Why Most Small Businesses Fail??? The fear of every entrepreneur is his or her business failing. Look around you, there might be an eatery or supermarket or a friends business that suddenly wrapped up.
Have you ever asked yourself why that happened? Most people believe insufficient funds are the reason why most businesses fail. Well, that is just one out of numerous other reasons.
In other words, you might have all the money in the world and still be unable to run a successful business. TO BE FOREWARNED IS TO BE FOREARMED they say, so if you are an Entrepreneur and you are looking forward to running a successful business, you need to know why most businesses fail and how to avoid this failure.
NOTE: YOU’RE NOT A FAILURE UNLESS YOU GIVE UP ENTIRELY.
WHAT ARE THE REASONS WHY MOST SMALL BUSINESSES FAIL
1. STARTING FOR WRONG REASONS
Firstly, one reason why most businesses fail is that 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 coming in? Passion and love for what you do must be there. When you start a business for the wrong reasons, you lose interest and desire to push it forward.
2. POOR PLANNING
No successful business can be executed without proper planning. Read on How to Write a Business Plan.
You cannot run a business without a short term and long term plan. When you fail to plan, you plan to fail. So, your business plan must be 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
- Possible problems and solutions
- Market survey and analysis
- Financial plan (capital, equipment, balance sheets, etc.)
- Analyzing Competition
- Required Workforce
- Marketing and Advertisement
3. 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 the 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.
4. 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: HOW TO WRITE A BUSINESS PLAN
5. BAD MANAGEMENT
Also, 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. Furthermore, a successful business needs a good manager and leader who are good at organizing activities effectively to ignite productivity.
6. CHOOSING THE WRONG LOCATION
In running a business, your location is very important especially when your customers have to come to you to get your products or services. Wrong location can make customers lose interest in your business or make you have low influx of customers. Consider this when looking for a suitable location:
- Location of your customers
- Accessibility of your business location
- Location of Competitors
Most business owners are in a rush to expand, so as to show outsiders how much they have progressed. The expansion should be based on actual progress and not passive progress or mare feeling. This is another reason why most businesses fail and are unable to keep up. So be grounded in one point before rushing to another.
8. FAILURE TO FACE COMPETITION
If you plan to succeed in your business, you must be ready to face competition. Most businesses fail because of their inability to face larger competition. This pushes you totally out of the 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. Competition should be one of the success factors for small business.
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Finally, entrepreneurship is not a game for kids; it requires proper attention and expertise, so as not to end up having regretful losses. Get informed by knowing why most businesses fail and ways to avoid them.
Also, if this post was helpful please share with someone who might also need it. Thank you and success all the way
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