Entrepreneurship is not for everyone. It requires careful steps to be followed and a proper guide to consider before making up a decision to carry on with a business. There are several reasons why small businesses fail; mainly because “a business owner fails to consider what actually implies to starting a business, progressing, and maintaining it,” exclaimed Issa Asad, a Florida businessman and CEO of 2 companies located across South Florida. Mr. Asad’s businesses are Quadrant Holdings and Q Link Wireless.
A business should complete its life cycle through its phases. However, not all businesses complete their life cycles. Here are 6 simple reasons why some businesses fail.
1. Lack of Sufficient and Reserve Capital
Before drawing up a business plan, you should be having sufficient capital that you need to start a business. Take into consideration the funding that you have that will enable you finance your business. Starting a business with insufficient capital may lead to collapse of the whole project. Reserve capital is also equally necessary as the startup capital. You need to be aware that some other recurrent or even non-recurrent costs usually arise as the business continues. Reserve capital is meant to finance such costs whenever you incur them, but if there is no such capital your business is likely to fail.
2. Poor Business Plan
Drawing up a business plan is usually a first activity before anything else. You need to have an adequate business plan that will enable you to focus on the future of the business and the possible challenges that you will face. It also helps you be aware of the financial requirements, marketing strategies, your competition, and the overall strategy of the business. A poor business plan hinders you from focusing on such important factors.
3. Ineffective Marketing Strategy
You can never do business without customers. Customers differ in their taste and preferences. They need to be handled differently and this is the reason why market segmentation and market niche are very significant. A small business may fail if the marketing strategy that is put in place is not working. A good marketing strategy should cover cost involve for the advertisement and promotion of the business. Consider your means and media of advertising and promoting such as online, social media, local search, and among others.
4. Poor Execution
Lack of competence and expertise by the business team will underrate your business. Ensure you have good customer care services and well-trained personnel to handle each issue with sufficient skills and experience.
5. Inappropriate Location
The location of the business is very important and poor choice of the location causes the business not to expand. Location determines the level of competition that you will face as well the customers that you will actually reach.
6. Failing to Cope with New Changes
A business environment is changing frequently with new issues and technologies coming up. For the success of your business, you need to move with times and cope with such changes quickly and effectively.