Do you perceive there could be relative causes linking all those failed business you know of?
Do you wish to have a categorical understanding of possible causes for the failed Businesses around, just so you too can learn plenty from their mistakes and avoid a debilitating effect for your own business?
Well, here... This article is for you. Let's discuss 5 reasons why businesses fail and how these factors are likely to affect other existing businesses that haven't given them proper thought and consideration.
1... GEOGRAPHICAL POSITIONS
Forbes has estimated that 8 out of every start up businesses are most likely to fail. This is a serious cause for worry. How does geography affect business sustainability? Well, by way of example, what do you think might be the outcome of a stationeries dealer or business dealer who sets up a stationeries enterprise in a location saturated by fashion designers instead of an area teaming with educational activities? Inasmuch as he doesn't have competitors to drag attention with, he is most likely going to experience breakdown because sales wouldn't be propelled but expenses such as hiring rent and personal spending would still be made, all these draining him gradually and bankruptcy becomes the net end when he has gradually burnt up his capital by spending from the insignificant everyday or weekly sales. Now it is easier to see how geographical positioning contributes to business failure.
2... CUSTOMER EXPERIENCE
Clienteles are like flame fueling factors, how you treat them matters to a very great extent because whether you're investing a million Naira into your start up or you're investing millions, without the right customers there are sure to be no effective returns. Stagnation and frozen funds would be your ugly experience. Sadly, some entrepreneurs do not take care to treat their clients accordingly and this has led to the downfall of so many of such business empires and it's likes are still sure to follow through. Sincere owners of failed businesses would tell you when asked of customer relationship that they erred greatly, while ex or past clients of such failed businesses would attest to the fact that customer experience was nothing to write home about. In order to avoid such repetitions, young entrepreneurs who wish to learn from such mistakes take time to give their customers best feelings and satisfaction whenever they come around.
3... MISMANAGEMENT
Mismanagement comes into play in many ways. Firstly it relates to how business funds are managed at any point in time. Mismanagement has crippled so many businesses in Nigeria today and the world at large. Failed businesses have a characteristic of its owners not knowing how to cut clear between business and luxury, they spend excessively on luxury and extreme comfortability with business funds and of course such businesses can never thrive. The second aspect of mismanagement which is also a major mistake most have made is managing business with family. Inasmuch as this gives some level of financial security and guarantee, it has great consequences because relations usually do not take care to work as though they were working for executive companies, so many things are taken for granted in terms of company's policy and work ethics. This in effect, accomadates such vices as laziness, petty theft and embezzlement as well as deplorable working relationships with other employees.
4... FAILURE TO LISTEN
Customer relationships are supposed to enhance business processes, expose owners to business areas needing work or lacking behind as well as help entrepreneurs view their businesses from customers perspective. Unfortunately so many entrepreneurs are guilty of not giving heed to customer complaints. A good customer relationship requires that you listen to customers and make needed adjustments right away. Not all customers complain, some would rather walk away and never return, and when they do, getting them back may require "extreme efforts". So many businesses have been dragged to the mud this way because customers as previously noted are skeletal to business success. Deep attention ought to be given to both subtle and major customer complaints.
5... NO BUSINESS MODEL
A business model is a basic requirement for every intending successful business structure. Any business running without a business plan or business model is standing few miles away to colossal dissolution. A critical observation shows that failed businesses usually lacked or operated without effective business models. Butressing further, the importance of a Business Plan for every business then can never be overemphasized because there's no magic that can be used to run and sustain a business without clearly defined objectives for too long, even if they exist, they would always and always experience technical difficulties in operative methods and unbalanced arrangements. So there's dire need for a Business Model.
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