The National Venture Capital Association estimates that 25% to 30% of venture-backed businesses fail. A research by University of Tennessee showed how industries are performing after 4 years along with the reason for startup failure.

Study revealed that 46% of businesses fail due to incompetence; 30% due to lack of managerial experience; 11% lack of experiences inline of goods or services; and 1% cause of negligence, fraud or disaster.

Specific pitfalls that lead to the cause are:

• Emotional Pricing
• Living too high for the business
• Nonpayment of taxes
• No knowledge of pricing
• Lack of planning
• No knowledge of financing
• No experience in record-keeping
• Poor credit granting practices
• Expansion too rapid
• Inadequate borrowing practices
• Carry inadequate inventory
• No knowledge of suppliers
• Wasted advertising budget

Leading management mistakes:

• Going into business for the wrong reasons
• Advice from family and friends
• Being in the wrong place at the wrong time
• Entrepreneur gets worn-out and/or underestimated the time requirements
• Family pressure on time and money commitments
• Pride
• Lack of market awareness
• The entrepreneure falls in love with the product/business
• Lack of financial responsibility and awareness
• Lack of a clear focus
• Too much money
• Optimistic/Realistic/Pessimistic