Estimated reading time: 20 minute(s)
Every business enthusiast or owner anticipates for business success and not a business failure. But with the trending economic situation, many business failures have been recorded.
Business failure happens, sometimes you win and sometimes you learn, but as an entrepreneur or business leader you have responsibilities for your employees and fellow directors, you have to do everything you can to guard against failure.
The simple truth is that many of the causes of business failure can actually be averted but most persons are yet to take cognisance of these actions that can plunge their business into a ditch
But not to worry, below are the business mistakes that could cause your business failure:
Note them and try as much as you can to avoid them.
Business Failure: 7 Causes Of Business Failure You Should Avoid
This is one of the leading causes of business failure. Good management is the backbone of every strong business. Decisions and strategies made by the management can decide the fate of a business well before it gets off the ground.
If you or your management are not aware of your business capabilities and the importance of creating long-term strategies and clear achievable goals, then it is needless having strategies or goals which they can’t implement.
When starting a new business, it is advised you get the services of people experienced in that field. Picking the wrong players on your team can lead to business failure. You can even have the best opportunities, finance, strategies and goals for a business and still fail simply because you lack the right team to implement the strategies for a successful turnaround.
This is another place that people get it wrong. Siting your business in the wrong location can cause your business to bleed to death.
Yes, even the most classy and profitable business model in the wrong location where its target audience doesn’t abound will bring you nothing but business failure.
Sorry if I’m sounding too hard, but I would rather tell you the truth than to give you a false picture. It is advised you take out time to carry out a market survey to find out if the product or service that you intend to offer is needed by those in that environ. If those in that location are interested in your offer, then you can go ahead set up your business.
3. Choice Of A Business Model
Choosing a business model that isn’t profitable is something that you should avoid. In as much as you want to add value, you can’t consistently keep losing money. What am I saying, the sole aim of any business is to maximize profit and any business that can’t yield you profits will fail.
It will fail in the sense that you’ll get to a point that you won’t want to invest any further in the business.
This can happen to even the most patient person on earth; after all, no one will be glad to keep investing resources and energy and get nothing in return. It sucks. So choose your business model wisely.
4. Poor Financing
Poor financing is another cause of business failure. A business needs robust financing to keep up with its competition. The blood flowing into your business is finance. it needs a steady cash flow to take it through its day to day running.
5. Not Having An Understanding Of Your Market And Customers
You have very little chances of your business surviving if you don’t understand your market and who your customers are. There’s no way you’re going to offer your customers the best value if you don’t understand them – their language, their pain point and their response to a similar offer that was offered to them.
Understanding your market and customers give you leverage over your competition and save you from experiencing business failure.
6. Lack Of Focus
This is another cause of business failure. You need to develop your own strategy and strictly adhere to it. Focus on what works for you and don’t go copying others.
You know why?
What rocks my boat might not rock yours. Don’t start a business just because you see others doing it and think you will be successful if you dive into that niche.
No doubt, good sales is a good index that the business is profitable but there’s more to that. Take out time to do research and find out the problem that people in your area are dying to solve, and build a business around it.
Believe me: if you can create a business around that you’ll be blown away by the kind of sales that will be rolling in daily.
7. Never Depend On A Single Customer
You know why this can be suicidal? If that single biggest customer walks out the door and never check back. I’m sure you already know the implication of that single action. Your business chance of surviving is very little.
Hence, never you depend on a single customer, try as much as possible to diversify your customer base so that if Mr A talks a walk, Mr B and C are still there to keep buying from you and with that business will continue booming
Starting a new business is not as rosy as many paints it to be, according to US Bureau of Labour Statistics, half of the new establishment survives the first 5 years.
What that means is that half of that business failed but if you can take cognisance of these tips and implement them, I’m pretty sure that the chances of your business failing are very little.
Nothing in life is easy but anything worth doing is worth doing well. If you want to set up a business (whether a business requires little start-up capital) take some time and plan your business putting everything in order before you hit the ground rolling.
What’s your fear in setting up a business? I would love to hear from you.