When Daymond talks to hopeful entrepreneurs on Shark Tank, one of the first things he want to know is how their business can fail. That sounds pretty negative, but he’s not interested in their failure because he wants to be mean or because he thinks they have a bad idea. Daymond is interested in it because he thinks they have a good idea, and he wants to know how much thought and effort they’ve put into it.

If you know how your business can fail, you’ve taken the first step to planning for that contingency and avoiding failure. That’s a pretty big step toward success in my book, so I thought I’d share a few of the most common reasons that startups fail to help you get a better idea of what you’re looking at and how you can ensure your business’ success.


“Failing to plan is planning to fail.” There’s a reason that old clichéd saying has stuck around as long as it has—it’s true. Lack of planning is probably one of the biggest reasons that businesses don’t make it. So, as you get ready to pitch to your investors, don’t rely on your incredible idea. Sit down and create a detailed plan.

If you don’t already have these integral components for your business plan, you’re not ready to talk to investors:

Honestly, these are just the bare bones. If you don’t have these, along with some hard numbers that detail how your investors will profit from your company, you need to spend some more time preparing before you ask for any cash.


Deadlines are great. They keep us from procrastinating or spending too much time focusing on perfection instead of getting a good product on the market. However, if you put your deadline ahead of the quality of your products or services, you’re in trouble.

Do not launch until you’ve worked out the bugs in your products, or you’ll be looking at a lot of really unhappy customers. Depending on what you cut corners on, you could even be looking at some pretty huge liability issues, too. Stick to your deadlines whenever you can, but don’t launch before you’re actually ready.


Whether you’re going the crowdfunding route or you’re approaching bigger investors, you need to know exactly how much money you’ll need to get started. It can be tempting to underestimate your funding needs to ensure that your investors say yes, but that can land you in a lot of trouble.

Without enough funding, you won’t be able to launch or you won’t be able to create your products or services to the specifications you’ve promised. You’ll fail, and your investors won’t be thrilled to partner with you again. You might even run into legal trouble and have to pay back what you’ve borrowed, all without anything to show for your work and sacrifices.

These are three of the biggest reasons that startups don’t make it off the ground. If you avoid them, you’ll be on the road to success, and before you know it, you might even be investing in other entrepreneurs’ dreams.

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