Are you asking why small businesses fail? To start with, one-fifth of businesses fail within a year of starting and there are many reasons this happens. Some of the reasons why small businesses fail include the fact that owners start them for the wrong reasons, poor business management, lack of adequate capital, poor location, lack of or poor planning, and overexpansion as well as lack of or little media presence.
1. Starting off for wrong reasons: Starting a business for the sake of it is uncommon by many start businesses for the wrong reasons, which makes them to finally end tragically. Among the many reasons people have is wanting to make a lot of money, desire for freedom whereby owners think they will have more free time for family, being your own boss or to stop being idle.
Among the many people who succeed in doing businesses, several do it because they have passion in what they are doing. For instance, their product would fulfill a real need in the marketplace.
2. Lack of drive, motivation, e.t.c.: Another reason a business is likely to do well after kicking off is having a drive, determination, patience and a positive attitude. While one-fifth of business startups fail within a year of starting, each and every one of them will face one or more challenges they must overcome in order to succeed.
Determination, patience and a positive attitude play a huge role in making a business to work instead of quitting or changing to another business,
We all learn from mistakes and use those lessons to succeed the next time around. Studies show that success in business comes as a result of people “building on earlier failures” and therefore always take failures as a learning process.
Never want to neglect your business. If there is need to learn some skills, and then give it a short. For instance, you can sign up to learn some skills or even outsource the skills.
Besides this, ensure to thrive on independence, be skilled in taking charge when the business needs an intelligent solution, and value interactions with others.
3. Poor management: Poor management is the number one reason for business failure. Unfortunately, most owners lack the needed business and management expertise in order to run businesses.
For instance, areas that many people lack skills in include finance, purchasing, selling, production, and hiring and managing of employees.
However, that should not be the end. It is possible to educate yourself on skills that you are lacking or even choose to hire skilled employees or even to outsource work to competent professionals. Make sure you are able to know how to study, control, organize and plan all activities of the business operations.
You need to also create a work climate that will encourage productivity. Besides, make sure to hire competent people, train them and then delegate responsibilities faithfully.
4. Lack of adequate capital: Lack of adequate capital and income flow is a common reason for failure of many businesses today. Many operators also do not know how much money they need to run the operation or to keep it running.
It is essential to ensure you have this in order to stop having unrealistic expectations about the business in relation to incoming revenues from sales.
5. Poor location: Choosing the right location is a critical consideration for many people. Factors to consider when selecting location include where the customers are; traffic, accessibility, parking and lighting; location of competitors; condition and safety of building; local incentive programs for start-up in different areas; and history, community flavor and receptiveness to businesses in your field.
6. Lack of planning: A good businessman starts to think about why small businesses fail right before starting. That will help you to plan adequately. Ensure to do market analysis, estimate workforce needs, determine potential problems and solutions, analyze your competition, plan your advertising and promotion and marketing, prepare for budgeting and manage for company growth.