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What causes a business to fail?

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QsId 99
Asked by Tuwaze Mawazo
Category Personal Question
Title What causes a business to fail?
 

Why do some entrepreneurs fail while others succeed?

Tags business failure, entrepreneur, buniness success
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Answers

MemberAnswerDate
Isaac Thuku

Business success and business failure

Business success is characterized by expansion of your business without other more investments from your personal cash box into your business.It is also characterized by increased profits.

Business failure is where a business or company ceases operations due to a continued encounter of losses.

Causes of business failure

Poor financial management

A business is not just a matter of human resource management.Most entrepreneurs who are unable to find what their business need,at most do not succeed .Making uncalculated risks is also part of poor financial management.Others include withdrawing money from your business for your personal use.

Bad customer relations

This involves talking recklessly to your clients and offering commodities which aren't in demand on bulk.This discourages customers from coming back to buy your product which leads to business failure.

Inadequate capital

Capital is the total amount of money brought into the business by the proprietor.Inadequate capital leads to inability to attract customers since a low capital business may not be able to afford advertising costs.

Poor business location

Locating your business where there is no space for expansion,locating a business far away from the raw materials,locating your business where there is little market may lead to termination of your business.This is due to increased costs of transportation or even perishability of your products,suppose your products are perishable.

Lacking a business plan

Lacking a business plan may lead to poor decision-making, poor business management which may eventually lead to closure of your business.

Inadequate technology

Lack of right technology for your business will lead to high labor costs, slowed production of goods and services which may not go as by consumer's demand.This leads to business failure.

Why some entrepreneurs succeed

They check on demand patterns

Always offer what your people want to buy not what you want to sell.The market is very important.Go and place your business where the market is concentrated.

They have a good business plan

A good business plan is an essential tool in ensuring your business venture is successful and profitable.A business plan is also required by some financiers when you need a loan.A business plan may entail your business structure,the way of operation of your business,business alternatives and the rate of capital inflow and outflow from the business.

They promote their products

This reminds the consumer about the existence of the product you offer and the advantages of using your goods over other substitute goods.Advertising,a way of product promotion, increases the sales which in turn increases the profits.

They avoid unhealthy competition

A stiff competition may make it hard for your business to succeed.You will need either to move your business or improve the quality of your products.That way, you would have avoided the stiff competition which is unhealthy for your business.

They are near to their raw materials

This cuts on transportation costs.If you are a retailer, wholesalers may offer the transport facilities.However, this will cut on the loss of goods in transit like burglary e.t.c

They check on security

Every aspect of your business needs security.Employ a quality staff.If you sell food, always make sure that your product is always available - food security.This is because consumers may not have a specific time of demanding your product.

They manage their business well

An apt recording system will help in this.Record each and every transaction.This will help you to decide if your business is making a profit or a loss.If it is making a loss, cut on costs.

They are aware of government policies

Be aware of government policies, license your business, pay taxes so that your business is not terminated by the government.The government may also offer tenders which is a business opportunity.

Now you have a great idea on how to make your business succeed That's all you need to know about business success and business failure.

2017-04-24

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