What are the 10 reasons Businesses Fail?

10 Reasons

1.  Lack of Funds & Review:

Far too often, business owners fail to properly estimate how much money they are going to need to be fully functional as a business.  When determining how much money a new venture needs to start, take into consideration both the costs of starting up and running the business as well as those funds needed to sustain the struggles that may be experienced should things not go as planned.  It is essential to have access to regular management information and hold regular meetings to keep your finances in check.

2.   Sloppy or Ineffective Marketing:

Contrary to popular belief, very few products actually “sell themselves”.  The development of a strong marketing strategy is essential.  Marketing keeps customers interested in your products and money flowing into your business.  It is essential that you do this well so that your target market would rather spend their money with you instead of the competition.

3.  Ignoring the Competition:

Customer loyalty is fading quickly.  Customers go where they Want, when they want, forgetting about business relationships. Monitor your competition, and don’t be ashamed to copy your favorite ideas.  Importantly, stay on top of things, follow the trends, and don’t let your ideas get stale.

4.   Failing to Adequately Train and Develop Employees:

When hiring employees, make sure that they are sufficiently trained, fairly compensated and able to complete all tasks that are expected of them.  Try to create a work environment that keeps your staff happy and  motivated.  Remember: Happy employees will work harder for you!

5.  Uncontrolled Growth: What goes up…

While business growth is considered an indication of success, uncontrolled growth can kill companies for two main reasons.
a.  Businesses need systems and infrastructure to scale properly.  Unfortunately few entrepreneurs take the time and effort to lay out a strong plan for growth when in the  planning stage of their business.
b.  In order to grow, you generally have to spend.  As demand increases so should your production capabilities. Businesses are forced to invest money in assets and employees.  Many businesses don’t have the cash to fund their expansionary needs.

6.  Inadequate Planning: Prepare a detailed business plan Location:

Even the strongest businesses will have a tough go if they are situated in the wrong place.  When choosing your location, consider traffic, convenience, parking, and signage, etc.

7.  Poor Location:

Even the strongest businesses will have a tough go if they are situated in the wrong place.  When choosing your location, consider traffic, convenience, parking, and signage, etc.

8.   Inadequate Flexibility:

Being flexible is an asset which helps you to stay ahead of the competition.  If a product or service isn’t selling in accordance with projections don’t be scared to make changes.  Make sure to go into business with an open mind.  Don’t be surprised if many of your assumptions and ideas turn out to be wrong.  Look for people to give you advice.  It is important to continuously learn about your market and adapt to the changes as they occur.

9.  Spent Too Much Too Quickly: Maybe you should have  waited to buy that new sports car… 

Too often entrepreneurs grossly underestimate the amount of time, and capital that is necessary for their businesses cash flow to break even.  It is important to plan fluctuations within your market by keeping enough cash on hand to help you through the tough times.  And remember, “you must keep your personal spending separate from your business spending”.

 10.   Ignoring the Extra Mile:

Once you attract customers, you will have to work hard to keep them.  Customer service should be a key aspect of your business.  If you don’t follow through with your customers, they will find someone who will.