Have you ever asked yourself why that eatery or supermarket wrapped up? Contrary to what most people always believe that its always insufficient funds that causes make 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.)
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
HOW TO WRITE A BUSINESS PROPOSAL
HOW CAN I PROPERLY MANAGE MY FINANCES?
· 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