Have you ever asked yourself why that eatery or supermarket wrapped up? Contrary to what most people believe, it is not always inadequate funding that makes businesses fail. There are a whole lot of other reasons why a business can fail.
About one-fourth of startup businesses fail in the first year and about a half of them fail in 10 years’ time. Why? Well that’s what we are going to talk about shortly.
You might be an entrepreneur starting up a business and if you want your business to succeed, you need to know and avoid those things that make businesses fail. TO BE FOREWARNED IS TO BE FOREARMED they say. There are many things which entrepreneurs may most likely overlook and ignore that put them into the failure statistics.
NOTE: YOU WON’T FAIL UNLESS YOU GIVE UP ENTIRELY. In other words, you might fail 9 times and get it right the 10th time. You didn’t actually fail because you never gave up.
SO WHY DO MOST BUSINESSES FAIL?
· POOR PLANNING
When you fail to plan, you plan to fail. No successful project or venture was executed without proper planning. It is the same principle in business. You cannot run a business without a short term and long term plan. Your business plan must be accurate and feasible.
When there are lapses in these plans, the business has a likely hood to fail because these plans give you targets and projections of where your business ought to be. Here is a checklist you should follow when making a business plan.
- Business description (about your business, goals, vision, etc.)
- Possible problems and solutions
- Market survey and analysis
- Financial plan (capital, equipment, balance sheets, etc.)
- Analyzing Competition
- Required Workforce
- Marketing and Advertisement
READ ON: How to Write a Business Plan
· STARTING FOR WRONG REASONS
Another reason why most businesses fail is because they were set up for the wrong reasons. If the only reason for starting up that business is to make money, what happens when money isn’t flowing in? There should be a passion and love for what you set out to do. There should be determination and belief in it succeeding.
When you start a business for the wrong reasons, you lose interest and desire to push it forward.
· LOW QUALITY PRODUCTS OR SERVICES
The major secret of every successful business or venture is that they provide the best value e.g. God Is Good Motors. You can’t under-deliver and expect to top the market. It can never work like that. If you are always trying to cheat customers or give anything less than the best, you will be only driving your business to a dead end. Most businesses have failed because of low quality delivery of products or services.
To be the best, you have to put in the best. If you are not adding as much value as your competitors are, you will lose customers to them. Providing the best might cost you a lot at the beginning, but it definitely pays off as time goes on.
READ ALSO: STEPS TO TAKE WHEN STARTING A BUSINESS
· INSUFFICIENT FUNDING
You have to understand cash flow. Most business owners underestimate the startup capital and operating cost of running a business. This results in a forced shutdown of the business in early stages. It is one thing to know how much you will need to start a business and it is another thing to know how much you need to stay in business. You need to have adequate funding that will carry the business on till sales start coming in.
· CHOOSING THE WRONG LOCATION
If you are running a local business, your location is very important especially when your customers have to come to you to get your products or services. The wrong location can make customers lose interest in your business or make you have low influx of customers. You have to consider:
- Location of your customers
- Accessibility of your business location
- Location of Competitors
· FAILURE TO FACE COMPETITION
If you plan to succeed in your business, you must be ready to face competition. Most businesses fail because of inability to face larger competition. This pushes you totally out of market and reduces your business sales. To face competition, you must be creative, resilient and different in your manner of approach. Customers are always willing and ready to accept the best of the best.
· BAD MANAGEMENT/LEADERSHIP
When there is no proper experience of the business world, the business has a high chance of failure. As a business owner, if you lack the proper expertise, you should have business mentors and be ready to seek help when you are faced with difficult decisions and situations. A successful business needs a good manager and leader who is good at organizing activities effectively to ignite productivity.
- NO CONTROL OF EXPENSES
In conclusion, if you are an entrepreneur or an intending entrepreneur, you might want to consider these factors and avoid them from crashing your business.
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