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Post-mortems reach for product quality and effort, and both are usually fine. The recurring causes are duller and more predictable, which also makes most of them visible before launch.
Short answer: Most new businesses fail because acquisition costs exceed customer value, the market is too small for the cost base, or cash runs out during delays that should have been planned for. These causes are arithmetic that can be checked before launch. Product quality is rarely the reason. The same checks also show when to stop rather than continue with marginal results.
Acquisition cost exceeds customer value, and volume makes it worse rather than better. Or the market is real but too small to support the cost base. Or money ran out during a delay that should have been planned for. Or the founders solved a problem nobody was spending on.
Every one of those is arithmetic, and arithmetic can be done in advance. This is the actual argument for testing an idea before funding it — not caution, but that the answer is frequently available.
Businesses that do not fail and do not work. They produce enough to justify another year, indefinitely, absorbing effort that had better uses.
Defining in advance what would make you stop is the only reliable protection, because the decision is nearly impossible to make honestly from inside year three.
This question routes to Startup Genius — one of 29 engagements the platform runs. It does not produce advice in general; it produces this analysis for your business:
✓ Sizes who could realistically buy this — not the size of the industry
✓ Estimates what a customer costs to acquire and what they are worth to you
✓ Tests whether the gap between those two survives contact with reality
✓ Models the cash you need and when break-even actually arrives
✓ Names the assumptions the whole idea rests on, ranked by damage if wrong
✓ Gives the cheapest test that would prove the riskiest one false
You watch the analysis get built before you pay anything. Read a complete report here if you would rather see the depth first.
Roughly half within five years in most developed economies, though the figure varies by sector and by how failure is counted. The number is less useful than the causes, because the causes are addressable and the base rate is not.
Running out of cash — but that is a symptom. The underlying cause is usually that customers cost more to acquire than they return, or that break-even was assumed to arrive far sooner than it did.
Decide the condition before you start, while you can still think clearly: a date, a spend, or a signal that would mean the thesis was wrong. Businesses without one tend to end through exhaustion rather than judgement.
Describe the situation in your own words and we will tell you which analysis answers it — before you sign up for anything.
Describe my situation →Prefer to skip ahead? Go straight to the free diagnostic.