Entrepreneurialism
Businesses Failure ? 10 Reasons Why It Happens And What To Do To Avoid It
No one wants their business to fail, but there are 10 main reasons why it may. Discover what these are and what you can do to avoid these problems.
1. Insufficient Working Capital
It is crucial for businesses to have a financial cushion especially in the start-up phase. Ever changing markets can take many unexpected turns which make financial reserves a must. Ensure that you are realistic in how long it will be your turnover starts and how much money you need to survive until your company becomes profitable.
2. Lack of a Solid and Visionary Business Plan
The markets are living, breathing environments and are constantly growing and changing shape; for this reason, your business plan must include some kind of realistic look into the future and how the company can adapt to the needs of this ever changing market.
3. Inappropriate Strategic Planning
The company must create goals that are realistic but precise. The business plan should be consulted regularly so that the employees are clear on what their responsibilities are and the direction that the company is taking.
4. Inability to Market Products and/or Services Effectively
If a company is unable to penetrate its market, steadily increase awareness, and effectively market their product then all the other strengths of the company are useless. Make sure that your company is market driven ? that what you are selling is what your marketing is looking to buy. Review and change often.
5. Overwhelming Competition
Competition can be brutal; it is crucial that a company have a strong understanding of their market and be able to develop a niche that gives you a competitive advantage. Don?t try to go head to head with the market leaders ? do what Virgin and Easyjet did and find a niche that is crying out to be filled. Virgin found it with cheap Atlantic flights, with all in one mortgages etc. Easyjet found their niche in no frills cheap flights to lesser known airports.
6. Failure to Control Costs
It is important to develop a system of accounting for costs embedded in company operations; then, management can control costs effectively and provide incentives to employees to increase production and efficiency. Look at all possible places that costs are accruing. Costs of unsold inventory have bought many a large company to their knees.
7. Inadequate Financial Records
Current and accurate financial accounts are vital. Cash flow needs to be maximized and debts owed minimized. Positive cash flow is crucial to keeping any business afloat.
8. Poor Customer Relations
Customers keep a business viable; therefore, it is crucial to keep them happy to ensure repeated business and good referrals to other buyers. Ensure that all your staff, your web site, your call centers etc are welcoming and easy to understand for all your customers.
9. Inability to Maintain Quality Control
Quality of product or service is something that must remain consistently high. Inconsistencies in quality have a tendency to spread and eat away at companies slowly but surely. Ensure that your business brand is consistently visible and that the business quality standards are understood and practiced by all your staff.
10. Lack of Proper Internal Communication
Management must share a healthy avenue of communication with employees so that common goals are clearly defined and constructive criticism is useful. Your staff represent your business so look after them and keep them aware of what is happening and what you want in the future.
Nobody wants to fail in their business so be aware of the pitfalls and good luck in your business.
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? Copyright 2006 Biz Guru Services Ltd
Lee Lister, writes as The Biz Guru, for a number of web sites including her http://www.clikks.com where she sells her informational products. With over 20 year?s management and business consultancy experience with businesses large and small as well as being a serial entrepreneur, she now helps others set up, develop and market their businesses.
If you would like a professionally designed business plan with success written all over it ? then contact us at http://www.bizguru.us
This article may be freely distributed if this resource box stays attached.
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Lee Lister
Tags: business strategy, business planning, branding, business failure, strategic planning, entrepreneur, Similar articles
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