Thousands of new businesses start every year. Few businesses grow up so early while others are still struggling to cover its cover. If you are going to do business, then you should take care of these reasons, due to which great business fails.
Why do these great businesses fail?
After scrolling down on the internet, searching in various newspapers and seeking information from other sources. Analyses that due to some common reasons few business shutdowns within 1 to 2 years, few within 5 years and rest in the initial 15 years.
Before you start your business, you must have a look at below-stated reasons :
1. Lack of Experience :
Taking about those successful businessmen, We came to know that they too had failed in their early days and after experiencing it, they had achieved a lot of success in their business.
Lack of experience is one of the biggest reason for the failure of startups. If you are freshers in the industry then before setting up your own company, Get to know about the if and but, In and out, reviews and experiences. On this basis, you will get to know what to do and reason why businesses fail. You have to do research on the business you are going to start.
2. Lack of Planning:
When you're not aware of how to do planning related to your business? How to manage a production unit? How does marketing affect sales? What about branding and advertising and who gonna manage all these ? Where to allocate resources? How to promote the product?
Planning not always mean financial planning! Sometimes choosing the right product has also a great significance. According to the product, Deciding who will be your consumer, from which place, from which income group he belongs to. This is needed to be indemnified and that's necessary too.
3. Lack of Management or Mismanagement:
Many times we choose a product along with this product we choose the right marketing strategy and we know well how to deliver our product to the right consumer. But to manage all these the staff we had hired is not capable enough. Here a selection of responsible and determinant workforce is a responsibility to the management team. A manager is the leader of an organization should how to manage his team to increase their productivity. The success of a great organization depends on its capable workforce.
4. Location:
If you are setting up your business at a location which is appropriate for this then with lots of advertisement, walk-in and with information huge customers can be attracted easily. This not only subjects to Offline businesses but for the online businesses too.
5. Starting a Business with the wrong Intention :
Is profit-making is only the sole objective of your business? Earning profit could be a secondary objective for a business concern. Primary objective though plays a very significant role in the growth of any business. Performing social responsibility and managing business with ethics may benefit all business in the long run. If your business fulfilling those needs of consumers which benefits society as a whole. If your business provides those services who is benefiting any community collectively. If this is the motive behind your business then your business will go much further. Before starting your business your mission and vision should be clear. This may lead a rapid development in business, network, team, staff and the brand.
6. Cash Flow Management:
Many businesses have collapsed as they failed to manage their cash inflow and cash outflow. They failed to manage their finance. The owner should know the regular capital need of the business, liquidity position of the business, cash reserve needed to maintain, amount of revenue generated and expenditure to be done. Analyzing the break-even point of production and act accordingly.
7. Over Expansion:
When a business starts giving you a good profit, An entrepreneur may think this is the right time to expand the business. In greed of expansion, the extra profit generated is reinvested. But after a point of time, It's often experienced that the rate of expansion is lower than the money generation rate. This in turns the miss-match of cash flow and businesses starts collapsing.
Therefore the rate of expansion and rate of generating profit should go hand in hand.
When money is reinvested examining the cash flow with limitations of expansion. This may guarantee success for sure.
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