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Why Businesses Fail

ArticleID 79  
Writer Titus Kamau
Category Personal Article



Running a business at the top level is as hard as starting it. Entrepreneur’s joy comes after starting a business and seeing it off to great success ensuring maximum profits and benefits. However, different kinds of challenges arise after the business has started making the business to incur loses and even shutdown. A business which is high on loses and likely to close is said to have failed.


Poor leadership and management skills by business officials have been the biggest reason why businesses fail. Many business executives don’t want to lead by example. They lead from behind instead of being in the forefront. In a business venture, employees are there to be led and guided to achieve their full potential and maximize profits. Poor decisions made by leaders may cost the business a fortune. They sometimes don’t want to involve their subordinate staff in brainstorming for ideas and end up making their own decisions which can be wrong. Also there could be inexperienced leaders in the business.


A business which was started and is running under an insufficient amount of capital is more likely to fail. Costs for operating a business vary from time to time and from one business to another. At times a business finds itself in need of more funds to cater for purchasing and supplying of goods and services. Lack of the required sum of money for special needs may render the business functionless and if it goes on for a long time the business will fail.


Many businesses fail because of poor planning. This can be because some entrepreneurs started these businesses for the wrong reasons like becoming rich quickly. Other businesses were started without a business plan; therefore entrepreneurs cannot determine their present situation and the long term goals of the business. They fail to know how much money they invested in the business, how much they need and how much they can make if the business becomes successful. Here a cash flow forecast helps a lot.


The location of a business dictates its success. A business should be centrally located where there is a lot of traffic. The place should be very accessible and secure. An accessible location will attract many customers to your business. Poorly located business will attract few or no customers at all. Customers are also more concerned with their security.


Lack of uniqueness in business will lead to failure. Unique businesses attract new customers and stand out from the rest in terms of competition. Customers prefer unique businesses where they can get unique goods and services.


Poor economic times can lead to a declining market. Any business that does not sell its goods and services is subject to failure. This is because of lack of income, thus no profits. Every entrepreneur started a business in view of getting profits and no business can operate without it. Many businesses fail because of poor marketing strategies. Posters, brochures, business cards and Newspaper Ads have been used over years. Nowadays it is important to have a website for your business for online marketing. With a website, customers can contact the business and make inquiries and online orders anytime anywhere. You can also interact with customers on Facebook, Twitter and through email. The most important thing is to stay in touch with customers and ensure customer satisfaction.


Why Businesses Fail, Entrepreneur, Entrepreneurship
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