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Top 20 Reasons for Business Failure!

We youth people love business and want to be a great business person, some of us start our business with a big hope and big courage and do well as well. But business will not success all time. sometimes it may get failure as well. it is not necessary that all new business fails sometimes old and established business may fail as well. so here I am trying to give some ideas about the reason behind failure of business so that you can find your mistakes with two examples.

Last week, when I was enjoying my weekend leave, a friend of mine called me and proposed for the meeting. And I was agreed. It was long time we didn’t meet each other. We had completed our graduation from the same college and were best friends. After the graduation, I started to work in a bank and he started his family business. His father is a reputed businessman and he is handling one of his father’s businesses than.  In these three years we have done few contacts each other but were not in regular touch.

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That day in our meeting after few formalities, he opens the main secret of this plan for meeting. He was in frustration. And want to share me. According to him, he started his family business before 3 years. He was happy enough and had some enthusiasm and some eager to do something. He wanted to pick of this business new height and earn more profit. He has knowledge as well and father gave some ideas as well. But after three years the business is in same stage. There is no loss he is earning profit as well but fails to increase significantly. According to him he is fail in the business. That’s way he is frustrated.

Another example is also here. In the office I have to meet various customers daily. Some of them are regular and well known. So I have been interacting them regularly. On day a customer, who is a reputed businessman, was in frustration. I couldn’t do long interaction with him but according to him the business is not like before and is in down falling.

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After listening the problems, style of their business, marketing strategy and other all aspect of these two I have found that there are some significant reasons for the failure of business. In most of case we don’t know the reasons why we are failing, so that we can not apply corrective action. For the correction of the mistakes we have to know our mistakes. In these above two cases both were not aware about their mistakes and are unable to pick up their business. So I decide to write a blog post so that other businessperson who are doing business and who want to start business shouldn’t be suffer from this problem. I will write about how to pick up the downfall business but at first let’s find your mistakes.

So in most of cases the reason for the failure of business are follows:

  • Lack of self belief: when you are doing your work(business) you have to believe yourself and must do work with confidence. But if you  lack your confidence problem appears there.
  • Overspending: Many new entrepreneurs burn through their startup capital before their cash flow is positive. This often happens because of misconceptions about how business operates. If you’re just starting out, seek out seasoned veterans you can turn to for advice before making big expenditures.
  • Lack of reserve capital: Be prepared for unexpected increases in the costs of things like utilities, materials, and labor. Make sure you keep enough reserve cash to carry you through tough times and seasonal slowdowns.
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  • Poor choice of location: Don’t let a cheap lease tempt you into choosing the wrong location. Consider competition (how many similar businesses are located nearby?) and accessibility (is the area well served by freeways, public transportation, and foot traffic?).
  • Poor cash flow: Cash flow is the life blood of your business, without it you cannot survive. Even the most profitable firms can find  themselves going out of business because their cash is tied up in unpaid invoices.
  • Lack of focus: If your business is trying to be everything to every man, then you're bound to overstretch yourself and your resources. By establishing a niche for your business and focusing on being great at what you do best, you will provide better service and create more satisfied customers. Without focus and achievable goals, many businesses find it hard to set priorities and achieve their full potential.
  • Lack of planning: The most important document that any business has is its business plan, which documents what you intend to achieve during the next 12 months and how you plan to do it. This needs to be communicated to everyone in the business to ensure everyone is working for the same goal.
  • Poor execution: Poor customer service and overall employee incompetence will quickly sink your business. Make sure your employees place a premium on customer service. Develop systems and processes for how tasks should be accomplished, and create internal controls to monitor them.
  • Rapid Growth: Every now and then a business startup grows much faster than it can keep up with. You open a website with a trending product and suddenly you are inundated with orders you are not able to fill. Or perhaps the opposite is true. You are so convinced that your product is going to take the world by storm that you invest heavily and order way too much inventory and now you can’t move it. These are both additional paths to business failure.
  • Following trend: The ability to recognize opportunities and be flexible enough to adapt is crucial to surviving and thriving. Learn how to wear multiple hats, respond nimbly, and develop new areas of expertise. If you apply your old strategy and style always then that may not work with the change in time.
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  • Wrong People: The problem may with the people around you. If your employees are wrong, don’t have knowledge, lazy and don’t following your instruction clearly your business can’t go smoothly.
  • No performance monitoring: So you have a plan, but that's not the end of it. You should constantly review your progress to ensure you're meeting your business goals and that your staffs are meeting their personal potential.
  • Ineffective marketing: Customers can’t do business with you if they don’t know you’re there. It doesn’t cost a lot to advertise and promote your business through online marketing, social media, email, local search, and more.
  • Underestimating the competition: Customer loyalty doesn’t just happen — you have to earn it. Watch your competition and stay one step ahead of them. If you don’t take care of your customers, your competition will.
  • Not understanding your customer: To be successful in business you need to have your finger on the pulse and constantly adapt your business to meet the changing needs of your target market. A businessman needs to understand the needs and requirement of their customer and provide such service. But sometimes businesses fail there.
  • Poor management structure: Leadership has to start at the top of the company, but there is more to the success of a business than the owner. Hiring the right people to delegate responsibility to, who you can trust to carry your business forward, is crucial.
  • Insufficient funding: Without new investment flowing into businesses, many companies have found it difficult to grow – even if demand for their product exists. Bank funding has become increasingly harder to come by in the recent years, but alternative source of finance are available including grants, peer-to-peer lending and funding marketplaces.
  • Not want to take risk: sometimes there may come opportunity while taking risk. But if you afraid to take risk and continue with business in old fashion there may be the chance of being failure.
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Now it's your turn to find some other reasons for business failure! If you want to share them comment below in the comment box! Thank You!


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