Failure is often driven by basic, avoidable decisions made in the first year
Research showing roughly one in three new small businesses fail within their first year has prompted warnings from business experts about common pitfalls that could determine whether a venture survives 2026.
Miralda Ishkhanian, chief operating officer of business operations platform Honcho, said basic missteps continue to sink promising ventures despite strong enthusiasm among new founders.
“Every year, we see tens of thousands... register new businesses full of energy and intent,” she said. “But too many fall into the same traps that could easily be avoided. In 2026, with higher costs and thinner margins, those mistakes will carry even greater consequences.”
Mistakes to avoid
The first mistake involves delaying registration while perfecting business ideas. “Get your business registered and operational quickly,” Ishkhanian said. “Spending months perfecting an idea before launching often means missed opportunities and lost momentum.”
She said entrepreneurs should complete registration in days rather than months and prioritise growth over perfection.
Aiming for perfection before launch also hampers progress, according to Ishkhanian. “Starting a business is messy and iterative. A simple, functional website is better than no website. Refinement can happen as you grow,” she said.
Overspending on unnecessary overheads emerged as another critical error. “Many start-ups waste thousands locking into long-term leases or costly overheads when flexible options like virtual offices or shared spaces exist. Focus on generating revenue,” she said.
She cited consultancies as an example, where virtual offices costing about $100 per month could replace physical workspaces costing thousands each month.
Neglecting professional image also proves detrimental, Ishkhanian said. “A polished business name, domain, logo and professional email build instant credibility. In 2026, trust is currency. These are essential ‘trust builders’, so tick these off before diving into other customer-facing activities,” she said.
Conservative budgeting requires attention, with Ishkhanian recommending founders halve sales expectations and double cost projections. “It sounds cautious, but this mindset keeps you prepared for cash flow shocks and unexpected expenses,” she said.
The sixth mistake involves mismanaging artificial intelligence integration. “The winning businesses won’t be those that go all-in on AI or ignore it entirely,” Ishkhanian said.
“The practical rule for 2026 is simple: automate the routine, but don’t outsource the relationship. Keep the trust-building moments human – especially when decisions are complex, risky or high-stakes.”
According to research from the University of Technology Sydney, nearly half of new small businesses fail to survive past their fourth year.
