Frustrated businessman hitting laptop on fire with hammer.
REASONS BUSINESSES FAIL!
Ever wondered why some businesses thrive, some struggle and others fail? Even when these businesses may be in same location and may be rendering same or similar services. I have these happen over and over again to businesses around. There are a number of factors that can make a business fail.
Many people associate business growth or failure to the presence or lack of money. Unarguably, this is definitely a factor in determining the success or failure of a business.
A business can fail when income to run day to day operations dwindle.
If a business outfit is not able to break even, it is surely on the path to failure. This is because the business might not be able to pay its bills, staff and other financial commitment.
Asides lack of money, businesses fail as a result of some other important factors I will be sharing.
Why Businesses Fail
No matter the reasons that will be given as to why businesses fail, the success and failure of a business depends on the owner or manager of the business itself who happens to be an entrepreneur.
The duty of an entrepreneur is to coordinate all areas of the business. The way he/she runs the business, the decisions he/she takes can make or mar the business. Hence the failure of a business depends on the entrepreneur.
- Lack of Proper Planning – There’s a popular saying that if you fail to plan, you plan to fail. Failure to plan will affect your business. Don’t just wake up and feel like doing a business just because others are doing same. As an entrepreneur, you should set realistic goals. There are short term and long term planning and it is important to understand this. Planning involves knowing the type of business or service, location, staffing, plans for expansion, etc.
- Poor Location – The location of a business is very important. Poor location is usually a disadvantage. If the business is situated in a place where the target audience don’t reside or an area not easily accessible, this will affect access to products and services and most times low sale; as those in that area may not have need of the product or service rendered by your business.
- Staffing – Your staff is as important as your business itself. The way you treat your staff is how your business will be treated. It is not advisable in the first place to employ people who have no interest or experience in your line of business because it can mar the progress of your business. Your staff should be able to relate well with customers and bring in ideas for growth of the business.
- Poor Leadership – This still boils down to the entrepreneur. Once the top is disorganized, it affects every other aspect of the business. Poor management of people, funds and the business can lead to business failure.
Failures are inevitable in a business but it can be avoided if an entrepreneur takes note of the reasons the business is failing in the first instance and carefully plan to avoid these.