Why Businesses Fail (And Why You Might Be Next)

Entrepreneurship is currently a hot stuff. Them who wants to go big is digging it. Why not? Opportunities are plenty! Because there isn’t yet any shortage of everyday problems in Indonesia to be solved by creative solutions.


This is also supported by the fact that Indonesia’s economy is predicted to advance 5.4 percent in 2018, higher than a 5.2 percent expansion in 2017. Investment is projected to increase at a faster pace, especially for lower commercial lending rates. Both local and overseas investors are paying more attention to the archipelago.

In short, there’s never been a better time to be an entrepreneur in Indonesia.



Succeeding as one is not an easy sail. According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months.




Entrepreneurship is such a “trendy” thing that motivational and inspiring talks of CEOs and Unicorns are everywhere, MBAs are in most people’s second thought; yet, there’s only 20% chance for you, business starters, to survive. Why can’t we learn from the colossal amount of failure with our predecessors that we can apply to our own business aspirations?

If you haven’t read any yet, here’s a sum up of top 7 reasons businesses fail:


#1: Not In Touch with Customer Needs

Entrepreneurs must walk 1,000 miles in the shoes of their customers. Your customer holds the key to your success deep in their pain, behavior, dreams, values and the jobs they are trying to accomplish.

What are they telling you? Have you been listening? Or is the market declining? Are they even still interested in what you’re selling? These are all important questions to ask and answer. Maybe you’re offering a product or service that is fallen well below trend.



#2: Lacking Uniqueness and Value

“Wherever the crowd goes, run in the other direction.” – Charles Bukowski

You may have a great product or service for which there is strong demand, but your business is still failing. It may be that your approach is mediocre or you lack a strong value proposition. If there’s strong demand, you probably have a lot of competitors and are failing to stand out in the crowd.

Dig in. Figure out the true value you bring to the table which is unique and different than others in the marketplace.



#3: Failure to Communicate Value Propositions

Many entrepreneurs work hard to discover a point of differentiation then blow it because they do not communicate their message in a clear, concise and compelling manner.

It should be pretty simple. Learn how to communicate better. Listen to the words they use and then use them right back at them. Do so through focus on these 3 points: Be clear, be concise, and be compelling!


#4: Unprofitable Business Model

Your business idea may be good, but failure may come in the implementation of the idea if there are no strategic guidelines in place. Building a business on a model that is not sound, operating without a business plan, and pursuing a business for which there is no proven revenue stream, are ways to get down to failure quickly.

Research and review the way other businesses in the industry operate. Develop a complete business plan that includes financial forecasting based on predictable revenue, strategic marketing, and challenge management solutions to overcome potential obstacles and competitor activities. A sound business model that incorporates best practices can help your business avoid failure.



#5: Poor Financial Management

Research says: 40% of small businesses make a profit, 30% come out even, and the remaining 30% lose money.

Down to the last dime, you need to know where the money in your business is coming from and where it’s going. Your business can also fail if you lack a contingency funding plan, a reserve of money you can call upon in the event of a financial crisis.

Sometimes people start businesses with a dream of making money but don’t have the skill or interest to manage cash flow, taxes, expenses, and other financial issues. Poor accounting practice puts a business on a path straight to failure. Learn to count or hire the professional one!


#6: Rapid Growth and Over-expansion

Wise man says, “Don’t bite off more than you can chew.”

Every now and then a business startup grows much faster than it can keep up with. Your business could experience get bombarded with orders you are not able to fill. Or you’re getting too excited with stocking up inventory without knowing when are they gonna sold out. These are both additional paths to business failure.

Business growth and expansion take as much careful and strategic planning as managing day-to-day operations. Measure local and regional demographics and spending trends, future development plans for the area, and other pertinent issues before you move forward. Greed is one of the 7 deadly sins, after all.


#7: Leadership Failure, or, Founder Dysfunction

This is the most dangerous one.

Your business can fail if you exhibit poor management skills, which can be evident in many forms. You will struggle as a leader if you don’t have enough experience making management decisions, supervising a staff, or the vision to lead your organization.

Dysfunctional leadership in your business will trickle down and affect every aspect of your operation, from financial management to employee morale. Once productivity is hindered, failure looms large on the horizon. Learn, study, find a mentor, enrol in training, conduct personal research – do whatever you can to enhance your leadership skills and knowledge of the industry. Examine other business best practices and see which ones you can apply to your business.


Knowing these facts, and knowing that our fellow aspiring entrepreneurs are struggling to find mentor and getting insights for their business improvements, is why we launched our state-of-the-art program, Business Starter Pack.

We stitch the program to suit YOU, aspiring entrepreneurs or already struggling start up owners, to collect your guts and be ready for the big (re)start. And we have a dozen of awesome leaders to kick yourself off as your personal mentors!

Click here to enrol and get IDR 2.000.000 off!

Business Starter Pack is the 10-week learning experience which offers entrepreneurship skill set from concepting, branding, to financing. We provide you insights, expert feedbacks, personal coaching, and peer network to help you start and grow a successful business in creative industry.




Resources :

  • https://tradingeconomics.com/indonesia/forecast
  • https://www.forbes.com/sites/ericwagner/2013/09/12/five-reasons-8-out-of-10-businesses-fail
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Rofianisa Nurdin

lingkaran's Queen of Content, on which she (among other things) leads one of our program, CreativeMornings Jakarta, to highlight the bright individuals’ effort to make Jakarta a more lovable city.

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