There are tons of reasons businesses fail. Building something that generates profit from scratch is everyone’s wish, but only a few are willing to bear the risk involved. Profit-making is a reason why an individual might decide to take the risk of setting up a business. For every prospective business person, there must be a propelling force that yearns for success. In spite of the challenges associated with setting up a business, an entrepreneur must always allow his quest for achieving success override the challenges that may arise.
Seeking financial freedom is one of the major reasons for starting a business. Financial independence has to do with profit making. But this is not always the case for some businessmen who narrate their woes in the world of business. Perhaps, this could be as a result of unavoidable mistakes that were made before starting the business or in the course of business. Above all, a lot of persons who would have loved to start a business entertain fear because of stories of other failed businesses. It is, however, important to note that mistakes militating against the success of a business can be avoided.
I will carefully highlight various reasons businesses fails. Various findings have proven beyond reasonable doubt that most entrepreneurs fail to discover that starting a business is not as difficult as the sustenance of business. Every Tom, Dick and Harry can start a business, but maintaining and growing the business requires some level of ingenuity and determination.
REASONS BUSINESSES FAIL
REPLACING SELF DEVELOPMENT WITH ENTHUSIASM
Erroneously, people feel enthusiasm for a business is enough to bring about the desired success. Being enthusiastic can becloud one’s commitment to self-development. Self-development involves reading books related to the anticipated business, attending seminars, workshops etc. Effective time management is another cardinal feature of self-development. As it is often said ‘punctuality is the sole of business’, it is, therefore, important to imbibe the spirit of alacrity and punctuality, then just been overly enthusiastic that business is about to start. With those in place, you’ll no doubt exempt yourself from the reasons businesses fail.
Naturally, before entering into a business, there should be a period of effectual tutelage. It is almost impossible for a well trained to fail in business he acquired the training for, if all other parameters needed are in place. This is so because the training acquired will help in difficult situations during the course of business. In some flexible businesses, it is possible to achieve success without spending several months in training. In such situations, well-grounded researchers could suffice. Crash programmes related to the business of interest can as well satisfy the needed requirements. Let me not also forget to add here that research is equally important for the well trained before and even in business. There are lots and lots of reasons business fail, but if this very factor under discourse is tackled, chances of business failure will be slim.
LACK OF FINANCIAL PREPARATION
95% of businesses need capital to start. It is for this reason that every entrepreneur must ensure that capital must be generated to start up the business. Experiences have shown that most businesses fail because the owner commits all his savings into setting up business. By standard, only 20% of the savings should be expended when setting up a new business. For instance, if an entrepreneur has the sum of N1,000,000 in his account for the purpose of business, then his business value should not exceed N200,000. The remaining N800,000 should be kept for exigencies and future expansion of the business. Not making adequate financial preparation is one of the reasons businesses fail.
LACK OF PASSION
Passion is the virtue of an entrepreneur that drives the business. Passion is a strong desire and a feeling of emotional zeal. When there is no zeal in any commitment, there is bound to be distractions. A business person must possess the quality of eagerness to take the business to greater heights. Your passion for the business is a driving force and when it’s overwhelming, there will be no room for business failure.
FEAR OF FAILURE
In Africa, the fear of failure has always been one of the reasons businesses fail. A businessman must dare failure if he must succeed. Putting ourselves in the position of a failure at times gives us the unwanted feelings that propel us to the attainment of success. Failure in business does not actually mark the end of the business. A businessman must be resilient and be prepared to be proactive and put in place parameters that will get him back on track should he fail.
LIMITED CUSTOMER RELATION
Every business, whether service delivery or production of commodities etc must see customers as their major stakeholders. Therefore there must be a close relationship between an entrepreneur and his customers. This helps him to meet up with their requests and yearnings. According to Bill Gates, ‘your most unhappy customers are your greatest source of learning’. This explains to us that as entrepreneurs, we need to constantly be in touch with our customers to acquire new milestones. So many businesses fail because the owners do not take seriously complaints from unsatisfied customers.
A businessman must be accountable for his business. In other words, he must be responsible and answerable at all times in matters related to his business. Most often than not, a lot of entrepreneurs exhibit various characters that impede accountability. Such characters range from unjustifiable spending of business funds, giving room to friends and family members to enjoy services not paid for, committing the business to the management of a mediocre and untrusted person. That’s one of the major reasons businesses fail.
POOR MARKETING STRATEGY
One of the variables to taken seriously before starting a business is marketing. Marketing is regarded as a variable here because of its unstable nature due to several external factors that affect it. It is a very versatile concept. Marketing involves various efforts implored to ensure that goods and services reach the final consumers. When a business person does not apply proactive marketing measures in business, the business suffers. As a business person who craves growth in business, it is dangerous to rely on one means of marketing. Several options must be weighed when establishing ideas that will fast track getting goods and services to consumers. When a particular marketing strategy is not producing the desired result, an entrepreneur must be smart enough to the device yet another marketing strategy to ensure that his business remains afloat.
Based in Nigeria, Inyang Victor is an expert creative/freelance writer. His strong area is Humanities (Politics, Parenting, Business Development, Arts) and writing of detailed SEO posts that ranks high on google.