The challenges of running a business

Starting a business can be risky, and not all businesses succeed. New businesses often fail during the early years.

We recommend that you seriously consider the following causes for business failure. Understanding what can go wrong, and how these challenges would affect you and your family, can help you to decide if you are ready to start a business.

Market potential

Before you start your business, thoroughly research your market. Many businesses fail because the market for their products or services is too small to support them. It isn't enough to know that a market exists for a product or service. You must also investigate the size of the market, your competitors' strengths and weaknesses, your points of difference, and the sustainability of demand for your product or service.

Use our market research kit to find market and industry information for your business.


Many good business initiatives fail due to poor funding, so carefully consider your capital requirements when planning your business. You will need enough capital to sustain your business until it begins to break even or consistently returns a profit. You could also use financial benchmarking data to find out what funding might be required to start your business.

Learn more about funding your business.

Business plan

Prepare a detailed business plan to help you set out clear goals for sales, growth and expenses. Operating without a business plan can cause a business to lose direction and exceed its budget.

Learn more about preparing a business plan and creating a business vision.

Risk analysis

List all your business and personal risks – some risks can be expressed in dollars while others are impossible to value. At a business level, consider the most important risks that could affect your business, including:

  • financial
  • technological
  • intellectual property
  • product sustainability (relevance over time)
  • legal
  • safety
  • staff retention
  • machinery breakdown.

At a personal level, you may be risking your home, other important family assets, your family wellbeing and your present career.

Learn more about identifying business risks.


Plan growth carefully to give your business a much greater chance of success. Some businesses expand too quickly, putting pressure on their financial and management structures and damaging the quality of their products or services.

Learn more about ways to grow your business.


You may struggle to attract customers if your business is difficult to find, hard to access, and surrounded by competitors. Retail businesses in particular require a prominent and easily accessible location.

Learn more about finding the right location for your business.

Getting started

Use ABLIS (Australian Business Licence and Information Service) to find out what licences, registrations and permits you may need to operate your business. You will receive a free personalised licensing report and business support information.

Learn more about establishing your business.

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