Three Reasons Why Businesses Fail

Understanding the reasons for business failures enables you to take steps to avoid them. Here are the top three to watch out for:

1. Lack of Change Management

Change management is a way to move individuals, teams, and organizations from so-so to success. Failing to implement change management is one reason many businesses don’t succeed.

Organizational change management involves techniques for creating readiness assessments, engaging senior managers as change leaders, building awareness of the need for change, developing skills and knowledge to support the change, helping employees move through the transition, and methods to sustain the change. Methods to bring about and sustain change include measurement systems, rewards, and reinforcement. It’s also extremely important to solicit input from staff members so barriers to change can be identified and removed.

Consider how the correct customer relationship management software can make a dramatic difference in helping you implement necessary changes to improve the health of your organization.

2. Lack of Identification of Business Goals

The lack of clear business goals is another key reason for business failures. Does your organization have written measurable goals? If not, or if they aren’t clear or need to be updated, be sure to take time to address this issue. You may find it helpful to use the acronym SMART, which stands for five characteristics of well-written objectives: Specific, Measurable, Achievable, Relevant, and Timely.


Each goal needs to be specific enough for you to know when you’ve achieved it. For instance, the goal “to gain new customers” is too vague. How will you know when you’ve reached the goal? But if your goal is “To gain five new customers this month,” you’ll know when the goal has been reached.


You probably want to increase your number of contacts, but “making new contacts” is too vague to be a well-written goal because it can’t be measured. However, “We will attend one networking event per week and attempt to connect with two people at each event” is a concrete goal enabling you to know when you’ve hit your target.


While goals need to motivate you and your business to accomplish more than you are accomplishing right now, it’s important to be sure they aren’t too difficult to reach. Don’t set up your organization for failure by establishing unreasonable goals.


Make sure that the objective is appropriate. Can you or your team truly do something about the goal, or is it irrelevant for the job you or they perform? Would a different objective be better?


Structure your goals with a time frame. Without an end date, your team won’t feel a sense of urgency; they’ll see little reason to take any immediate action. Having a specific time frame gives impetus to get started, and it helps monitor progress.

If writing goals for your business seems daunting or you simply don’t have the time it takes to tackle the project alone, consider getting expert help in identifying the best objectives to enable your organization to reach its full potential.

3. No Ability to Measure Outcomes

A key component that businesses often lack is a usable measurement system. Do you have data at your fingertips that can reveal how well your business is doing? If not, ask yourself if the right software—and the right consultant—can help you in this area. If you don’t know the results you’re getting, you won’t know how to improve.

Get the Help You Need from Experienced Organizational Development Specialists

Contact us now for a free one-hour consultation with one of Northwest DataDesigns’ organizational development specialists for targeted suggestions on how to strengthen your organization.