30 Reasons Businesses Fail
Business Failure: Major Reasons Small Businesses or Companies Fail -
Common Causes of Business or Startups Failure
There are very many reasons why the idea of starting a business is still attractive to people. You want to be your own boss and refrain from morning walks to work and the headache of dealing with bosses. You also have some money and you want to invest it as a side source of income to supplement your monthly earnings. Many people do not feel comfortable with a full-time job working for someone else. However, apart from giving up, they choose to be entrepreneurs and own businesses too.
seekers start small businesses and resign from their full-time
employment for the love of what they do. They believe wholeheartedly
that the passion that drives them is crucial to
their success. They want to feel in control, to control their career
paths and work environments. This group
wants things simple and manageable. However, one misery of
entrepreneurship is the fact that most small businesses fail. The
reality is that if your business failed, then you are not alone. The
US Bureau of Labor Statistics keeps a tally of how often businesses
fail in the country from year to year.
There are over 50% chance that a small business established is likely to fail within the first trimester or before the end of one year. The statistics also show that 90% of all the startup businesses fail. It takes the efforts of many people and a confluence of many factors to build a business. You need to assemble the right team, mobilize the right resources and stay high in competition in order to succeed.
It is so
hard to spot and point a
specific reason why businesses fail. Some of them are influenced
by a couple of factors that crumble it down. Some fail due to cash
flow mismanagement, low wages for workers (lack of motivation) and
others fail due to lack of market and competitiveness in the industry.
brief, I have listed and elaborated on several issues that may be the
reason behind your business failure.
for the wrong reason
the root of all problems. According to Forbes, more than 0.5 million
businesses in the USA rare up
for the wrong reasons. Regardless of whether you want to run a small
business and supplement your monthly earnings or whether you want to
quit your current job and solely start a business, starting your
business can be overwhelming. You may have all the resources both
human and non-human but starting a business for the wrong reason will
not take you far.
making a decision that is impossible or difficult to undo, you have to
find the answer for the
difficult questions before making the leap. You need to have a valid
reason why you are starting the business and ensure it makes sense.
This is the first method to protect yourself from unnecessary risks as
a result of lack of motivation.
If you don’t start your business for the right reasons, then it is destined to failure. Research shows that the best business ideas come about as a result of a gap in the market. An opportunity that you would want to take and fill the gap.
of the wrong reasons why people start businesses include.
be rich - As a matter of fact, many entrepreneurs
start a business to be rich. This is wrong, if money is your
energy then you will fail before the end of the first year. Although
it is true that you may be able to make profits that surpasses what
you were getting working for someone else, the truth is it takes time
and a lot of dedication to make the first profit. If money was your
motivating factor, then am sure you will lose hope before your
business stabilizes. According to business expert Patricia Schaefer,
many people miscalculate the financial needs of their businesses
thinking that it is simple and easy to start the business and recover
the principal within a month.
employment - Creating jobs
for other people is not a bad idea, however
it shouldn’t be the reason for you to start a business. When you
start a business, you will see the highs of hiring and lows of firing.
What this means is that the business will come to a standstill due to
the misjudgment of efficiencies and costs.
This is one of the fantasies that any
entrepreneurs have. You think that you will work for fewer hours once you start a business. You think that your current
job is tiring by working from 8:00 in the morning to 5:00 in the
evening. The fact of the matter is that if you start your own
business, you will find yourself working for long hours to get your
business out of the ground.
Be your own boss
some people think that the boss they relate to daily in their job
areas is an oppressive figure
that has no compassion. Therefore, they want to start a business and
be their own boss. This is not a bad idea but with your
own business, time will be your boss. Just like the boss in
the company, you will have some goals to accomplish, a budget to
consider and other outside factors. Therefore, when you get into your
own business you will realize why your boss seamed
To be famous -
This is what every person in the world wants. However, this is a wrong
reason to start a business. The reality is that being an entrepreneur
has some possibility of you becoming a public figure. Relentlessly,
starting a business for this reason
is going to take you away from the office most of the time and this is
a bad idea.
There is a lot of good reasons to become an entrepreneur and therefore you should think carefully about the reason as to why you want to venture into business. This will be your personal motivational factor that will keep you moving.
don’t fail - leaders do!
leadership is the number one reason why small businesses fail. Your
business is likely to fall if you exhibit poor management skills. Poor
management skills can be evident in very many forms. One of them is
the struggles you will be undergoing in making management decisions or
supervising the staff.
Many entrepreneurs lack relevant leadership skills and they don’t have enough capital to hire and establish a professional executive. They lack relevant management expertise in some of the critical areas such as finance, supply chain, hiring and managing employees. A good example is an engineer who wants to quit his job and establish her own supermarket. If she doesn’t recognize that she lacks some business skills and take note of what she doesn’t do well, then the supermarket is likely to fail.
management experience is the main reason why many entrepreneurs fail.
You think that the former experience as an engineer, doctor, a teacher
or department head is sufficient for business management. Most of them
do not even have the managerial skills and hence they are likely to
misguide the employees and eventually the business will fail.
