Many businesses emerged at the same time, but few remained after some few years. Not all business can stand the test of time and no matter how high the starting capital is, some of them will experience business failure due to some reasons.
Here are some of the basic reasons for business failure:
- Core Values and Mission Statement: many business owners don’t even know what Core Values and Mission Statement is all about. Some that have core values do it for emphasis sake without being keen to it as the business grows. Example of core values could be excellent, integrity, trust, and teamwork. The purpose of Core Values and Mission Statement is to serve as a moral compass; something you will look up to in your daily dispositions.
- Lack of planning: there’s a saying that “If you fail to plan, you plan to fail”. Meaning that not planning at all is already a sure route to business failure. Many business owners are too preoccupied with junk activities without taking some time to do the business short term and long term planning. This is not what you can just verbally say or have it in your mind. The best way to do this is to clearly write down plans by including tasks to accomplish with deadlines.
- Leadership failure: many good businesses that were supposed to survive actually failed simply because of a wrong leader. Even if the director has done the needful, the people appointed as leaders can bring about business failure once the wrong decisions are made.
- Ignoring the needs of customers: this is common among business owners that are proud, arrogant, un-teachable and selfish. All that matters to them is the things that favor their account and time. Forgetting that the basic reason the business exist was to meet the needs of its customers. No business can survive when you totally ignore the needs of your customers.
- Wrong location: this is very important to business growth. There are some types of business that cannot just survive in a certain location. As a business owner, you need to understand who your targeted audience is and then decide on the best location to get these people.
- Lack of profit: profit making is far different from revenue generation. You can be busy making so many sales but at the end of the day after removing all your expenses you might see yourself recording shortage. Once you continue on this trend, in a little while you will run into debt and eventually the business folds up. Even as you intend pleasing your customers, strive into making good profits because that is the basic aim of you setting up the business except you are really into a charity as an organization.
- Poor financial management: this results from being undisciplined. Some business owners become uncontrollable once cash enters their hands. They spend on wants rather than on needs. They spend without boundaries, using both the profit that was to be reinvested into the business and eventually eating up the capital.
- No differentiation: for your business to succeed, you don’t need to be among the crowd. The mindset that this is how others do it won’t take you far. Be unique in your business activities ranging from the production, packaging, sales strategies, customer service, time factor, etc. your uniqueness is what can make a customer to drive for miles just to get to you, even when numerous same kind of business exit very close.
- Lack of Confidence: some entrepreneurs from the start can’t even visualize any success. All they feel is that the business is not good enough or they are incapable of running the business. Asking yourself, “can the business survive or am I worthy enough for business success” is already a journey to failure. All that you should think or ever say is “yes! I know the business is good. But what can I do to record success”. Have confidence in yourself and in your product. Customers only compensate something they have confidence on and you can’t give what you don’t have.
- Not having a mentor: don’t be a ‘bastard’ business owner. Have someone to coach you right. But care must be taken in choosing a mentor; take one that has succeeded in a similar business, one you can trust enough for advice. Good Mentor is like a pillar to business success and not having one will most likely lead to business failure.
If your business is still at the growth stage or you are just intending to start one, try your best to avoid all these highlighted reasons. In case you have already experienced business failure, you can dust up yourself and start again on the right foundation using this article as some guide.