Reasons why new projects fail (know them to avoid them)

 any professional and experienced driver before he drives his car to a new road; He first asks about the obstacles and pitfalls in it so that he takes them into account and prepares well for them.

The same applies to you; Before implementing your new project idea, you must familiarize yourself with the challenges and obstacles that you will face, and for this reason, today we will talk about the most important reasons for the failure of new projects in order to prepare well and avoid them.

in the last period; It became terms such as entrepreneurship (entrepreneurship) and a startup (Start-up) and venture capital (Venture capital) often hesitate between our Arab societies.

This has led to the presence of a large segment of young people who seek to establish their own projects and obtain the title of “entrepreneur”… However, full awareness of this field is not yet complete.

Not only in the Arab market, there are great shortcomings and recklessness in the Western market as well. For example, according to the statistics of the American Small Business Agency ( SBA ), almost 90% of new projects or startups fail and do not achieve success .

According to many statistics and studies conducted by many institutions around the world (such as Harvard University); The 20% of new businesses fail in its first year, and 30% in the second year, and the remaining percentage does not exceed the fifth year .

All this information and statistics carries with it many reasons for the failure of new projects, and the strange thing in this matter is that the rate of creation of new projects is still on the rise despite all this information.

For this reason, we felt a great responsibility towards our dear readers, and we were keen to put before them the most important reasons for the failure of new projects so that the picture becomes clear to them, and they realize the magnitude of the responsibility that is coming upon them.

And not only that, but we were keen to put all the information and sources to help avoid these problems from the beginning… That is why I want you to read this entire article and not just be satisfied with the titles, okay? ... well, let's get started!

14 Reasons why new projects fail you should not fall for

There are four main pillars for any project:

  1. market or industry itself.

  2. Project Idea.

  3. Managing the material and human resources of the project.

  4. The service or product provided by the project.

For this reason, any defect in it will inevitably lead to the failure of the project. You will see that for yourself when I show you later the most famous reasons for the failure of new projects… You will find that they revolve around one or more of the previous elements.

Now let's start listing the reasons why projects fail:

1. There is no need in the market for what the project offers

This reason is responsible for the failure of nearly 40% of new projects , as many project founders do not study the market well … they do not look at the volume of demand for the products and services they want to offer.

This does not apply to relatively large companies or projects, even shops are affected by this. There are those who open a new project for a candy store, and there are other shops in the same area that offer the same products and people trust them.

When you study the market you should look at the following aspects; For example, if you intend to launch a product or service that is already in the market, you should ask yourself:

  • Is the volume of demand greater than the supply? You want to meet the needs of the market by repeating an idea that already exists.

  • Will your products be presented in a different way that meets the needs of customers (saving time - saving money - providing higher quality)?

  • Are you going to add some new features or features to existing products in the market?

If you intend to introduce a somewhat new product or service, you should ask yourself:

  • Does your product solve a real problem that people have that they are willing to pay to solve?

  • Can any other company in the market offer the same services as yours by simply modifying what they already offer?

  • Is your product marketable in the normal way and there are potential customers already for it? Or do you need to first convince people of the importance of your products in their lives before you even think about promoting it to them?

By this, you study the market well and know if your products will actually achieve success, even if initially, or not?

2. Failure to manage the project's financial resources efficiently

One of the most famous reasons for the failure of new projects is the lack of management of financial resources, as capital is the most important weapon in the arsenal of the founder of the project … without it nothing can be done.

And with all this a lot of new entrepreneurs spend money incredibly fast, just like fire burns paper quickly, let me give you some examples:

  • Buying equipment at a high cost rather than renting it.

  • Expand the purchase of raw materials and key components at the beginning of the project with no guarantee of their use in the near future.

  • Excessive spending on some marketing channels without a good return on them.

  • Using the services of some companies or buying some technological solutions despite the ability of the work team to complete the tasks required of it with the current capabilities.

That is why any new entrepreneur must think more than once about every penny he spends... He must be sure that this money must be spent and that there is no other alternative.

Even if he decides to spend the money he must make sure that he gets the satisfactory quality for himself and his clients at the best possible price.

3. Underestimating competitors in the market

When you decide to launch a new product in the market, you have to study your competitors well... I remember once when I was young that someone opened a butcher shop (to sell meat) in our humble neighborhood.

In order to attract people to him, he lowered the prices by about 10 pounds from the market price... and then he finds the butcher's shop that competes with him in the market, offering more types of meat at lower prices.

This lasted for several months... Since his competitor has a larger capital and has a strong position in the market, not a single year passed before that person decided to close his new project and announce its loss.

You have to know well the reason why customers will buy from you (quality - price - time - new products), and ask yourself; Can competitors in the market outperform you or not from the same angle?

For example, maybe if you depend on quality, he can't compete with you much... But if you depend on price - as in the previous example - if you do not have enough capital and can withstand, you will most likely lose.

4. Products and services are not priced correctly

The first periods of establishing any project are always accompanied by a reduction in prices as a form of advertising, or even motivating people to buy on an experiment as long as they do not spend a lot of money.

All this leads to the failure of many new project owners, because they reduce the selling price less than they should, and thus lose capital over time, especially if they cannot change prices due to fear of customer reaction.

That is why many experts advise not to compromise from the beginning ... You have to make a profit from the first day, or at least sell at the same cost price so as not to lose money.