It is the
rule of every business owner to clearly define and communicate the
vision of the business to the subordinates. If the leader is poor in
vision determination and communication skills then the subordinates
are likely to be misguided. Moreover, the vision of the enterprise
should be in line with the values of the company. If this is not so,
then there will be troubled waters ahead.
the business owners lack the relevant skills and experience in the
execution of the set rules and guidelines. Most of them do not focus
on deploying the necessary talents and resources to ensure that all
the demons in the business are managed.
In conclusion, dysfunctional leadership in your business will affect every aspect of your business. It will affect the morale of your employees, the relationship with your suppliers and also the productivity of your business. Therefore, one of the ways of dealing with poor management and/or leadership is to hire an expert in the relevant fields. However, if you want to manage your businesses personally, you can get back to college and study some of the leadership skills that may be beneficial for the future of the business.
This is a
very crucial factor when we are talking
about business success. The first step to take when
determining your business location is your business needs and the
target customers. There are several ways that location can affect the
success of your business. The quality of workers is determined by the
location of your business. If you are focused on
attracting a fantastic and high qualified workforce, then think about
the business environment and its vicinity.
A bad location can spell disaster even for the most managed businesses. A bad location will mean that your business will not be able to attract enough customers. A business should look for a position that gives them exposure to their customers. That is critical to increasing sales and ensuring high profits which is one of the factors why a business will be successful.
position for your business will determine your level of
competitiveness. The mistake that many entrepreneurs make is to set
their businesses in a location that doesn’t attract many customers
for their specific products.
The position will also affect your proximity and cost of raw materials. The costs that are associated with the transportation of raw materials from the source to the business. What this means is that if your business is located in an unsuitable location, costs will increase and you will end up closing down. This is what happens to most if not all small businesses.
position will also get your business a bad image. If the area that you
have positioned your business is not consistent with your brand, then
your business is destined to fail. Customers will question the quality
of your products if you cannot be able to set a good location for your
The business location will also determine the growth of your business. The question here is whether your business has enough space for growth and expansion. If not then your business will not be able to grow and be competitive in the market.
another very common reason why businesses fail. As a leader or the
owner, you should at all costs know where your business finance is
coming from and where it is going. This will ensure that you keep
track of all the leakages along the way that may be affecting your
unarguably true that if you don’t have a well-set
funding plan for your business, then you will eventually fail. At the
initial steps, businesses take in a lot of money and may not be able
to give any positive returns on
investment during the first year. They are prone to a crisis during
this stage and if you don’t have a financial plan that you can call
upon at this point, then you will end up swinging in debts and
eventually crumble down.
matter of fact, over 70% of businesses that were established between
2007 and 2012 had no defined source of their funding. The leadership
did not have the relevant skills to manage cash flows, expenses, and
taxes among many other financial issues. This was the source of
failure for many of them. Your business should have a good accounting
practice in order to avoid a financial crisis.
There are several ways that you can implement and reduce or entirely avoid financial mismanagement. You can make use of professional accounting software that will help you keep a record of all financial transactions including expenditures and cash inflows. You can as well hire a tax advisor or a general financial advisor if you entirely lack financial management skills.
you can do everything yourself
another challenge. Believing that you don’t need anybody else. Some
of the entrepreneurs believe that they can have hands-on control of
all aspects of the business. That they are the only people who should
be making decisions regarding everything.
entrepreneurs understand the benefits of delegating some of their
powers to their subordinates. If you cannot trust them with the
business decisions and operations then you are destined to failure.
You should concentrate on the most important goal of the business and
let your employees help you to reach them. Give your people enough
responsibilities and authority over their duties.
If you don’t want to involve other people who are part of your business in your company’s decision-making process then they will think that you are dictatorial and end up demotivated to work towards the company’s goal.
the advice of the mentors and those people who have experience and knowhow
in the same field of business. Sit down with your employees and
welcome views and suggestions. This is the best way to make your
employees feel recognized and motivated to continue working towards
the goal of the company.
As resourceful as you are, just know that there are some things that you cannot handle yourself. You need help from advisers, experts, employees, suppliers and customers. You can delegate some of your powers to employees and give them the authority of making decisions regarding small matters of your business. You can be dealing with bigger matters such as when and where to expand your business, who to employ and what qualifications they should possess and several other critical issues in your business.
are most often frustrated by their employers. They want to feel that
their employers notice them and appreciate their efforts. They want
their employers to have their back and listen to their concerns.
However, not many employers do this. Many of business owners or
leaders ignore the powers of an employee and end up mistreating and
exploiting them. This is the source of all the devils
that kill a business. Some of the business
owners feel that employees are their subjects and hence they should
just always listen carefully and implement whatever they say.
Employees are motivated and inspired when their leaders make good, thoughtful and reasonable decisions. Low engagement drains morale and also limits the ability of a business to retain the most productive employees. This will affect the productivity of the company and eventually the cash flows. The company will end up closing as a result.
are the backbone of the success
of a business. Without customers then there is no reason for the
business to exist. Customers determine the productivity of the company
due to their demand for the company’s products. Every entrepreneur
will tell you that a customer is always right, however, very few
businesses listen to their needs.
