’t understand how the industry works
4. No secret sauce or way to differentiate
5. Insufficient funding
A wise man once told me: "a tree grows from the bottom up, but it dies from the top down." When a business fails, look to management to find the cause. In fact, every one of the other top reasons for failure is related to poor management.
Boredom? Yeah, that may affect a few entrepreneur wannabes, but 90%? Give me a break!