13 Reasons most businesses fail at the inception
-Ojo Oluwasegun
One of the great mysteries of entrepreneurship is why businesses fail. Some people start one successful business after another while others fail to succeed.
Below are 13 common reasons for business failure at the inception
#1 Lack of planning – Businesses fail because of the lack of short-term and long-term planning. Your plan should include where your business will be in the next few months to the next few years. Include measurable goals and results.
#2Lack of capital – It can lead to the inability to attract investors. Lack of capital is an alarming sign. It shows that a business might not be able to pay its bills, loan, and other financial commitments. Lack of capital makes it difficult to grow the business and it may jeopardise day-to-day operations.
#3 Poor location – Poor location is a disadvantage that might be too much to overcome.
#4 Inadequate inventory management – Too little inventory will hurt your sales. Too much inventory will hurt your profitability.
#5 Poor financial management – Use a professional accounting software like Freshbooks. Keep records of all financial records and always make decisions based on the information you get from real data. Know where you stand all the time.
#6 Lack of focus – Without focus, your business will lose it the competitive edge. It is impossible to have a broad strategy on a startup budget. What makes startups succeed is their ability to quickly pivot, and the lack of focus leads to the inability to make the necessary adjustments.
#7 Personal use of business funds – Your business is not your personal bank account.
#8 Overexpansion – It is easy to make the mistake of expanding your business into too many verticals. Before you enter new markets make sure you maximise your existing market.
#9 Wrong partner – It’s no secret that it is easier to succeed in business with the right partners. The wrong business partner will, at the very least hurt, or, at worst, destroy your company.
#10How will you sell and market your product/service – Marketing and selling your service could be one of your biggest business challenges. A sales and marketing plan is a must.
#11 Lack of product/service clear definition– It’s key to have a clear definition of the services you offer. Without a clear definition, you will be unable to effectively develop, market, and sell your services.
#12 Leadership failure – Businesses fail because of poor leadership. The leadership must be able to make the right decisions most of the time. From financial management to employee management, leadership failures will trickle down to every aspect of your business. The most successful entrepreneurs learn, study, and reach out to mentors to improve their leadership skills.
#13 Ignoring customer needs – Every business will tell you that the customer is #1, but only a small percentage acts that way. Businesses that fail lose touch with their customers. Keep an eye on the trending values of your customers. Find out if they still love your products.