There is another aspect of the pricing process. There are new entrepreneurs who overprice their products due to their quality or other factors.

This strategy often fails... Only large companies and brands can sell their products at prices above the market average, because they have the trust and loyalty of customers, unlike new projects.

5. Inefficient market infrastructure to offer products and services

This reason may be somewhat rare, especially in our Arab year, but it is one of the reasons for the failure of new projects that you must bear in mind, especially with the terrible technological development we are experiencing.

What is meant here is not to put forward any new product or idea in an economic environment that it is not ready for... Let me give you an example.

Some of the applications of selling ready-made vegetables and delivering them to homes that started several years ago; It largely failed due to the lack of a good system for collecting, storing and delivering these time-dependent products to keep them fresh.

Therefore, think carefully about the services and capabilities that your project will depend on, and make sure that they are available and available within the budget that you set.

6. The difference between the founders of the same project

One of the most famous reasons for the failure of new projects is the difference between the founders, whether differences in managerial and technical views or even personal differences.

If you are going to establish a project with a group of people, you must define the specializations and tasks from the first day … You must choose a person responsible and a leader for the project who defines the tasks.

There is a famous saying that our ancestors used to say: “A boat that has more than one head…sinks.”

7. Not looking for talent and including them in the work team

In many cases, the founders of the project distribute large tasks to the work team, whatever their level or level of experience ... even tasks that they do not know how to do.

The same applies to the entrepreneurs themselves, who initially want to do everything with their own hands without any outside help.

If there is a specific task that you cannot do, you should hire a specialist to help you, and if this task is repeated in your work, then you should hire a professional person to do it permanently.

Of course I'm not telling you not to learn new skills and not be fully aware of everything going on in your project, but I'm telling you to be moderate, to know when to ask for help, and to avoid the next cause of project failure.

8. Not distributing tasks appropriately among project personnel

There are very promising projects that achieve good success from the first day... However, they do not continue because the tasks are not distributed well. Either the founder does everything himself, and with time he collapses and loses his focus with clients.

Or some employees are loaded with a lot of responsibilities at the same time, and when one of them decides to leave the new company for any reason, the project completely collapses.

I have a lot of acquaintances and friends who have had these experiences, and I even personally went through one of them when I was working at a startup while I was studying.

9. The inexperience of the project founders

There are many people who want to make a profit from the field of business management, so you find them searching in all sources and asking many people for profitable business ideas that suit them.

And after they settle on a certain idea, they start implementing it immediately... After a while, they are surprised by the loss of the project for several reasons:

  • Lack of understanding of the nature of the product and the movement of the market.

  • Not understanding how the product itself is manufactured, which exposes the project owner to deception by those who deal with them, whether employees or suppliers.

  • Not knowing the target customers of the product and thus failing to market it.

That is why my advice to you is not to start a new project unless you have experience or expertise in it, or you have someone you trust 100% that you can rely on in these matters.

10. Inadequate marketing of the product or service offered by the project

Marketing for any product is more important than the product itself, as there are many inferior products that achieve great success in the market only because of their good marketing.

That is why you should be an expert in marketing so that your new project does not fail, and fortunately for you, you are here in Rabjoon. We have a complete library of guides and explanations that will make you a professional in no time.

11. Offering complex products and services to the average consumer

One of the most important factors for the success of any product or service is that it is easy to use by the customer (User-friendly), so any difficulty that the customer faces in using your products will push him to look for another alternative.

Therefore, be sure to try the product or service yourself and test it on a good sample of the customer segment that you target before putting it on the market.

12. Providing bad customer service

If you look at anyone's evaluation of any company or service, you will find that they often talk about customer service, and in many cases customer service comes first.

That is why you must ensure that you provide customer service at the highest level, and remember that any customer you have already earned and who buys from you is much more important than any new customer.

This old customer is the one who will talk about what you offer to his friends and acquaintances, either negatively or positively... He will buy from you in the future without the need to watch a new advertisement.

That is why pamper your customers and treat them as best as possible, talk to them, write to them to check on the quality of service, offer them additional discounts after purchase, answer all their questions and make it a priority to solve any problem they face.

This way you achieve success and avoid one of the most common reasons for the failure of new startups.

13. Not choosing the appropriate geographical location

For many new projects, the geographical location is the most important factor for success... and for this reason, it may be the reason for the failure of the project if you do not take good care of it.

Therefore, think a thousand times before choosing the location of your project, search for the services surrounding the site, the nature of the population in the area, the competitors around you, the ease of using external services such as delivery of orders or storing raw materials.

14. Non-observance of economic laws in the project country

Legal licenses and permits can never be underestimated or postponed, as your project and effort may be lost in a moment due to violating the laws.

You may also be subject to large financial fines if you do not follow the legal instructions in the place where you work, so do your best in the beginning and be sure to implement the law.


There is one more reason I did not want to include in the previous list of the most famous reasons for the failure of new projects, and I wanted to mention it at the end of our conversation together.

This is the reason for giving up… Yes, giving up. Many new entrepreneurs think that life is rosy and that after study, research and analysis, they will not face any problems.

This is not true at all... The market is always in flux and there are a lot of factors and variables that cannot be expected or controlled.

That is why you have to have persistence, determination and patience, and you have to know that there is a solution to any problem, no matter what, especially if you follow a scientific approach from the first moment to implement your project.

I wish you success, and see you soon!


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