A survey carried out by Nerdwallet, revealed that 20% of small businesses fail in their first year, 30% of them fail in their second, and 50% fail after five years of operations. Also, 70% of small businesses fail in their 10th year of business. Quite a staggering statistic, right? But, the truth of the matter is that there is no business that is destined to either fail or become successful upon its creation. There are factors that determine the failure or otherwise of businesses, and those factors are what will be discussed in this article. In the meantime, one thing you can do to help offset the failure chances of your business is to have excellent planning right from the start, even before lunch. This will help put the entire operations, target market, and their purchase behavior as well as trends in the industry, which will inform and better equip you in the right direction to steer the wheel of your company. This is where Damisrael Solutions come in for you. We provide quality business solutions for start-up and existing businesses, through our business consulting services. Our business planning service offerings include: business plan, financial modeling, business proposals, market research and pitch deck. Through our services, your business will be better positioned to secure funding either through loans, grants or investments.
Beyond that, the business plan we develop will provide all the above-stated information about your business and more. This will better equip you on the right way to run your business and outlook on your financial performance. This service is beneficial whether you are fresh starting or you have started, but, looking to expand. Now, let’s get to the business of the day.
Why do Start-up Businesses Fail?
Truth is, while there are factors within the control of the entrepreneur to prevent business failure, there are external factors outside his/her control. This applies more in economies like Nigeria, with low ease of doing business index. In such situations, the entrepreneur needs to go the extra mile to ensure business success. Now, let’s talk about internal factors within the control of the entrepreneur. There are numerous factors in this case, that account for the failure of businesses, but, we will cover the most important and impacting ones, here.
- Managerial Error
- Doing it all yourself
- Preventing Employee Creativity and Innovation
- Wrong mindset
- Liquidity (Running out of Funds)
- Funds Misappropriation and Mismanagement
- Raising Funds at the Late Hour
- Failure to Deliver Real Value
- Lack of flexibility
- Brand – Target Market Connection Failure
- Inaccurate understanding of resident business market
- Miscommunication of brand identity
- Conversion Optimization Failure
- Bad Company Culture
- Rigid policies
- Hiring error
- Wrong employee orientation
- Lack of Effective Business Plan
- Lack of vision
- Ineffective marketing strategies
Conclusion
Starting a company is a great thing to do. But, growing it to success is even greater. While, there are several things the entrepreneur should do to ensure the company success, keeping the motivation that started the company all throughout the development process of the company is probably the most essential element to make sure the company does not fail.
