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Nobody likes to think about failure. People conduct businesses with the wish to succeed. The idea of failure is deleted from the entrepreneurs mind. However, talent, ambition and desire are not usually enough in order to guarantee success in a world that becomes more complex and competitive. Regardless if we like it or not, a significant proportion of new businesses nowadays will not reach to celebrate their fifth year of activity. By taking a look at the top 10 reasons for business failure, these can help you in becoming alert in front of a few common obstacles.
Starting With A Bad Idea. Although trusting the initial business idea is an important attribute for many entrepreneurs, sometimes it isn`t enough. It sometimes happens that a ‘unique’ idea is actually not unique at all or the market is already too busy or the demand in the certain domain is smaller than you anticipated.
A Faulty Planning. Your initial business plan represents your model for succeeding. Failing in following your plan, failing in the execution or more usually, failing in searching and asking for professional advice are common ways of starting a faulty business. In-time planning is vital for every stage of your business and should represent a permanent activity.
Lack Of Capital. In the first years of activity, insufficient capital is a main reason why businesses fail. An adequate capital should consider a variety of costs for a long period of time. Some people prefer to start a new business from zero when there are businesses for sale available on the market.
Lack Of Market Knowledge. You need to know your clients and what they need and not what you think they want. This is one of the essential requirements for the survivor of a business. Failing in maintaining contact with your clients due to the lack of a concrete marketing plan or failing in being up-to-date with their changing wishes and demands represents a guaranteed road towards disaster.
Managerial Crisis. When the amount of money you spend is higher than the one that is earned, that`s a problem. Still a lot of businesses ignore this problem and are busy with every day\’s crisis. Even profitable companies may have severe problems thanks to the faulty management of money.
You Do Everything. There isn`t a more important thing for a business than efficient management. A boss who`s always worried for small issues often doesn`t have the time to fix real problems.
Inadequate Control. It is essential to control your business at every level and to have the suitable controlling mechanisms, so every potential problem is solved before it`s too late.
Inadequate Protection. Bad things happen to every good business on a daily basis. It doesn`t matter if it`s about damage caused by fire or inundation, protection against risk can help you in the future.
Failing In Changing. Failing in understanding the changes that occur in your business market is a problem. Everything that causes changes needs to be monitored and plans need to be adjusted permanently in order to face the rapid pace in which the business world changes.
Too Fast Development. A fast development is dangerous than a slow increasing. Too fast development comes with the risk of losing control on your business resources.
About the Author
Alex Filip is a reputable marketing and business development professional with over 12 years of experience counseling top companies and brands or Fortune 500 organizations. He is now a publisher small business administration subjects for many business magazines.