• Kim Lorenz

Why 95% of Start Ups Fail in 2019


What are the top reasons 95% of young companies fail in the first five years? There are many factors and several different statistics with no ‘official’ agreement, but some common areas are these five (5):

1. Lack of initiative

2. Poor self-discipline

3. Poor cash flow management

4. Having the wrong vision

5. Poor execution


When asking people why their businesses failed, the answers they provide often do not match the true root cause of the failure. Not many who failed will tell you they failed because they lacked self-discipline or some other quality. What they might tell you, or what they might convince themselves to believe, could very well be clouded by pride.


When asking a successful business owner why they succeeded, we often find that the core reason for success is individual effort and self-discipline combined with an enormous will to succeed. This effort may be referred to as inspiration and perspiration, something many people lack in addition to a lack of vision. Yes, I said “perspiration,” the hard work it takes to succeed. Too many fear hard work or, ironically, they “work hard” to avoid it.


There are several other traits we see in people who succeed whether in their own businesses or working for others. These include dedication, perseverance, continued learning, and listening to others. Building a culture of success within an organization is another key ingredient. And remember, age, race, and gender have nothing to do with any of the above. When applied, they provide the same outcome for all.


External Factors


Sometimes, startups fail due to external factors that they’re ill-equipped to face. Markets change, consumer demands change, the economy falters.


The first one of these is not having a strong market need. As great your idea may be, it will be an uphill battle to persuade a cold audience that your product or service is worth their hard-earned cash. Simply, what you think others might want, is not reality.


Always in the top five is lack of capital. Cash, on its own is another reason why startups run into snags. To be more specific... not having enough of it! You spend cash building inventory as one example, and collecting the cash to pay for that inventory through sales cause ‘Negative Cash Flow’. You just cannot pay your bills unless a bank provides the capital required. Even then, a bank has to be repaid, as well as be comfortable you can manage the cash flows. Many do not manage, or understand cash flow and they fail. Many profitable companies fail for lack of cash flow management.


If you run out of cash, you may risk losing all progress made in your business. Plenty of businesses achieve greatness if they had enough fuel in their tank to run the race.


I’ve also seen many bright business leaders come up against competition that’s plainly just too fierce for them to handle at such an early stage of business.


Entering a saturated market is a bit like storming a fortress with no army. If you intend to disrupt big competitors, you’ll need a solid plan for breaching their defenses. In the book Tireless, you can read how we started in a mature market, with many ‘global’ competitors, yet when we sold 20 years later, we had 61% market share! The next competitor had about 14% and we had many competitors, about 15 in those markets, some of the businesses over 70 years old! How did we do it?


Internal Factors


External variables aside, there are also internal factors that can lead to startups closing their doors (or never even opening them).


Not having the right team is surely a common reason.


Aligning yourself with teammates who possess the right skills and work habits is key. And it’s just as vital that they share your ambition for your startup’s success.


And even if you do have the correct team in place, the leadership of the startup can be the final say in whether success occurs or not. Are you appropriately equipped as the leader of the business? Your success depends upon it.


Strength through leadership is something that I am very passionate about. Growing employee knowledge, and their personal success was always a focus. We built market share through excellent employees. May we hired had zero experience in our industry and we taught them the correct ways ourselves. Honesty, integrity, sincerity and empathy were key ingredients. I explore this with my readers in great detail throughout Tireless.

Best Habits for Startup Owners


These are, in my opinion, some of the best healthy habits that can lead business owners to a higher likelihood of success in their endeavors.


Always have a thirst for learning more. And instill that thirst with employees. Those that have a hunger for more information and new perspectives often possess the ideal “growth-driven” mindset.


You’ll also want to develop a willingness to delegate tasks. Even though it can be tempting to “do it all yourself,” having the right team means that you can delegate tasks with confidence that they’ll be done well and on time.

Here are a few other quick tips that can help you along the road to success.


Prioritize Organization


While the “flying by the seat of your pants” approach can seem like par for the course as a startup, there is no excuse for poor organization. You must develop and practice ‘Self-Discipline’ and always follow through. There are several humorous but true examples in Tireless.


Be persistent with your follow-ups


When building new relationships with partners, teammates, and customers, it is all too common to let communication fall by the wayside. Develop a follow-up process that ensures you don’t miss out on any opportunities. Find your way of simply planning your next steps as you go with a focus on the overall goals. And never be afraid to adjust those goals.


Spend time cultivating your personal brand


As the startup owner, people are buying into YOU and your vision. Help them see the value in you and what your business can do for others. People who do ‘buy into you’ also grow faster when they realize, you are investing equally or more in them! Some call this ‘Servant Leadership’, if you are not ‘sincere’ in your efforts, people will know it.

When solving the riddle of why startups fail, the answers are not always cut and dry.

In Tireless, I aim to equip you with a fresh perspective that you can analyze your business paths, learn to recognize opportunity, as well as recognize negative self-talk and negative people who will always fail to see what might be in front of them that can help all succeed. You can succeed where you are right now, learn to see the opportunity even when disguised as a problem or serious issue. Or, like me, if you find the option is starting your own business, my hope is that Tireless helps you becomes truly great!

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© 2019 Kim Lorenz. All rights reserved.