It is important to always know this;
your present action determines your tomorrow. Why some Businesses cease to
function or fail is not just speculation or assumption, it is a reality.
One of the
greatest fear of entrepreneurs and business owners is “business failure” No one
starts a business expecting to fail. Starting a business can be a lot of fun
and excitement. However, Entrepreneurs encounter numerous risks such as
bankruptcy, monetary risk, competitive risk, natural disasters etc.
Entrepreneurs are risk-takers.
Entrepreneurship
could be easier, if you start your business the right way. A successful
business requires a solid plan that encompasses a set of targets and
objectives. Perhaps, you have started any business in the past but failed due
to reasons you do not understand. Well, you are about to discover what might
have caused your new small business to fail.
In this
discussion, I will be putting you through some major causes of business
failures and how you can prevent them.
LACK OF SOLID
PLAN:
Having an ineffectively composed
business plan or no business plan at all can be horrible, regardless of whether
the basic business idea is reasonable. Most private firms and businesses don’t
have satisfactory business plans. If you really understand the facts a business
plan should contain, it becomes challenging to envision a business prevailing
without one.
Your business
plan should show research on the size of your market, your competitors,
customer buying conduct and satisfactory evaluation. Without this information,
you’re simply thinking about who your customers may be, what they could pay,
and what could spur them to purchase from you rather than another person. More
terrible, you may be starting a business that is now in decline, oversaturated
with settled in competitors who are scarcely creating again themselves.
Failure to
plan will harm your business no matter how favourable your business idea is.
Formulate a business plan that works for you, it guides you through each stage
of starting and managing your business.
POOR
MANAGEMENT:
Business fails because of poor
management, it is detrimental to your business and organisations. Poor
management policies have caused damage to organisations and members. Bad
management affects employees and a company’s overall operations. It is an
obstacle to the growth and development of organisations and businesses.
Poor
Management Signs include excessive oversight, poor communication skills,
leaders unwilling to listen to staff etc. Effective Manager on the other hand,
communicates, instructs and offer the opportunity for personal growth to their
employees, creating a comfortable atmosphere for employees. Weak and poor
leaders are detrimental you any business. Managing a business is not an easy
task.
It demands
proper planning and effective and experienced leaders. Having a friendly and
constructive approach to employees is one of the ways to enhance business
productivity.
POOR CUSTOMER
CARE:
Lack of good customer care or service
weakens business. Bad customer service occurs when a business fails to meet the
customer’s needs and expectations. Dissatisfied customers go to your
competitors. If you do not treat your customers well they stop patronising you.
Your customers should be your priority. Learn to show your customers that you
care about them. Poor customer service kills
POOR LOCATION:
Is your service needed at your present
business location. you shouldn’t start a business where the service is not
needed. Assess your location to know if your service is required. Do not choose
any location because the rent is low. Research shows that poor location is
among the major causes of all business failures. Your location determines your
business image and reputation. The proper location attracts large customers to
your organisation as well as creates the right sort of talent to make the
business successful.
POOR CRISIS
MANAGEMENT:
Large or small, international or
local. Crises do not discriminate, any business can be hit by an unexpected
crisis. We do not want it but sometimes they are unavoidable. Poor crisis
management is among the chief causes of business. Companies and organisations
are better prepared to deal with any unforeseen disastrous events that may
cause damage through effective crisis management. Effective crisis management
is a crucial part of a successful business. The best way to manage a crisis is
to plan before it happens.
POOR MARKETING
STRATEGY:
Marketing strategy is fundamental to
any business. Effective marketing strategies help create awareness and provide
more information about the company’s products or services to your target
audience. Companies with effective marketing strategies attract more customers.
Examine your marketing strategy periodically to determine its level of
workability. Every business requires a winning marketing strategy to promote
its goods and services and attract new customers. Marketing strategy is the
backbone of any business.
POOR CASH FLOW
MANAGEMENT:
Cash flow is the money that is flowing
in and out of your business. Cash flows in through your customs and buyer,
while cash flows out through payment of workers’ salaries, payment of rent,
payment of taxes etc. Lack of cash is one of the main reasons small businesses
fail. Some businesses running out of money for self-development. Keep an eye on
your cash flow. Most small business cash flow problems are caused by late
payment of loans or money owed. Poor cash flow hinders productivity and growth
which could eventually lead to the demise of any business.
No one has the
intention to fail in his/her business startup. Business owners and leaders
should take note of the listed causes above. If you can overcome the listed
causes, you are not far from being a successful business owner.