A larger share of businesses that fail lack touch with their customers. This means that they will not be able to understand the needs of their customers and improve their product quality where necessary. As a matter of fact, if the needs of the customer are not met then the customer will not come back for more products from your business. This means your sales will go down and eventually you will start making losses.
should keep an eye on the needs of your customers in order to
establish a loyal customer base. Analyze their comments on the quality
and the pricing of your products and services and hence be able to act
swiftly and improve where necessary.
customer complaint is a signal that shouldn’t be ignored. The way
you listen to customer negative reviews and act accordingly makes the
difference between success and failure in every market
place. Actually, when customers complain, they are giving you
an insight of what you should improve on. Business Psychology says
that every customer acts on their own self-interest. This means that
they are the only people who can tell you the unfurnished
truth, something that your employees cannot say. If you don’t turn
those negative feedbacks into positives then your business is prone to
example here is Netflix, in 2011, they ignored the views of their
customers and went on to split its DVD and increase prices. As a
result, they had to lose a whipping customer base of 800,000
subscribers. Their stop price fell to almost half of their previous
value and many people end up hating the company. This is a very good
lesson that what customers say should be a top
most concern of the company.
business is able to satisfactorily solve all complains,
then this will result in an increase in the number of loyal customers.
Therefore, listening to your customers is a way of marketing your
business. You will be able to improve the quality of your products or
services and customers will always be coming back. It will also result
in a positive word of mouth
pyramid. Customers will be able to talk positively about your company
and hence attract more people to your business.
Train your employees to look for complains and view them as opportunities to build stronger relationships with the customers. Record complains so that you will be able to revisit them and determine the major source of this complains on a monthly basis. In addition, make sure that you solve them as quickly as possible.
written business plan
show that over 50 percent of those
business that fail lack short-term and long-term planning. If
you did not plan then you planned to fail. Every business should have
the focus on where the business will be in the next few years. There should be
some measurable goals and results that you will always be referring
to. A good plan should include to do
list and what to do and achieve the anticipated results.
If you have ever been in charge of a successful event then I bet you very well understand that if not for your careful, methodical and strategic planning then success would not have followed. This applies to businesses too and the power of proper planning shouldn’t be underestimated. Many businesses fail due to those small planning shortcomings that could otherwise have been avoided.
business plan should be accurate and based on accurate, current
information and informed reasonable projections for the future. As a
matter of fact, some of the banks insist on a well written down business
plan before lending you a loan to start up a business.
to have a written business plan and treat it as a marketing document.
It will be marketing your business to lenders, investors and other
intellectuals in the society. Ensure it includes relevant statistics
and facts that will be attractive to your readers.
Am sure no entrepreneur goes to business to fail and therefore you should be well prepared in order to succeed. A strong and a well-informed business plan is a vital outline for business success. It details a strategy and the way that the business is going to follow to bring in its revenues. If you will not be able to create a written business plan before you launch your business then you are less likely to succeed.
people rely on debts to get the capital they need to launch their
businesses. However, high
debts can be a double-edge
sword for small businesses. The problem comes the time you are
required to repay the loan. When your business spends a greater
percentage of the cash flow on repaying debts, then you know it is
time to fail. Your business should use the cash flows in expanding the
customer base, adding employees and expanding.
The reality in business is that you are either a master or a slave. You either owe your business or you own your business. However, do not owe your business, ensure you own it if you want to succeed. Start your business from zero dollars and grow it to a multibillion-dollar company rather than digging yourself into a hole of debts.
Buy My Books at Apple iTunes,
& Noble book stores.
Also available in other languages.
a research about those people in your society who advise you to take
huge loans to finance your business. Do you see them in debts? Do you
think their businesses are in debt right now? If your answer is no then ask yourself what they did to get out of that situation.
I am a little bit sure that they either started with a low debt ratio
or they may also have started from zero without any debts.
Ensure you don’t acquire liabilities to build assets. Ensure you are always working towards eliminating all your liabilities. Your number one goal should be to get rid of all the liabilities, debts and concentrate on building your business.
debts well make
your business lack flexibility to keep up with the competition
and hence it will fail. Many people say that it is a good idea to go in
debts to start a business. It may be a way of raising your initial
capital investment but I wouldn’t recommend going into high debts in
order to start a business. Most probably, you will be using almost 95
percent of your cash inflows to repay these debts.
Although you are getting into business to raise the startup capital for your business, not all debts are friendly. Some of them will make your business go down. If you have to use loans and other debts to finance your business then consider creditors who are providing loans at very low interest rates. Some of credit unions have high interest rates and you may spend very many years just paying for the interest.
of determination and persistence
The fact is that most if not all of the investors will say no when you present them with an investment opportunity. This is the genesis of persistence. You should always be at the top notch raising your capital. Do not be discouraged when issues arise or when several investors turn you down. It’s a matter of time before you meet someone who will make your business dreams come true. Do not let the ‘’no’s’’ from the investors put you down. If an investor is not willing to invest in your business ask them for the reasons and if they can be able to refer you to some other potential investors.
step in luring someone to invest in your business is to invest in it too. Giving up at the early stage will not lead to new
opportunities. You should be determined to achieve all your goals
before you seek people to help you achieve them.
can be able to get the reason
why an investor is not investing in your business then it means
you will be in a better position when approaching other investors.
