Let’s face it, this is a scary time to start a business. In fact, a recent Gallup poll found that 87% of Americans don’t have the guts to start their own business. That’s almost nine out of ten people who lack the gumption to become an entrepreneur.
Doing business is not easy, especially if the competition is very high. Many companies failed due to many reasons, some don’t know and won’t accept their failures. However, if a business owner will be able to see and acknowledge the problem, it will be easier to look for a better solution to the problem. They say, if a problem arises, think of a solution. Most business owners failed to acknowledge the problem, so they end up shutting down the business. Sad but it is the reality. Fortunately, if the business owner is a broad thinker, he will definitely see the reason why the company will fail.
If you are one of those entrepreneurs who has taken the plunge and are running your own show, good for you! You have a lot of companies as there were 582,000 new businesses started in 2021 alone (according to the SBA).
Like any risky endeavor, some of those businesses will succeed and some will fail. In fact, according to the Small Business Administration around half of all new establishments survive five years or more and about one-third survive 10 years or more.
So what’s the difference between those small businesses that make it and those that don’t?
Here are the Common Reasons Why Business Startup Failed:
Reason 1: Lack of Feasibility Study
Doing a feasibility study will help you determine if your business will survive. See the location and observe the nature of the locals there, if there are tourists see the peak of their visit. Also check the market standing,, what kind of people are living there- determine the social class so you will be able to see if your target market is in the community. If you will do the business over the internet, study your competitors’ way of marketing and doing business. Learn from their mistakes and improve the things you see lacking.
Reason 2: No Right Equipment
Equipment is essential such as computers, paper shredders, copiers like multifunctional printers and copying machines, and internet connection. If any of these is lacking, your business will be most likely to go down. You can use this equipment in aiding the marketing, reports, business analysis, etc.
In order to avoid the risk of business failure, make sure that you have ready access to the latest quality equipment and supplies. Though it might be tempting to buy cheaper products from less reputable suppliers, this can create a feeling of mistrust with your customers and in the long run cost you more.
Another alternative if you don’t have the right equipment like shredders, you can contact a shredding company like Squab Shredding to do the work for you and dispose of those sensitive paper documents. Research companies that offer document destruction services in your area.
When hiring, be sure to find out what type of paper shredder the company uses so you know your documents are destroyed adequately. All paper shredders are not created equal, so ask questions before you hire a company to handle your business document destruction needs.
Reason 3: Lack of knowledge and skills
When starting a business, it is important that you have a good reason to get into business. Many people start businesses because they want to make money or they want to be their own boss, these may be good reasons but they are not compelling enough to keep you going when the going gets tough. To be successful in starting a business, you must start your business for the right reason.
If you do not plan properly before starting your business, then you will likely fail because poor planning can lead to inadequate financial resources, lack of proper market research and analysis, ineffective marketing strategy and tactics, lack of good location among other things. If you don’t plan properly before starting your business then the chances of failure are very high.
Lack of knowledge and skills is another major reason why some businesses fail. It takes time to acquire the skills and knowledge needed in running a successful startup. Knowledge and skills in areas such as marketing, management, finance, and operations are necessary for startup success.
Reason 4: Wrong Location and Timing
The location is significant, and if you are targeting the high-end market and putting your business in the common market, then your sales won’t be picking up. Timing is also essential, if there is a recession or the so-called ghost month, make your business some other time. See if there is an economic crisis in your preferred area.
Reason 5: Too Little Capital
The capital can be regarding money or assets; you may be lacking the capital needed for a business to run. Purchase the right assets and manage your capital well. Prioritize the things you need to purchase that will help you grow your business. Once you are established, you can buy other things such as office buildings and warehouses.
Reason 6: Unable to Reach Target Market
Today, most businesses are targeting internet marketing so they will reach their target, but most companies are still blind to see the opportunities they can get from this technique. You can utilise the internet to make your business visible to your target market although traditional marketing still works, internet marketing is way cheaper and has real-time results.
So, those are the main reasons why businesses fail. The question is, what will you do to prevent it? After all, most people aim to be successful in their business, so it’s important that they know these things. Working these tips into your business will allow you to be more likely to succeed, and that’s what everyone wants!
Business has a lot of challenges but once you see these problems and be able to acknowledge it- you can quickly make things right and work for your company. It is important to be open-minded when you are doing business.