Are you wondering why many people open up businesses and yet, most of them fail? Most times, new entrepreneurs do not understand how difficult it is to survive after they have started their businesses, and many just abandon the whole idea halfway through thinking that it will be easy.
The fact that most individuals who start companies neglect some very basic rules contributes to their eventual failure. Business like any other task requires dedication as Gunung Capital Kelvin Fu advises. It is important to be consistent and committed to whatever you are doing whether it is your job or starting up a business.
A business may take off but the number of people owning businesses is not significant enough for them to share an equal amount of wealth. This is because 90% of all start-up companies fail within the first 18 months, making business failure one of the most common failures in life.
If you’re planning on starting up your own company, here are 3 key reasons why a business fails.
1. Lack of planning
Many business owners just think that their idea would be the reason why they will succeed but this is not the case.
In fact, many have thought that all they have to do is just start a company and wait for it to bloom on its own without putting much effort into it, and this might lead them to failure as soon as possible because a lot of things play a role in starting up a company, from coming up with an idea or strategy to actually opening doors for business.
Without any proper plan at hand, what will happen once you open your doors? Businesses fail mainly due to lack of planning as there are no long-term plans made by the owners before setting off which leads to a lot of wasted effort and time. The outcome will be either selling your business or going into debt. Still, if you are contemplating whether you are about to sell your business or planning your exit strategy, be sure you have a solid understanding of its value. In the end, if you fail to plan, you are planning to fail.
2. Lack of funds
Starting up any business needs proper funding as this is the only way that will make it possible for you to find the best methods that can help turn your business into a success, and having sufficient capital also ensures that there is enough supply for your products and services which means better chances of earning money in return.
If you’re thinking about starting up a business but you don’t have much funding, those thoughts should be left where they are because not many invest in new businesses without giving them proper attention as to how they would be able to accrue returns from what they have put out as an investment.
This takes us back to point number 1 on lack of planning as it is crucial to have a plan on how you will be able to finance your business in order to keep it afloat.
3. Poor location
A lot of small businesses also fail because their location is not that great, and this could be due to many reasons like the fact that their area might not be popular for businesses or the customers they’re targeting are not located near them, making it difficult for them to attract attention let alone sales.
Other than that, other reasons for poor locations are high rent prices, competition from big companies, and more. If you’re situated in an unfavorable place, it would be best to move your business elsewhere lest it fails within the first few months.
These are the three key main reasons why many businesses fail and there are of course other factors that you should also try to avoid as much as possible. Some of these factors include poor location, lack of planning, and of course, not having a good business idea in the first place.
If you’re sure that your business would survive even at its lowest peak, then it’s all up to you to apply the best strategies and keep on trying if things don’t work out fine for quite some time.