Lack of determination and persistence is also a reason why many
businesses fail in their first trimester. You will be discouraged in
your quest for investment capital and if you are not strong enough you
can end up giving up.
A good business plan is the difference between a great idea and a dead idea. If you present your business ideas well to the investors then you will never get a no from them. That idea will be turned into a multi-million dollar company soon and you will be on your way to achieving greater heights.
probably not the first person venturing into
a business in that industry. There are a thousand other business
people who have experience and expertise to do competent business in
that field. Therefore, if you don’t calculate the level and impact
of competition in that field then I can bet you are on the wrong path.
You cannot just start a business thinking that you are the only product or service provider in the market. There will always be another person in business selling the same product or providing the same services. Therefore, the success of your business will be determined by how good you are at dealing with competition.
competition is bad for small businesses. There may be a large company
providing the same products and services to the already existing
customers. They are most likely to have dominated the market and definitely
your small business can have problems getting into the market.
However, you may finally manage to enter the market but take long
to make the first profits from sales. This is the top most reason why you will end up giving up and your business will
are supposed to understand is that when your business if entering the
market, you can be running on negative profits. If you have debts to
cover then be sure you will not be able to make it through.
Most of the small businesses do not have resources to expand and therefore can fail easily.
not even a single entrepreneur who goes into business with a plan to
not succeeding. However, there are several issues that may arise and
pull your business down. One of those is inadequate access to working
capital. Your business relies entirely on its ability to sell
products, attract payments and meet obligations in order to reload
stock of inventories.
other reasons why small businesses fail to go
into owner’s inability to raise working capital. Your business will
not be able to attract investors since they will be thinking that your
business is not stable enough. It starts with
a low credit score, and the owner’s inability to borrow from
traditional financing sources to other operational issues that affect
capital may be an alarming sign that your business can crush down at
any moment. It also shows that your business may be unable to honor
the bills, loans, salaries and other financial commitment. Therefore,
lack of capital may jeopardize day to pay operations.
The truth is, most entrepreneurial ventures will fail before someone makes the first dollar in their business simply because they fail to raise their initial funds. The reason why some of the businesses end up in a financial crisis is lack of good control of costs. You should manage the payrolls and other expenses. What this means is that you should be ruthless with expenses so that you will be in a better position to take care of future expenses.
reason is not saving during good times. Saving during the good times
is a very good way of hedging the risk associated with bad business
times. The problem is that too many business owners would rather spend
than save. This means that when bad times strike, they may end up
succumbing and closing down their businesses.
Some of small business owners are not bankable. If you are running a business to minimize taxable income then you will not be able to attract bank loans. You need to convince your bank that you have a profitable business and you can be able to honor your dues. Lure your bank with money to see what the banker would need in case you want a loan from them. This way you will at least have a way to raise your operational capital in case your business lands in a financial crisis.
talking about premature expansion then am talking about scaling your
business before it has established deep roots in the market. This is a
major reason why some small businesses fail. Some of the companies
such as pets.com failed due to the same reason.
is not a bad thing, but scaling prematurely can destroy everything.
You may be hiring too many employees to market
your business or you may be spending a lot of the money on
marketing. Take enough time to learn your business before you scale
it. What this means is that you should not scale your business unless
you are ready.
the business owners are so impatient and think that they have enough
guts to open nationwide branches too soon. This will be the fall of
your business. You first have to establish your main business before
expanding to other places of the country. Premature scaling has been
found to be one of the major overlooks by the business owners and at
the same time the most consistent predator of startup failure in small
shows that 90% of the time, small businesses fail due to owners’
self-destruction rather than competition. This doesn’t mean
that the 10% of businesses that succeed had a smooth path. They go
through near death experiences
before they make it by grace. All these
things are caused by premature scaling of businesses. Another
Startup Genome Report Extra on Premature Scaling by Max Marmer and the
colleagues found that 70% of businesses and companies scale their
business prematurely. The same report showed
that 74 percent of these businesses fail due to the same reason.
The main reason why premature scaling is found to be dangerous for small businesses is that it is so deceptive. All the things that accompany scaling such as hiring, expanding, funding and growth are good things but now most of the businesses do them out of order.
of the signs of premature scaling include overspending
- You are in business to make money. I don’t think you can make enough money to sustain your business if you are
overspending the company’s earnings. This is the reason why most of those
business that scale prematurely fail to meet their financial
obligations in time.
