Here at All Top Startups, we love the thrill of a new business. Turning the spark of an idea into something real is a fascinating process. We’ve watched bedroom entrepreneurs turn their small ideas into multi-billion dollar businesses. Unfortunately, we’ve also seen promising companies fail before they’ve even gotten off the ground. In this post, we’re looking at some of the biggest reasons small businesses fail. These are the huge problems that could kill your startup.

1. Data loss.

The loss of information and data can cripple small businesses. And, it’s one of the main aspects forgotten by startups. They’re busy carving out a niche, finding money to keep going, and focusing on the future. All too often, it leaves a chink in the armour when it comes to data. Whether it’s your company’s information or worse, your clients’ and customers’, it needs to be safe. You can visit for safeguarding purposes. A data breach or system crash will ruin your credibility, and you stand to lose months of hard work.

2. Lawsuits.

As a small business, you simply can’t afford to go through a lawsuit. The legal process is lengthy, expensive and draining. It will draw your attention away from the business, and empty your bank balance. A lawsuit could come from anywhere, so make sure you speak to a lawyer in the early days. Invest in business insurance that will cover public and employee liability and indemnity. You should also copyright and patent any intellectual property.

3. Financial trouble.

The bank balance is the biggest giant killer in the world of startups. No matter how promising the business, if the cash-flow doesn’t add up, it’s going down. At the beginning of your venture, it’s crucial that you think about every single penny you spend. More importantly, you need a plan for generating revenue. A startup plan without a return on investment is doomed to fail.

4. Slow reaction times.

The best startups are reactive, adaptable and flexible. They act fast on current trends and dive into market gaps when they open. That’s the beauty of small companies. They can adapt quickly while big business is slowly making a U-turn. When startups fail to capitalise on an opportunity, they inevitably crumble. Look for that gap in the market, and react quickly.

5. Bad customer service.

In the early days of your startup, every single customer is vital. You’re building a community one-by-one here. One bad review can tarnish your reputation before you get started. Treat every last customer with respect and exceed their expectations. In the first year or two, you need to build your reputation and authority. That means spreading through word-of-mouth and gaining business through referrals. Don’t let poor service kill your startup.

6. Launching too early or too late.

Timing is everything for startups. You launch too late and your product could be useless when you are finally done. You launch to early. if you launch too early, you might find that you are completely unprepared to handle your growth, or worse yet, unprepared to present a useable product.

“Launching too slowly has probably killed a hundred times more startups than launching too fast, but it is possible to launch too fast. The danger here is that you ruin your reputation. You launch something, the early adopters try it out, and if it’s no good they may never come back.”–Paul Graham

7. Raising too much or too little.

Raise enough to get to the next step, and then 50-100% more for buffer. Always plan for the unexpected. Not everything goes as planned in a startup. Prepare for that. Spending too much happens when you hire too many people, and/or pay too much salary (give equity instead), or waste too much money on marketing with little or nothing to show for it.

If you can avoid these difficult pitfalls and problems, you have a clear path to success. Who knows, you could emerge as the next big startup success story! Everyone has to start somewhere, and now it’s easier than ever. Good luck!

Writes about small business, technology and also reviews startups.


  1. What about this 2 small ones?
    – Not creating value for the right people
    – Not cashing in that value creation

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