There is only one reason why businesses fail: They have no clients or customers. As simple as that.

What I mean is if you have created a product and it costs you Rs. 100, you need customers who will pay Rs. 125 and buy ENOUGH quantities so that you can have a sustainable business model. Let me enumerate why I think businesses fail.

1. The entrepreneur has no understanding of cash flow, costing, or law: Business is about cash flow – how to make payments on time, collect on time and understand enough about costing so that you do not mis-price. It is also knowing which payments cannot be delayed, and which returns have to be filed on time. Most businessmen do not know the basics and mess up pretty badly before they seek professional help of a good accountant.
2. Business is about talking to the customers daily: Many businessmen think that they are too intelligent and smart so THEY know what the customer wants. When they talk to the customer, they talk at the customer. They just do not listen. If you are making a product for me, please listen to ME. If you build something without a clear market — or if you build something that your customers don’t want — you’ll end up wasting money. It’s easy to fall into the trap of executing too quickly. When you’re passionate about something, it’s too tempting to simply jump in and start bringing your vision to life. Good chance that your assumptions are wrong. Very wrong. You are likely to be pursuing ideas that YOU think your customers may want, but in reality you should be actually ASKING your customers. As a blogger, I can afford to make mistakes – my post has a one day life, however, as an author I do not get time to correct my mistakes.
3. Not knowing how to delegate and what to delegate: A few entrepreneurs that I have met have been so passionate about their work that they believe that only they can do all the work. Just to prove this to the world they keep giving examples of how delegating failed. Actually they do not delegate, they just assign work to a few other people and micro manage to the last detail. Normally puts off the employee who then starts looking for a new job!
4. Hiring poor quality people: Many entrepreneurs are a little worried about their genius ideas (one was so paranoid that he did not showcase the product to the client!) that they hire people who are not too smart (what if they walk away with the idea?) and these people in turn hire people worse than them. An awful process in a race to the bottom.
5. A narrow focus: Well what I mean is entrepreneurs think because they are launching a product the world should share the passion! I remember one accounting software which the entrepreneur wanted to sell at Rs. 35,00,000 a piece. As an accountant I had no clue – the market gave me feedback that they would not buy it at a price more than Rs. 300,000. I was just an investment consultant, and had no direct role in the sales. The start up had promised a turnover of Rs. 220 crores in one year. It folded up without doing a single sale!
6. Not removing own shoes before  wearing client’s shoes: I saw an entrepreneur telling a bank how they could save Rs.10,00,000 per annum – with a stupid idea – without understanding that the person who had agreed to meet him would have had a ctc of Rs. 65L. The banker was a friend and he sent me the ppt – it was a good idea for the bank, but the product was so poorly pitched that the client refused to look at it again!

Obviously many more pending…