See Top Reasons Why Many New Businesses Die & Solutions

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Jegz
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Location: Naija
 

November 19th, 2010, 11:40 am

It all started well, your business was cruising so fast, within weeks, it was already the talk of the town, and then suddenly, it died! What happened?
Business-Failure.jpg
It's often held that more than half of new businesses fail during the first year, this isn't necessarily true. But the reality is that still many businesses are closing down every year.

However, not all of these businesses need to fail. With the right planning, funding and flexibility, businesses have a better chance of succeeding. We'll go through some of the biggest mistakes that start-ups can make and figure out how to improve your chances of success.

Not Investigating the Market

So you've always wanted to open a real estate agency, and you finally have the means to do so, but your desire to open the agency blinds you to the fact that we're in a down housing market and the area where you want to work is already saturated with agencies, making it very difficult to break in. This is a mistake that will cause you to fail from the beginning. You have to find an opening or unmet need within a market and then fill it rather than try and force your product or service in. It's a lot easier to satisfy a need rather than create one and convince people that they want to spend money on it.

Business Plan Problems

A solid and realistic business plan is the basis of a successful business. In the plan, you will outline realistic goals for your business, how your business can meet those goals and possible problems and solutions. The plan will figure out if there's a need for the business through research and surveys; it will figure out the costs and inputs needed for the business; and it will outline strategies and time lines that should be implemented and met.

Once you have the plan, you must follow it. If you start doubling your spending or changing your strategies, you are asking for failure. Unless you have found that your BP is overwhelmingly inaccurate, stick with it. If it is inaccurate, it's best to find out what's wrong with it, fix it and follow a new plan rather than change how you do business based on quick observations. The more mistakes you make, the more expensive your business will become and the greater the chance of failure.

Too Little Financing

If you have started a company and things aren't working out, you've got little capital and a struggling business; you're really not in a good position to ask for another loan. Be realistic at the beginning, and start with enough money that will last you to the point where you're business is up and running, and cash is actually flowing in. Trying to stretch your finances at the beginning may mean that your business never gets off the ground, and you'll still have a lot of cash to repay.

Bad Location, Internet Presence and Marketing

A bad location is self-explanatory if your business relies on location for foot traffic. Just as dangerous, however, is internet presence. These days, your location on the internet and your social media presence can be just as important as your company's physical presence in a shopping district. Online presence will let people know that they can give you their business, so if the need is already there, the availability and visibility of your business is the next important step.

This is similar to marketing. Not only must you make sure that marketing reaches people, it must reach the right people. So make sure the type of marketing lines up with the audience you want to reach. Big billboards may not be the way to go for an internet company, just as online ads may not be the way to go for a heavy-construction business. If the need is already established, make sure you're reaching the audience who needs your product or service.

Rigidity

Once you've done the planning, established your business and gained a customer base, don't get complacent. The need that you're fulfilling may not always be there, monitor the market and know when you may need to alter your business plan. Being on top of key trends will allow you lots of time to adjust your strategy so that you can remain successful. One must only look at the music industry or Blockbuster video to know that successful industries can undergo huge changes.

Expanding Too Fast
:?
Now that your business is established and successful, it's time to expand, but you must treat the expansion like you're starting all over again. If you're expanding the reach of your business, make sure that you understand the areas and markets into which you'll now be reaching. If you're expanding the scope and focus of your business, make sure you understand your new products, service and intended consumer as much as you do with your current successful business. When a business expands too fast and doesn't take the same care with research, strategy and planning, the financial drain of the failing business(es) can sink the whole enterprise.

The Bottom Line
Though the rate of business failure is around one-third, it doesn't mean that you have to fail. Through planning and flexibility you can avoid many of the pitfalls of a new business and be a part of the 25% that make it to 15 years. :hi: [/size][/color]
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"Many of us are not living our dreams simply because we are busy living our fears" - Les Brown
J0E
Site Admin
Location: Texas
 

November 19th, 2010, 11:47 am

Jegz wrote:It's a lot easier to satisfy a need rather than create one and convince people that they want to spend money on it.

