Most times people complain about failure in business especially as beginners, even established businesses once in a while face the threats of failure sometimes. Most of the times, the main causes of business failures are mismanagement, lack of proper handling of funds and so on.
As we all know, running a business is not as easy as it seems, to run a business you have to be lion hearted since the business world is like a jungle where only the strong survive. Most small business owners are usually starters, as a result they are nervous and this makes the whole running and management mishandled but not to worry we have laid down a detailed analysis of why these businesses fail and also recommend how to prevent these failures.
HERE ARE SOME OF THE REASONS WHY BUSINESS FAIL
1. BAD LOCATION
Location has always been on the top of the list of steps needed to start up a profitable business anywhere in the world. As always noted in our previous posts the location of your business has a very big influence in the success of your business. One of the holy books said you can’t lit a lamp and put it under a bushel same way you shouldn’t open up a business and locate it in a very scanty area all in the name of minimizing costs. It is better to locate your business in a very costly area where you would reap your fruits on the long run than situating it where no one can see it. We’ve always advised individuals to start up in a very busy area probably close to very busy road or even in a junction which connects two busy streets. If you are experiencing failure in your business try checking your location to see how it favours you.
2. INSUFFICIENT START UP CAPITAL
When you ask an entrepreneur the main cause for failure in his business or if you similarly ask an individual one of his or her major set-backs in starting and maintaining their business they would mention lack of proper funding. Starting up a business does not require large amount it requires enough amount because not every large amount is enough. Inadequate capital can make the most profitable business fail. There are a lot of expense to be made for a business which just started e.g rent, advertisement, electricity bills (for business who needs electricity), tax, trade union registration fee etc. so enough money is needed in starting up.
3. POOR MANAGEMENT
As defined by professionals in the field, management is the planning, organizing, controlling, directing of materials and human resources so as to accomplish a task easily. Most individuals who start up small businesses are usually not trained individuals, they do not have the know-how for running a business, as a result run into losses. Most of these individuals make decisions at the early stage which affects the business negatively in the long run. Some give out excess credits to customers which should not be, there should be some form of limit when giving out credits even as an established business. One thing to be done here is employ an expert who would help in running, some might say it is expensive to employ someone, you can make them partners in such a situation. You would share the profits, depending on your agreement.
We must have heard this phrase life is all about competition. Most individuals go into business without anticipating competition, whereas, competition is one sure thing to meet in business. Of course you can’t be the only one having a type of business in your location. There might be up to three to four people doing same business so it is left for you to find out how to serve your customers better. You should try to improve on what your competitors are not doing while doing what they are doing.
5. LACK OF PROPER MARKETING
Most times small business owners do not really make plans for marketing and promotion of their business, they sometimes intentionally ignore the marketing aspect of starting their business which is very wrong. Marketing is all about promotion, advertisement and public enlightenment in which you try to make people aware of the existence of your business. This is very important especially as a beginner since no one knows about the existence of your business.
Knowing your target audience, knowing how to get their attention and convert them to leads and ultimately to a customer is one of the most important skills of a successful business. As much as you need a great product to win, you also need a great marketing strategy to convert that product into a continuous source of revenue.
6. BAD PRICING
There are several pricing strategies for small businesses, you can decide to put your price on the high side or on the low side. Pricing is really important, as it determines your profit Slevel. Bad pricing bad profit.