5 Reasons Why Small Businesses Fail
Starting up a business of your own is one thing many individuals want to venture into to experience the benefit of earning their own profit and gain financial freedom. But the truth is not many take time to study and analyses the risk, skills, attributes,s, and qualities requires for you to start up any business venture.
Many business owners, just get into business only to realize what is involved. They venture into the business because they heard stories of success and fake tales of how easy it could be to start up but only to realize it is not as they thought.
Seven out of Ten (7/10) businesses fail in the first couple of years, 3% last longer than 5years. Why does this happen?
Many people lack the ability to get past the idea phase of a business but capacity building should follow up with ideas. Ideas are easy to think about and plan in detail and it is easy to start and get it launched. But the challenge that confronts you is getting sales, marketing, advertising, and growing your business is however not easy.
It takes time to build up customer and brand trust. You have to get involved in social media daily engaging people constantly. Even when there is no response. As a new business owner, you have to be consistent to grow your social following.
In this article, we are very much concerned about the reason why small businesses shut down and fail to grow because no one will have the intention to invest so much money, time, and energy only to realize the business has no headway.
Lack of Experience:
Reasons Why small businesses fail: Lack of experience is one of the reasons many startup businesses fail within the first year or two. Though you do not need a whole lot of experience to start a business or that you will automatically fail because you do not have experience. The fact is that it gives you the consciousness and motivates you to learn more about the business you are about to start.
There are many ways you can learn what you need to know about any business you want to start and what needs to be done, the internet is ever available for you to do your research online where you can gain a wealth of ideas on how to go about your business.
You can also make an inquiry from those or someone who has gotten experience in the field of business you have interest, you could make that person be your mentor to guard and direct you, you can gain a lot of insight on this to run your business.
This can increase your chance of making your business successful since you have a direction through your wealth of information and knowledge on the business.
Knowledge is key, give yourself to learning before making the jump. Do not let lack of experience make you fail in your business.
Bad management is one of the main reason most business and startup business has failed. You may want to trace it to lack of experience which could be true as discoursed but not all. There are many experienced business owners who have started their business but failed because of bad management choices.
Bad management can take any form. One of these could be, bad management of finances which can cause a business to go down very fast. This is one of the reason is important to employ a competent and experienced accountant that will manage the finances of the business and give a regular financial report to regulate the operation of the business by controlling cost and help to eliminate the business from failing.
Another reason for bad management is hiring people to manage your business for you and not paying close attention to how the business operation is being run. Having a successful business requires you to pay to monitor and giving attention to what is going on and query any wrong act.
Ensure there is cooperation among your management staff and teamwork achieve in the running of the business, where there is no teamwork the business suffer and this has resulted in bad management and the resultant effect is business failure.
Lack of Planning:
Business failure has often time caused by improper planning. Sometimes people start a business with the right intention but with a wrong business plan, most people get into business out of anxiety and excitement and start the business with little or no planning.
It is very important as a prospective business owner or an entrepreneur to have a defined business plan at hand, having your business plan laid up is key to success in your business pursuit. This is extremely important if you want to source funds to finance your business for a startup.
Lack of planning can hurt in many ways, you have to think everything through, have all your business plan mapped out and well-aligned. Think and plan on your product quality and services, how to carry out your advert and marketing, the quantity of product to start with to meet the possible demand you may encounter, think everything through beforehand is a must
Success in business cannot be achieved without proper planning, ensuring every aspect of your business is planned out to avoid the risk of your business failing in the end.
Starting A Business For The Wrong Reasons
The basic reason why people go into any form of business is for the very reason of profit which comes as a result of increased turnover from your business.
A successful business must be back up with a passion for the business you are doing, without passion, a business owner will hardly succeed in his or her business
There are many people that started their business because what they offer is something they are passionate about, and there are also people who also involve themselves in a business because of what
If you are starting a business make sure it is something you have passion and interest about. Because if you are not going into something that you love your chance for success is very low.
Your passion for your business can be visible by your customer in the way you render your services, this could cause the customer to be attracted to your competitor who is passionate about what they are doing.
People that have an interest centered on just making money in their business tend only to bother learning little about what they are selling, but success in business requires you to know “everything” about your business. The reason is customers will always ask you a question about your business and if you don’t have the right answer you will lose your customers to others.
That is the reason if are starting a new business You have to love what you are doing and be passionate about it. The lack of passion and love for most entrepreneurs has caused most businesses to fail.
Most business owners start their business by borrowing from friends. Family and also through a bank loan. There is nothing bad to raise funds for your business through these various mediums.
Though, most small businesses find it unable to pay back when the agreed time to repay is due. This has caused so many businesses to fail since the little returns from the business are used to repay the debt the profit is not reinvested into the business to grow.
Businesses need cash flow to float them through the sales cycles and flow of business. Running the bank accounts dry is responsible for a good portion of business failure. Cash is king, and many quickly find that borrowing money from lenders can be difficult.
Conclusion and Recommendation
I will recommend that starting a business is a difficult task that requires commitment, discipline, and dedication. You don’t start a business and sit back and relax as a CEO feeling you have to attain a height, thinking g customers will come automatically and buy from you.
You need to sit up for your business and do a lot of research to gain a competitive advantage over your competitors so you can stand out and be successful. Success in business is not by chance but by hard work and dedication.
Too many people getting into business fail to realize what is required of you to become successful. They completely underestimate what is involved.