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How to Prevent a New Business from Failing – 5 Opportunities from a Business Consultant

There are approximately 30-million small-to-mid-sized businesses in the U.S. and they all began as a startup with an entrepreneur at the helm and the risk that they might fail.  About 50% of new U.S. companies fail in their first five years. Bloomberg found that a whopping 80% of entrepreneurs who start businesses fail within the first 18 months.  As a business consultant in San Luis Obispo, I make it my mission to help businesses avoid this tragic end and learn to grow and thrive.  In this County, we have about 30,000 non-employer businesses which are the “solo-preneur” as I like to call them; businesses that are either just starting out here in San Luis Obispo or that are service industry and making it on their own by wearing many hats.  These are not all new businesses, but many are and might be at risk for failure.  Losing half of new businesses within their first five years is a lot.

So how to you avoid being a statistic and prevent your new business from failing?

Invest in knowledge.

“An investment in knowledge pays the best interest.”

~ Ben Franklin

The primary reason businesses fail can be traced back to something in their infrastructure.  Something wasn’t planned out all the way, or thought ahead fully.  There are cracks in the foundation of the business.  This lack of business expertise can be simply a failure get the knowledge and training that will give the entrepreneur the edge they need for success. I see it all the time.  This is why people hire business consultants: I provide training and can find gaps in knowledge that need to be filled, if not by me then by other training or hiring someone who can get you those skills.

I’ll help you get started.  Below are five common points of failure for new businesses that can cause them to close their doors; but I want you to look at them as learning opportunities.  These five opportunities are places where you may want to invest in further knowledge for yourself and for the future success of your business.  If you see an area where you do not have a plan, call a business consultant you know (or call me, I would be happy to talk to you) and develop an action plan to develop your knowledge and skills.


5 Common Points of Failure for New Businesses and Learning Opportunities  


  1. Not knowing you customer. Do you know what they want, how they want to shop/order, and when and where they want to get it?  Don’t assume anything.  In today’s market, the consumer has full authority over their purchases.  I’ll give you an example: You buy something from a box-name-brand online and want to return it, so you walk it into the store and they tell you, “Sorry, you have to ship it back.”  To most consumers, that’s the ultimate betrayal and they wouldn’t order from that brand again because they expect so much more and the letdown hurts on an emotional level.  Our customers expect things.  They hold the key to your success deep in their pain, behavior, dreams, values, and needs.  They buy to solve a problem, but they also buy out of desire.  Where does your product or service fit in?


  1. Not knowing your unique selling position. I hope you know what this term means, if not, dig in deep to find this. Figure out the true value you bring to the table apart from anyone similar to you.  Why would someone buy your widget when there are so many widgets available with the power of the Internet?  Where can you compete with your service in your community?  Price, value, quality?  It is not just your product or service, it is also YOU.  Grab some sticky notes and do some brainstorming. At first, don’t self-edit.  Write it all down.  Then review it for what feels true and in alignment with you, your purpose, and your customers.  Pick 3 to 5 that really resonate with you and give them a field test with this next point…


  1. Not knowing your brand to build your tribe. Communicate clearly and succinctly about WHO you are and the VALUE of your product or service.  And by all means, be COMPELLING.  Be excited, be enthusiastic.  Getting your customers excited and enthusiastic is going to be necessary in order to get them to take action and BUY.  Once you have them, they become your greatest brand advocates.  This is what is currently called the “tribe” of your brand, but you can’t have one if you don’t know who you are and what you stand for.  Many startups skip writing their mission statement and don’t identify their brand.  A brand should create an emotional reaction in your customers with your business.  What emotion do you elicit from people with your business?  Pick one and own it, then never break it.


  1. Not being able to lead and close a sale. I’ve met many wonderful entrepreneurs and here in San Luis Obispo as a business consultant many are gifted with creativity as this is a very artistic community.  Creativity is a skill that cannot really be taught, so it’s a great one to have, but what can be taught are leadership and sales (especially the sales closing) and I see too often a lack of these two skills.  Other skills can be learned, too, as I mentioned earlier, such as marketing and financial savvy.  But to be the boss, even as a solo-preneur, you have to be able to lead people.  Your conversations with clients and contractors need you at the helm if you are going to get that “yes” when you go for the sale.  Workshops, webinars, and monthly coaching can all help put you there.


  1. Not having a revenue strategy. And this last point is CRITICAL!  It would be like going on a treasure hunt without a map.  Spend time on the design of your business model and your revenue strategies.  Even if you use the above 4 points, if you miss this one you are at serious risk of your new business failing.  Without a plan and a financial strategy, you will consistently struggle to reap the financial reward that your business has the potential to produce.  In the end, you need your business to be profitable.  A business that consistently loses money is a hobby.


I love to consult with startups and new businesses within their first five years because they have nowhere to go but up!  Not all new businesses fail due to these five pitfalls as sometimes life throws other curveballs like health and family matters that must become the priority; however, most businesses go throw a Cycle of Change in which they pass between optimism and pessimism on their way to having a business they love.  I want you to know that this is normal, but being prepared for it is what will make the difference and keep your business from failing.

Leave a comment and let me know which of these points you will commit to learning more about TODAY!

Lorna Whiteaker

Lorna Whiteaker is a San Luis Obispo business consultant and coach dedicated to helping business owners get the results they want. Lorna has over 30 years of experience working with small businesses, working as an administrator in the legal industry and as an independent business consultant helping hundreds of entrepreneurs. With clear and realistic expectations of just what a business owner must deal with in running their business, big or small, she has worked with firms making 7 figures and start-ups with little more than elbow grease and a dream.

This Post Has 2 Comments

  1. cami

    I have read your blog its great.

  2. Taylor Hansen

    I like how you mentioned how a brand should have an emotional reaction from customers about the business. My brother wants to create a startup that is a street-like burger place this year. I’ll have to share this with him so he can cater to his customers and create a memorable brand.

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