Understanding Business Failure: Insights from Entrepreneurs' Journeys

The UK StartUp Awards, which drew over 1,200 applicants in 2024, provides a unique window into the challenges faced by entrepreneurs across the UK. Among these applicants, business failure emerged as a significant yet transformative aspect of the entrepreneurial journey. This data reveals not only the common reasons behind start-up failures but also the resilience and determination of entrepreneurs to learn, adapt, and try again.

The data shows that one-third of entrepreneurs have experienced business failure, reflecting broader trends where only 40% of UK start-ups survive beyond their fifth year. Despite these statistics, failure is often viewed as a stepping stone, with many entrepreneurs emerging stronger and more prepared for future ventures. Male entrepreneurs (40%) are more likely to report experiencing business failure compared to females (24%), consistent with research indicating men’s greater propensity for risk-taking.

Sectorally, tech entrepreneurs report higher failure rates (38%) than non-tech entrepreneurs (30%) which is likely due to the longer development cycles, higher capital requirements, and greater market uncertainties associated with the tech industry.

Regionally, entrepreneurs from prosperous areas (36%) are more likely to experience failure than those in less affluent regions (30%), possibly due to the competitive nature of dynamic markets and the risks associated with larger funding and more aggressive scaling in these areas. Older entrepreneurs (35+), who are more likely to have pursued multiple ventures, report higher rates of failure (36%) than younger entrepreneurs (29%), indicating that experience increases exposure to both success and failure.

The most common reason for business failure, cited by 63% of respondents, is a lack of funding, underscoring the persistent challenge of accessing financial resources. Another significant factor is a lack of customers or over-dependence on a small client base, affecting 56% of respondents. This highlights the importance of customer acquisition and diversification, especially in sectors where market shifts can jeopardise businesses reliant on a few accounts. Poor planning was cited by 53% of respondents, pointing to the critical need for strategic foresight and adaptability, particularly for first-time entrepreneurs.

Personal factors also played a role, with 14% of respondents citing increased care responsibilities and staff management issues. These findings reflect the challenges of balancing work-life demands and managing a growing team, areas that are particularly relevant for female entrepreneurs and those in rapidly scaling businesses. A small group of respondents noted that their businesses grew too quickly, or that they lost interest in running them, highlighting the pressures of rapid growth and the need for stress management in sustaining long-term business leadership.

Despite these setbacks, many entrepreneurs remain motivated to start again. Among those who experienced failure, 77% cited a strong belief in their business idea as a driving force, 64% identified new opportunities, 64% showed resilience and determination, and 56% emphasised the importance of learning from past mistakes. This optimism and ability to view failure as a learning experience underline a core characteristic of entrepreneurship: the capacity to adapt, persist, and build stronger, more sustainable ventures after setbacks.

Therefore, the data from the 2024 UK StartUp Awards reinforces the notion that failure is an integral part of the entrepreneurial journey, offering valuable lessons that often lead to future success. By addressing key challenges such as funding, planning, and market adaptation, policymakers and support networks can create an ecosystem where entrepreneurs are better equipped to overcome obstacles and thrive. For entrepreneurs themselves, these insights highlight the importance of resilience, adaptability, and continuous learning in navigating the path of business ownership.