No one would like the thought of failure, especially when you’re just starting up a small business. But a lot of startups don’t succeed. To help on this dilemma, this article provides some of the reasons why businesses fail and some ways to avoid them.
A statistical study shows that around 78 percent of startups, particularly the small ones, only survive the initial year and half of its employer establishments survive not more than five years. This means that only a significant number of startup companies do fail.
In relation, below presents some relevant information on why businesses fail and some tips for avoiding them.
1. The business started for the wrong reasons.
Did you start your business with the goal of earning more money? You need to spend quality time with your family and you believe you can do this by running your own business. Or, you simply are not the type of person who wants to take orders from anyone else but your own. These question and statements are benefits to some successful business people after their several years of hard work, but they are not the right reasons to set up a business.
The right ones are noted below:
• You are passionate to start the business because you strongly believe in the product or service you’ll be offering to the market is needed.
• You thrive on independence and are well-skilled at making the right decision when an intelligent or creative solution is needed.
• You have the drive, a positive attitude, patience, and determination.
• Failures or mistakes don’t defeat you. You learn from them and use the lessons earned to succeed the next time around.
People like event planners who are in charge of handling events would know that if it were not for their strategic, methodical, hard work, and careful planning, success would not have followed. The same goes for most business successes. Catching up with the competition and win it eventually is one of the foremost goals of any business these days. Given the online strategies any business can use, the creativity and the right prediction on how your clients will accept your business is crucial.
A good example is the gold industry where competition is really high, others would even give you ceiling rates (like you thought) just to let you choose them. While others still keep the good faith and are trustworthy – point is trust. But trust does not work alone to win the competition, like if you sell gold in Nashville – promos and risky yet effective strategies of these companies would let you decide.
It is vital to have a sound business plan. A lot of businesses, small ones, even more, fail because of their basic shortcomings in their business plans. The plan must be accurate, educated, contains current data, and have realistic projections for the future.
Therefore, a business plan is also the life-blood of your business and must include the following components: vision and mission, business description, market analysis, competition analysis, financially capable, have the needed workforce, have identified potential problems and its solutions, and more.
3. Poor Management
Research shows that poor management is one of the major causes why the business fails. New businessmen frequently don’t have the management expertise and lack relevant business skills in areas like finance, production, purchasing, selling, hiring, and staff management. They are highly subject to disaster especially if they denied the fact that they are not doing well and need other people’s help.
As part of the solution, these company owners can educate themselves on the skills they lack or don’t have an idea of, hire the right personnel, or outsource work to highly competent field experts.
A great leader also knows how to create a work-life balanced environment that encourages productivity. A successful manager is also able to turn a vision into a reality, is skilled at strategic thinking, and is able to make transitions, embrace and confront change, and visualize new future possibilities.
To conclude, the success of any new or startup business is ultimately the business owner himself. You don’t really have to be very intelligent. What matters most is that you know when to welcome new knowledge or changes and are willing to learn what it takes for your business to succeed.