Every year thousand of business starts and most of them fail in the first year. According to Department of Trade and Industry, every year almost 400,000 businesses start their progress, but in the first years of their business, one fifth of this total number fail. There are some reasons due to which these businesses fail in their startups. Lack of management and less experience are some of these factors that cause a failure. Are you starting your own business? Beware of these failure factors before you took further steps forward. Have a look at these factors.
Top reasons of business failure in startup:
A business fails in startup due to a number of reasons and every businessman should study the business models of successful and failed business along with the core reasons mentioned below to avoid failures in their businesses.
Less experience – Experience in any field is the key to success. Less experienced people start a business when they assume that they will start earning revenues and this overestimation will cause a failure to start. Lack of experience can be overcomed by consulting online resources and studying business models as well as taking helps from experienced business persons.
Dreams of revenues – Many business men do not consider this fact that in start they have to put an amount into their business for a longer period to make it strong and getting huge profits is farther away than they imagine. Stewart Thornhill, said that some organizations take time to earn revenues unusual than expected. The dream of earning big will underestimate what they are already progressing.
Miss management – You must have management skills to run a successful business. Managing finances, hiring people and then keeping an eye on all these factors will assure success. You can hire accountants, managers and a whole team to promote your business, but meanwhile you have to check what’s going on. If you do not manage these factors carefully, you will miss a lot. People may file a case against you if you do not handle accounting and finance carefully.
No planning- Planning a business before you actually launch it in the market is a major step. If you do not plan anything before you start it then you will fail at the start. You have to make a right plan and learn successful business strategies to lead your business. Without plans, nothing will happen and it will end in a few months of its startup.
Ignoring customers – When you start a business, you have to keep in mind who are your customers and for whom you are starting this business. Investors can be found in large number, but choosing a right audience and customers is very important. If you do not know who will be your customers, you will fail in the start.
Business fails due to these reasons described in the above points. There are a lot of other reasons that affect business in the state. Economy, business planning, business selection and similar features influence your overall business activities and its progress. If you plan to start some business, you should learn and take advice from experienced businessmen.
Jenny Corteza is an expert and give her ideas on starting a business after MBA. She also give tips to avoid legal matters. She helps students in making their long term career.