Why Do Christian Businesses Fail?

Being an entrepreneur means being willing to take risks. And even for Christian owned companies, success is not guaranteed. 

In fact, statistics show that more than 50% of all new American businesses fail within the first 3 years. Even more unfortunate, however, is that most of these reasons for failure are avoidable! 

As an aspiring faith-driven business owner, you need to understand these common mistakes as you prepare to launch your business. 

The most common reasons small businesses fail are 

• poor financial management
• weak business plan
• discrediting or ignoring customer feedback 
• Poor leadership or unfair employment practices
• lack of delegation
• quitting too early
• poor decision-making
• forgetting God’s call on your life

To succeed as a business owner, you MUST be aware of these eight common reasons for business failure so you can avoid them and lead your business to success!

#1: Poor Financial Management

Whether it’s not having enough money to start the business, mishandling finances, or not having savings put aside for emergencies, poor financial management is one of the most common reasons businesses fail. Starting a business means investing a significant amount of time, resources and energy– making informed financial decisions is crucial for the survival of any business.

#2: Weak Business Plan

Not having a clear vision, trying to offer too many products or services, lack of research prior to launching the business, and inadequate marketing are all indicators of an unclear business plan. Knowing the “what” and the “how” is important to keeping a narrow focus so you can reach company goals. 

Even more importantly, however, is the “why” of the company. Without a strong foundation of a clear business plan, it is nearly impossible for a business to thrive. 

#3: Discrediting Customer Feedback

A business is successful when it knows what its customers want and what they are willing to pay for it. Ignoring the needs and wants of the target market or being unwilling to make changes based on customer feedback is a sure way to decrease profits.

#4: Poor Leadership

Oftentimes, business owners forget that the way they treat their staff has a much bigger impact on the culture and ultimately the bottom line of the business than they realize. Unfair employment practices, low wages, poor training, and lack of accountability systems in place are all contributing factors to business failure.

#5: Lack of Delegation

Business owners who tend to think that they need to do everything themselves and / or micromanage their staff, often end up with unnecessary added stress which can lead to business failure.The need to hand off certain decision-making, tasks, duties, and responsibilities to other people is an important lesson that business owners often learn the hard way or when it is already too late.

#6: Quitting Too Early

Did you know that it can take 1-3 years for a business to just break even? 

It can take a long time to start seeing a business be profitable and it takes a lot of perseverance. And although there are some cases in which a business should close for legitimate reasons, it is far too common for business owners to prematurely close their business.

#7: Poor Decision-Making

Making bad decisions is the quickest way to kill a business. As people start their businesses, it can be tempting to make decisions that lead to instant results instead of thinking about the long-term trajectory of the business. Lack of accountability and mentorship, short-term thinking, and misalignment to the business plan all contribute to poor decision-making. 

#8 Forgetting That God Has a Plan

And finally, as a Christian entrepreneur, you must also consider the role of wise Christian mentorship, wisdom and discernment in leading your business and making life decisions. God has good plans for your life (Jer. 29:11), and He wants you to know these plans (Eph. 2:10)!

But you must believe this is true for your life, and then commit to slowing down enough to seek His voice, wisdom and direction. Having a wise Christan mentor or business/spiritual coach who can help guide you both professionally and spiritually, is probably one of the MOST important decisions you can make as  a faith-driven entreprenuer.  

Reach out today if you’d like to learn more about how we can help you on your entrepreneurial journey. 

If you need help starting or growing your business, check out our Business StartUp course! Through this self-paced, online course, you will identify your personal values, strengths and assets, and learn what makes a good business idea, how to conduct market research by using our simple and clear step by step market research guide, and even how to write a strong business plan by using our business planning master tool and templates. But that’s not all,  you will also learn how to create a purpose-driven company, how to maintain a healthy life/work balance, time management, goal setting, leadership skills and vital financial management tools. Don’t miss this opportunity! Start today!