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ARTICLE · 17 APRIL 2026

Why Businesses Fail - A Data-driven Review On What Mistakes To Avoid

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Most people might think that poor economic conditions are the main reason for failure. However, based on liquidator data, the economic conditions cause only 8% of external administrator appointments, which leads to the question: what caused the other 92% of companies to fail?

AustraliaInsolvency/Bankruptcy/Re-Structuring
Hayden Asper
Hayden Asper
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Business failure is rarely caused by a single mistake.

Most people might think that poor economic conditions are the main reason for failure. However, based on liquidator data, the economic conditions cause only 8% of external administrator appointments, which leads to the question: what caused the other 92% of companies to fail?

Business failures are usually the result of factors within the owners’ control. By keeping these in mind, owners can (hopefully) make their business more profitable and avoid joining the approximately 9,000 insolvent companies that were placed into liquidation in the 2025 financial year.

What does the data say?

Based on data reported by external administrators to ASIC, 97% of businesses fail due to at least one of the following reasons in the 2025 FY:

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