Beautiful! :clap: :hi:
Humility is the first true attribute of a great man...
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Eon
Senior
Location: Maryland
 

November 20th, 2010, 7:44 am

this is d truth. some people kill their young business by making premature withdrawings, capital they should have added to the working capital, but they think its profit. its a wrong act, and i will categorize it under point no. 3- too little financing! great job, guys! :good:
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kurrupt
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Location: Ajegunle
 

November 26th, 2010, 6:44 pm

Eon wrote:this is d truth. some people kill their young business by making premature withdrawings, capital they should have added to the working capital, but they think its profit. its a wrong act, and i will categorize it under point no. 3- too little financing! great job, guys! :good:
:good: yes
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Bestnaija
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July 9th, 2011, 6:37 am

Cypher wrote:
Jegz wrote:It's a lot easier to satisfy a need rather than create one and convince people that they want to spend money on it.

Beautiful! :clap: :hi:
i concur! :w':
Welcome to Bestnaija.ng Community...
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Ijakadi
Junior
 

March 3rd, 2012, 6:33 pm

very true reasons. business requires dedication and sacrifice especially at the onset.
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Boma
Senior
Location: Montreal
 

April 28th, 2012, 9:46 pm

:clap: So many times the problem comes with lack of adequate planning. And the believe of wanting to turn a thousand to a million overnight which in many case is not possible. Adequate Planning with long term goals makes a business successful and survive odds. Good write up here!
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eMade
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Location: Abuja
 

March 28th, 2013, 10:21 am

While these factors are controllable, there are also some economic factors that murder both old and new businesses. But I think being flexible and well updated with latest trends in the dynamic world can help here.

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Lexybam
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December 11th, 2016, 4:38 pm

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eMade
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Location: Abuja
 

November 30th, 2019, 10:46 am

Herdas wrote:Hello, guys! I think that some IT support is really important for businesses these days
True. We are in digital age.
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LikaMalika
Newbie
 

December 5th, 2019, 10:09 pm

Oh yes, I totally agree with you! You conveyed your idea well. I think the business is dying when they do not take into account the time frame in which it exists. Now the world is a virtual life! Business is primarily a virtual money https://btcbit.net/sell. Cryptocurrency is something that will not die in the near future.
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Marinad
Junior
 

January 1st, 2020, 2:57 pm

Your advice helped me a lot! thank you for such a useful article
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makavelli25
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April 22nd, 2020, 12:33 pm

Wow nice piece
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eMade
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April 22nd, 2020, 1:19 pm

makavelli25 wrote:Wow nice piece
Very true. There are lots of great content on Bestnaija.ng .
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makavelli25
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April 22nd, 2020, 2:52 pm

eMade wrote:
makavelli25 wrote:Wow nice piece
Very true. There are lots of great content on Bestnaija.ng .
I agree with you on that eMade
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Jegz
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Location: Naija
 

May 4th, 2020, 4:47 pm

:clap: :clap:
"Many of us are not living our dreams simply because we are busy living our fears" - Les Brown
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green20
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Location: Rivers state
 

May 18th, 2020, 6:18 pm

you are very right on your article especially the finance aspect
"We must use time wisely and forever realize that the time is always ripe to do right."
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TitanKenneth
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Location: New York
 

December 19th, 2020, 12:35 pm

:clap: nothing far from the truth
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Maui
Junior
 

April 5th, 2021, 1:48 am

Thanks for this great knowledge. :clap:
SunGem
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Location: Benue State
 

April 5th, 2021, 4:08 am

:clap:
https://shopneolife.com/jemimmahonoja
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Gloria50
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Location: Enugu, Nigeria
 

May 6th, 2021, 12:17 pm

Really
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