Boss Lady

7 Reasons businesses struggle in year one


Did you know that 90% of new businesses fail within the first year that they enter the market? It’s important when you’re starting your own company that you do explore the reasons for this. That way, you can make sure that you are able to dodge these common pitfalls completely and keep your company on the right track. So, let’s take a look at some of the main reasons why a company can come crashing down on the market.


Business owners often underestimate the cost of starting a company and running new businesses. This leads to them spending far less than they need to when trying to make the company a success. There are countless guides online that will tell you, it’s possible to start a business with money in your accounts. While this is technically true, starting a business doesn’t automatically mean that you are going to find success. The reality is that a lot of businesses do fail and part of the reason for this is that companies aren’t spending enough money from day one.

There are lots of different corners that you can cut when you are starting your company. For instance, you can avoid paying for web design. While it’s possible to design a website for free, ultimately, your site will end up looking like every other web page online which is a massive issue when you’re trying to make an impression with customers and clients.

It’s possible that you underspend in your business model because you simply don’t have the cash available. That’s why you might want to explore the option of a personal loan. With the right personal loans, you can get the money you need and still find it easy to pay back any cash that you spend. You just need to make sure that you are exploring key elements like the interest rate as well as any additional charges. Remember, it’s essential that you do stay on top of any money that you decide to borrow.


Another reason that businesses struggle in their first year is due to debt. When your finances aren’t secure, and you don’t have a completely reliable source of funding, it can be really difficult to stay afloat. Or, even if you do have the amount of money that you originally thought you needed, expenses could be higher than you had anticipated. This could put your business in trouble, especially if your investor or whoever is funding your business is not willing to give you any more money.

It’s important to understand that debt only becomes a problem when you have no way of paying it off. If your business has debt at the moment, this is not going to be enough to sink your company. The issue comes when you’re not turning the level of profit you thought you would, and the loans become unpayable. At this point, the company that loaned you the money can take you to court for the payments, which could end up in the liquidation of your company if you are not careful. While this is usually a last resort, you need to do everything in your power to avoid it getting this far.

Legal trouble

Have you ever read about companies that have been in legal trouble? There are many problems that a business can face when it has legal problems being thrown at it. One of these is that legal costs are expensive. You need to pay for the best lawyer around so that you have a better chance of coming out victorious. Ideally, you should have a lawyer on retainer so that as soon as something is legally grey in your business, or if someone files a lawsuit against you, you can have them on the case, sorting out the mess. The quicker you respond to issues like this, the better chance you have at sorting it out.

However, sometimes even a fantastic lawyer is not going to be enough to save you from the legal trouble that is being brought against you. If the problem is controversial, or even just happens at the wrong time and the public gets wind of what is going on, this is enough to end a business. The reason for this is that there is no business without customers, and if people are reading that you are in legal trouble, this is enough to put them off. Many companies have gone down thanks to legal trouble, and this largely happens in year one because this is when it’s the most difficult navigating the right side of the law.

Low quality

If you don’t get quality levels right in your business then you are going to find that customers quickly begin to reject your company. This can even lead to a flood of negative reviews online and we’ll discuss the full ramifications of this a little further down. To rectify issues with quality you need to ensure that the right checks are in place. You can either take care of this as part of your business model. Or, you can use an outsourcing solution to check for problems with quality.

Of course, if you are using outside help in your business model, you need to be aware of the quality of service they are delivering as well. If it’s not up to the standards of your company, it’s always going to reflect poorly on your business as a whole. You need to make sure that you are checking out any service that you use in your model carefully to ensure that it will match your standard of customer support.

Poor reviews

Poor reviews are a huge killer of businesses. If you read somewhere that a business doesn’t perform the way it should, or it treats customers like they mean nothing, or even that they don’t deliver their product or service on time, would you want to use that company? No, and neither do other people. Customer service and treating your customers as though they are valuable to your company, and appreciated by your company is one of the most important things. There are several ways for people to give poor reviews about your business though, so even if you think that you can censor what is online, which is a terrible idea, there is still word of mouth.

So, you might want to think about what you can do when you receive poor reviews if you can’t avoid them altogether. For example, if you are getting reviews online then you need to respond to them. Respond to the review and say that you are sorry they have had a poor experience with your company and that if they get in touch someone will look into the issue and attempt to offer a solution.

Word of mouth is going to be more tricky to contain because you can’t respond when you don’t know what is being said. The only thing that you can do is send your employees on training courses to ensure their customer service is up to standard. On top of that, ensure that everything that comes out of your business is high quality, and then everything should be okay for the most part.

Health and safety

Something else that causes businesses trouble is health and safety. Following all the health and safety guidelines that have been laid out for companies is sometimes a very long, and expensive process. As well as that, it is something that needs to be continuously followed upon to maintain the same high standard as in the beginning. When companies don’t do this, they are putting the people in their business office in danger, and anyone who visits for any reason.

You cannot afford to have business premises that are not safe for people to be in. If an employee or a client gets injured because you didn’t uphold the health and safety standards that have been set, they can file a lawsuit against you and cause your business a world of trouble. After this happens, people are going to be hesitant to use your business, and your employees might even start looking for other jobs.

At the end of the day, the general consensus will be that if you can’t maintain a high health and safety standard, you are not a safe business.

The wrong team

Finally, a company is only as strong as the team behind it. If you don’t have the right people working in your business, then you are always going to struggle to keep things at the same level as your key competitors. This is always going to start with your hiring practices. You should consider using a recruitment agency to get the right people into your company. With a recruitment agency, you can make sure that only the best CVs land on your desk

In terms of finding the right team for the job, you should also be ready to search far and wide. Thanks to the latest tech it’s easy to go on an international search for the best people in your business.

About Business Woman Media

Our women don’t want to settle for anything but the best. They understand that success is a journey involving personal growth, savvy optimism and the tenacity to be the best. We believe in pragmatism, having fun, hard-work and sharing inspiration. LinkedIn

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