Why Businesses Fail
33 % of new businesses phase out within the first year. When you're starting a new business, the last thing you want to focus on is failure; but if you address the common reasons for failure up front, you'll be much less likely to fall victim to them. Here are a few reasons why businesses fail: Lack of planning: 46% of start-ups fail because of their shortcomings in planning. Hence developing a concrete plan before you actually start your business, will eventually help guide your company in a positive direction and can save you from going down an expensive road that leads to nowhere. Insufficient Capital: 52% of small businesses begin operations and the owners continue to work from home due to insufficient funding. Business owners underestimate the money needed and are forced to shut down even before they’ve had a chance to succeed. It’s important to ascertain not only the costs of starting, but the costs of staying in business as well. Lack of Managerial Experience: Entrepreneurs may excel at certain tasks, but they lack expertise on various topics. 30% of the business owners lack expertise in terms of Management. They must take care while organising, planning and controlling all the activities of business operations. Promoters need to think strategically, make their vision a reality, and envision new possibilities in the future. It’s always advisable to get experts help on board who can help run certain aspects of the business. Keeping Clients Happy: Entrepreneurs believe that if they build an interesting website or provide a unique product, customers will beat a path to their door. This may be enough to gain the first few customers, but with time it becomes an expensive task to attract and bring on board new customers. A lot of businesses don’t give any thought to the cost of customer acquisition (CAC) and life time value of a customer (LTV). Entrepreneurs eventually realise
that their business model may not work because their business’s CAC will be greater than LTV. Market Problems: A major reason why companies fail is that they underestimate the players and the size of the market they’re competing in. Conducting an in-depth market analysis before actually starting up will help stay ahead of the competition. It’s also possible that an entrepreneur comes up with an idea that he feels could solve a lot of problems, but if he doesn’t do his research on the market size, he could learn that the need for his
product
isn’t enough to sustain his business. For more detail visit our visit - http://www.themisconsult.com/content/why-businesses-fail