Another sign is having too many employees - When you are starting a business and you are in the hiring phase then you should ensure you are cautious and careful. This is where most businesses fail because an additional employer means an additional commitment and a drain on the resources. Am not saying hiring is a bad thing. It will come but you should be on the safe side and hire the right number of employees with the required qualifications.
of product improvement and development
of your products and services has a direct bearing on
customer satisfaction. If your business is not providing quality
products and services to the customers then it is likely to fail. The
opposite is also true, if you provide quality products then your
customers will rank your company high and they will always come to
purchase more. If a customer is dissatisfied then they become vocal in
criticizing your business and you will end up losing the majority
of the ways to maintain a high product quality is through product
improvement and development - How
you get along studying your market, planning, implementing and
evolving is very important. Continuous improvement can range from
simple changes that you make from day to day to major shifts in the
direction of the company. A company that doesn’t evolve is more or
less equal to a dead man. It cannot be able to increase the number of
customers or even attract more earnings.
bottom of the matter is that small businesses lack knowledge of their
environment - The owner
may not detect a change in the market that needs a swift action.
Therefore, they delay in
implementing several measures that can affect consumer satisfaction
and end up exciting the market due to competition.
The fact that small businesses are owner managed means that the business owner is more concerned about personal attitude and choice when it comes to product improvement and development. This means that they will concentrate on issues that affect their earnings rather than those that affect the consumer satisfaction. The business will thus end up losing a greater share of their customers to other rivals in the market who are more serious about product quality.
reason why small businesses fail in product improvement and
development is lack of resources - This
also plays a deciding role in the choice that the business owners
make. Product improvement and development need
a lot of resources from the cost of production to the cost of
marketing the new products in the market. Hence, most of the small
businesses end up failing due to lack of a quality and value
affects a business in many ways. It will affect your productivity,
your profitability, customer satisfaction and public perception.
Therefore, focusing on the quality of your products and services will
keep your business strong.
of a succession plan
to a report on the small businesses in the UK, it was found that up to
100,000 small businesses in the UK close yearly due to lack of an
appropriate succession plan. Although these businesses are provided
with considerable support for their start
up and growth, the succession plan is not given enough weight.
of those businesses that fail due to lack of an appropriate succession
plan are family businesses. Most business owners want to fuel their
businesses and eventually pass them to the next generation. However,
there is a little number of them who succeed in doing so. Several
studies show that only two-thirds of family businesses make it to the next generation.
absence of an appropriate succession
plan can greatly impact to your business growth. It makes it harder
for businesses to generate new ideas for the success to come. If the
business is entirely relying on the owner’s specific knowledge which
cannot be easily passed on to a successor, then your business is at
of a suitable and a willing successor drawn from the list of the
available employees or the family makes it difficult for the business
to keep moving when you’re not there. What follows is either
mismanagement, waste of resources and eventually
the business shuts down.
Most of the reports encourage business owners to address the succession matter at an early stage, promote awareness of the succession procedures, and improve the quality and availability of advice for the business owners to come. The company should as well establish an effective succession support and make it an integral part of the business. The business can also provide the employees and other stakeholders with the information, training, advice and support about the succession matter.
small business are owned by people who never think what would happen to their
family in case something happens to them. What would happen to their
businesses, whether it would stay solvent, whether it would be sold,
or whatever would happen to their customers when you are not at
the helm? That is the
reason that when death strikes small business owners then their
businesses end up being sold or exiting the market due to succession
want your business to pass to the next generation and still stand
strong, then consider the situation of your family, employees and the
customers and establish a proper succession plan. You should first
select your successor through careful analysis. Then determine your
business evaluation bearing in mind that when a business is sold to
family members the transaction draws extra scrutiny from the IPS. Then
lastly develop a plan that would be adopted when transferring your
technologies in small businesses in the U.S and several other
countries of the world is creating hidden but significant losses for
the businesses. One of the features of most small businesses is lack
of improved and modern technologies. According to a study that was
carried on by Samanage-an enterprise service management software
company, more than a third of employees that is 36.8% say that their
company’s technology is outdated and doesn’t add any significant
value to productivity.
company has the outdated
technology then be sure that worker productivity will be hindered.
They will not be able to work and be productive the same way as their
counterparts in big companies with modern high effective
technologies. The firm’s State of workplace survey that was carried
out some few years ago found that workers in small businesses spend
more than 520 hours a year on repetitive tasks that could otherwise be automated. This
translates to business losses of up to $13,202.80 per employee per
values are very significant when we talk about the company’s
profitability. If the company is not able to adopt highly effective
modern technologies then it will make losses until it closes down.
This is one of the reasons why small businesses close up within a
period of one year after start up
due to losses.
equipment is prone to failure
and hence increase the downtime. This means that the equipment spends
a lot of time out of work which also adds up to your losses. The
operational and maintenance costs will also be high and the
replacement of these equipment becomes harder and harder with time.
of the small business owners don’t know is that the time and money
that is used to repair and maintain old equipment makes sense to
invest in a new technology. If you want to increase profits in your
company and stay in operation, then you need to carry a risk
assessment and prioritize equipment that is used on daily basis.
Small business owners have a lot of responsibilities and all in one can be overwhelmed and close the businesses if the efforts are not paying well. Technology has been a game changer for both small businesses and large businesses entrepreneurs.
that any legal problems can be dealt with later
small business owners have a tendency of thinking that if they get
funding or once they are up there operating, then they will be ready
to hire a lawyer. Despite the fact that you may manage to get up and
running before getting a lawyer, this is a shortsighted logic.
the mistakes that are done during this initial process are hard to
deal with later. This is the reason why your business can be burdened
with issues until it fails. You should devote most of the time and
resources dealing with issues once they arise. Failure to do so then
you are digging your business into a hole that may be difficult to get
cost less money to hire some competent legal mind that will always be
taking your legal cases and release you from
the burden. Get it right at the beginning of your operations rather
than sorting it out later.
of focus and foresight
focus is the art of limiting your scope to that common thing that
really matters to majority of
customers. Lack of focus can greatly affect your business. Many
entrepreneurs think that adding more features in products and services
will turn out to be more appealing to the customers. Instead,
it will be in large extent confusing and end up affecting the
business. The odds of a non-focused business to struggle for survival,
lose market, miss an opportunity
to capitalize on their scope and lose investors’ attention is
Marketing a product with too many features that are confusing is self-defeating. The more you try to add more features to your products the more your customers will get confused and eventually settle for a competitor who is more focused. In the business domain today, the market is found to change after every 90 days. Therefore, if you are not focused enough you can lose your customers without even noticing.
Want free Audio books?
Get one of my Audible Audio
books of your choice for free.
the reasons why you need to be
focused on business is the
reality that competitors are always at your neck, looking for an
opportunity to lure your loyal customers into their business.
Therefore, you need to keep your customers aware of the differences
between your products and services as compared to those of your rival
solution is characterized by
many elements, then you also cannot keep the priorities straight. This
will make your team frustrated and end up pulling your business down.
What this means is that you should first teach your business to walk
before you lead it to run.
Focusing on the wrong things is equally destructive and unproductive for your business. In most of the competitive environments, business focus is not the most important thing. The important things are the quality of your products and services, the distribution channels, simplified pricing structure and better customer service. They determine how competitive your business is.
one thing that every entrepreneur needs to focus on is the strategy
- The strategy
needs to be very simple, straight, written down, and it should be
communicated regularly to the team members. The last but not least
thing that you should focus on is emphasizing straight and measuring
success regularly. This is a way to learn where there are leakages
that are draining your profits. You can then correct on
them and be able to raise enough income from your business to make it
21...The company should also have foresight - The fact that you are the owner of your business means that you should have a long-term sight on the achievements of your business. In contrast, some of the businesses that are managed by CEOs tend to have a shorter foresight since the CEO is there for a short time. He will set goals that can only be achieved in the shortest time possible. A good example of a company that was outwitted by rivals due to lack of foresight is Nokia. It was among the first telecommunication companies in the world. However, due to lack of foresight, it ended up being surpassed by new bays in the same industry.
Some of small
business owner do not want to spend money on advertising.
Therefore they end up making fewer
sales than they could actually be making after the advertisement.
It doesn’t matter whether you have been in business for a long time.
Other companies will enter the market and if you are not careful they
will take your customers. Customer loyalty doesn’t just happen. You
have to earn it through promotions and advertisement.
analyses your competition carefully and stay one step ahead through
strategic marketing. Hence, if you don’t take good care of your
customers, then your competitors will.
business owners in the industry understand very well the advantages of
marketing their products and services. One of the problems with small
business owners is that they don’t take advantage of easy-to-use
shows that the national average for marketing budget is supposed to be
at least 10.2%, however, small businesses invest as low as 3% in
marketing. This is the reason why am convinced that if your business
is not producing and marketing their products effectively, then you
are bound to fail.
The fact is that small businesses cannot compete with the big fish in the industry but they can at least be able to invest in data-driven marketing. Some of them include live charts, Analytics, social intent, ratings and review. All these are the insights that a small business can adopt and be able to make their products known to the public.
of website and Social pages
reality of the matter is that if your business
has no website that shows in major search engines, then your
business will remain invisible. Small business holders don’t ask
themselves the major questions that are relevant when marketing their
products. They don’t answer to the questions whether their full
product package is available in their website, whether their website
includes a clear call of action, whether their website
is mobile friendly or whether their website has relevant
keywords that show up in major search engines.
shows that there are nearly 28 million small businesses in America
that generate up to 54% of the total domestic revenue. However, nearly
half of these small businesses operate without a website. Many small
business owners think that a website is not in the business’s short-term
future. Several other companies and businesses always postpone the
launch of their websites to a later date.
astonishing thing is that even in 2018, some of the small business
owners consider a website not irrelevant. Whatever you do with your
business, the foremost strategy is to create awareness. There must be
a cost that is associated with this move and hence you should be ready
to incur. If you plan to avoid or skip marketing tools in your
business, then you should be ready to fail and exit the market.
A business that lacks a website looks outdated. They have no platform to tell the public who they are and hence they end up making small sales that cannot eve sustain operational costs. A website is important, it will give you an opportunity to show the world what you do and how uniquely you do it. This will attract additional customers and hence you will make huge profits.
24...Failure to adapt to
As I had
said earlier, the state of the industry that your business is
operating in changes almost after every 90 days. Many small
businesses concentrate on
marketing and other promotional processes and forget to monitor
industry trends. Most of the managers struggle
with time management and sometimes they are caught off-guard by
one of those areas that are so important in any business whether small
or large. It is worth the investment of time to avoid being outdated
and obsolete. There are some good
examples in your history of companies that didn’t evolve
accordingly and now they are either small or they already got pushed
out of the market. Some of them include Nokia, Blockbuster and
As a good
business manager, you are supposed to learn from the failures of
others. The above companies were once industrial giants and they are
now humble on the ground. If you don’t want your business to be the
next, then watch, analyses and
respond swiftly to industrial changes.
a research that was carried recently and found that 88.9 percent of
your business customers defect from your products or services due to
poor customer service. Therefore, poor customer service is considered
a secondary cause of many small businesses crushing down to the
ground. The primary cause is financial
crisis that small businesses encounter.
Bad customer service is directly proportional to poor management, and not paying attention to the business needs. In this case, it may paint your business image as a business that is staggering in financial problems. Some of the companies that dominated the market due to improvement in their customer service are Dell, Techno, and many more.
Some of small
business owners think that customers are wrong and hence do not pay
enough attention to what they have to say.
In the late 1970s, a retail institution W.T. Grant went
bankrupt for the failure to realize that middle-class Americans were moving to the suburbs which was
a huge threat to the company. The management thought that the customers were wrong
and hence did not consider shifting their retail shops from downtown.
This shows there is some truth in the saying that goes ‘a customer
is always right’. You have to pay attention to what they are saying
and act accordingly.
majority of small businesses do not strive to maintain their focus on
customer service and that is how they end up closing. Customer service
is one of the golden rules of
business that should highly be acknowledged by every business holder.
other hand, customer services is a tricky art to master for small
businesses. In some cases there is nothing you can do to appease an
angry customer but the approach that you take when addressing his or
her case can leave them feeling satisfied. A business that is focused
to succeed should listen and pay a lot of attention to customer needs.
You should listen to what your customer wants and know mechanisms of addressing those claims once and for all. What most of the small businesses lack is the ability to improve on places that their customers are complaining about. One of the reasons being financial constraints and others is ignorance.
to build a strong team
business, its productivity and profitability depend
on the labor force. It is one of the factors of production together
with capital. Therefore, labor just like capital is necessary and very
crucial when determining the productivity of a company. Entrepreneurs
and small business owners need a strong team of both advisers and the
shows that a startup biggest challenge is to get the right team for
the business. Some of the small businesses end up mobilizing a team
that cannot reach to the full
utilization of the resources at their disposal. This impacts directly on
the company’s success.
the small business owners do not trust their team to give them enough
control over their responsibilities. The possible consequences are
that they fail to operate the company’s tasks at the maximum
potential and eventually lead to poor performance. When the company is
not maximizing its resources then it is destined to fail as a result
There is a reason why the most successful businesses in
our society understand the need of having a strong team.
that is always focused on
maximizing the company’s profits. What you have to understand is
that your work team is what holds things together. Sometimes ideas in
the work place can change, the
products may pivot, and sales can go down due to market changes. But
if you have the right team then you can be able to fix things faster
team is not just selecting a team of people with sophisticated ideas
as many business owners think. A strong team is the one that is
complementing, the ones that appreciate each other’s efforts and
work together. A team that mitigates each other’s weaknesses and
ensures the work is done the right way every day. That is what a
business needs. If your business has no team work, then it is not going far.
to have a team of smart people too. Those that can work with minimum
supervision and those whose effort is not affected by your presence.
As a business owner, you have to retain a strong team of the right
people to build the technology, understand your industry and scale
out of cash too fast
no entrepreneur who wants his or her business to fail. However, very
many people start a business without thinking about the future needs
of the business. Small business owners think that sustaining a
business doesn’t need a lot of money as it is needed when starting
it. The truth of the matter is that your business
needs money to stay fit and stable. If your pockets are drained
within the first few months then you cannot keep on, you have to relax
your rope and exit the market.
not everything that a small business owner needs in running the
business but if you run out of it, there is not much that can be done
to help. Small businesses cannot afford to joke with the powers of
cash when running their affairs. Big companies can be able to take a risk
with their money by dedicating some to
crazy ideas. This is unlike small businesses which most
of them are running on debts and loans.
shows that most of the small businesses that fail are not insolvent or
unprofitable. They simply ran out of cash. As a small business holder,
managing your cash is the single most important thing that you should
do. It doesn’t matter how much money you raise but how well you
The biggest mistake that most business owners make is overspending. Spending money on features that are not really needed. Some of them spend their budget with no control on measuring what they are getting back.
Want free Audio books? Get
one of my Audible Audio books
of your choice for free.
allocation of resources
the disease that is eating most of small
businesses. They misallocate their money on things that don’t bring
any significant benefit to the company. In
their bid to keep up with the existing competition in the market,
small businesses are under
pressure to spend on several investments that may hurt the business
small business holders want to
hire more employees in their bid to increase their production and
increase sales. What many people don’t know is that additional
employees may hinder production due to lack of space and increase in
production costs. This is the reason why they end up closing down
rather than growing big.
other owners may want to move to a bigger office or even offer better
employee benefits. Am not saying all these measures are wrong, but you
need to move slowly. You have to determine the cost benefit of all
these options and implement the one you think can benefit the
other hand, small business owners tend to use some of the business
resources for personal gains. Apart from allocating a business vehicle
for transporting the business
products you use it for personal transport and other things. What they
don’t know is that they are adding ghost expenses to the company
that can impact greatly on its profitability.
small doesn’t mean living small, you need to allocate resources very
well and avoid misallocation. Avoid overspending by prudently
allocating resources that your business is endowed with. You should
always weigh the pros and cons of a certain expense that you are
planning to undertake. This measure will let you determine the things
your business can do with and the ones it can do without. In addition,
you will be able to invest the limited resources to those things that
will be beneficial to the company.
Involve relevant authorities and smart minds when determining where to allocate money. This will aid you in brainstorming more cost effective alternatives that will not hurt your small business.
personal and business expenses
want your business to be successful, keep your personal expenses far
away from it. Your business should always be independent. Most small
business owners are the top most
decision makers. Therefore, it is easy to mix your personal and
business expenses. This is one of the reasons why small businesses
will be burdened with ghost expenses that increase the production cost
and decrease the profit there after.
personal and business expenses is
tempting because it is easy but simple to kill your business. One of
the reason why you should never mix personal and business expenses is
because of tax. Tax is confusing and hence you should have a straight
forward way of ensuring it doesn’t affect your business.
business and personal expenses are tied, then it can affect your
credit score. Until you separate them then your business will not be
building you a credit history. This in
turn can make you lack funding in case of a financial crisis.
business lacks the boundary between personal and business expenditure,
then it makes poor book keeping,
filling taxes, balancing
accounts and creating financial goals. Most of small
business owners have a joint bank account. This is the root source of
overspending and mixed expenses. If you are an entrepreneur who is
focused on growing his or her
business, then you should keep a separate bank account. Each entity
should have its own source of money and a way of getting payments.
way out of this problem is avoiding getting money in cash, this will
reduce the chances of using business
money for your personal
expenses. You should also be paying the suppliers through the bank.
Make it a point to never deal with money directly.
Last but not least pay yourself a standard salary. Make the relationship between you as the boss and your business official. You can write yourself a check each month from your business checking account. You should stop counting yourself as the ultimate boss and consider yourself as a worker. Behave as you could behave if you were working for someone else. Keep track of the personal spending that affects your business. Ensure you don’t use the business resources including money to fund your private tours. This is one of the most common expense that when linked to your business can affect its operations.
a business while employed by a potential competitor
is clear that if you are currently employed by a company that is a
potential competitor you cannot start a competing business. Many small
business owners fail to resign before starting a competing business.
What this means for you is that when you do not consider the legal
procedures then your business can be prone to legal issues that can
lead to closure.
after leaving the current employer, you cannot go and disclose the
company’s secrets. Under the inevitable disclosure doctrine, if
someone leaves their current job and starts working for another
company with similar responsibilities, then it is common knowledge
that they will use the information that they had from the previous
employer. The law stipulates that you can face an injection that
prohibits you from working for the new employer until most if not all
of the trade secrets are stale.
the small business owners also employ workers without first checking
with their current employer about the signed covenants. You should
first of all check with their employer to get an insight of their
knowledge of trade secrets.
states and countries vary on how they approach this issue. Some of the
laws may be open for a dialogue between the two companies and others
may prohibit your next job up to a maximum number of years.
The biggest problem with many small businesses is that owners assume there are no enforced laws regarding your current employer and your next job. That is the reason why most of them succumb to the legal provisions of a country and end up closing. Therefore you should find out and see what assignments of inventions that might have been signed. You should check if there are any signed covenants not to compete.
in business is not automatic and it isn’t gained by luck.
Therefore, you have to get it out of your own efforts. It
also depends entirely on the owner’s foresight and the
organizational strategies that make you unique from the pool of
available competitors. Teach yourself to learn from the
mistakes of small businesses that failed earlier before you establish
your company. Try to find out more about the causes of their failure
and act differently. I bet all the businesses that close had a reason
to do so. Some of those reasons I
have already briefed and hope you now have an insight of what you
should do to your business and avoid failure. There is nothing
as shameful and frustrating as failing. You will have lost some if not
all of your resources including money and time. Therefore, if you have
plans to start
a business either for your full-time
income generation or to supplement your monthly income, just be
careful and involve critical issues in your analysis.
for money, Top
Website Hosting Companies, Nigeria
Stock Market, Selling
on eBay, Amazing
Business Ideas, Your
Simple Guide to Financial Abundance, Financial
Freedom and Wealth Creation Formula, Starting
a Money Making Internet Business, Most
Common Immigrants Jobs in the United States, Tips
for Healthy Living, Earn
Income Selling on Amazon, Retirement
Planning Tips, Quick
Easy Ways To Make Money, Best
Investments Ideas, Website
Traffic Tips, How
to Become Financially Poor, Tips
To Make Money Selling On Craigslist
Sign up for EBATES Here: It is a shopping portal and it offers cash back and coupons from more than 2,000 online retailers.
You will also love these great articles:
Want More Interesting Money Making Business ideas? See extra ways to make more money below: