Nobody wishes to start a business and expect such business to fail. Setting up a business enterprise requires thorough planning and financing.
Setting up a business is a risk on its own. However, sometimes some businesses fail because the entrepreneur is caught unaware or fails to put some checks and balances in place.
According to recent research online, In Europe, USA precisely, out of 28 million small businesses, 50% survive. In Africa—Nigeria to be precise—only 20% of small and medium-scale enterprises thrive to survive.
Business fails for different reasons. The common reasons are highlighted below:
1. Inadequate Planning
Planning has been one of the major causes of business failure in Nigeria. Most businessmen and women plan for short-term goals without planning for long-term goals. Your plan should be where your business will be in the next few years or decades.
If you fail to plan properly for your business at the beginning, then you are planning to fail big time in the business process.
It’s not just about creating or having a plan, it’s about executing the plan—which is planning.
2. Turning a Blind Eye to Customers’ Needs
Most businesses will tell you that the customer is number one, but only a few act in that way.
The reason why you are in business is to provide maximum satisfaction to your customers, so you need to know the needs of your customer, hear their reviews, and ask if they want new features or after-sales services, etc.
The best way to go is to hear negative reviews from customers and try to improve where necessary.
Remember, you are not in business to sell what you want, you are in business to sell what customers want.
3. Not Learning from Failures
At the early stage of your business, it is not a crime to fail. In fact, you may fail countless times. But your success is not in failing; your success will be determined by how many times you rise when you failed.
Most entrepreneurs are oblivious about their mistakes and the mistakes of others. If you want your business to grow, get a diary, write out your mistakes and the mistakes you made, and use it as a guide so as not to repeat them.
4. Poor Management makes business fail
Everybody wants to be a CEO whether there is a standard or not. To manage a business properly, you must not work without a standard or a system in place.
5. Inadequate Capital
This has been one of the major reasons why businesses fail. Inadequate capital makes it difficult for businesses to grow and may cause more harm than good if you are unable to pay loans, bills, etc.
It is always advisable not to start a business with a loan. Make sure you have enough savings before going into business—you can borrow loans thereafter.
You won’t have to collect big loans once you have savings. Your savings will surely save you from getting higher loans.
6. Bad Location makes business fails
Your location will determine if you will make more sales or loss.
When starting a business, location is a very important thing to take note of. A bad location will make it impossible for you to reach your customers.
If you are planning to sell proteins like frozen turkeys and chicken, your location needs to be in a market side or busy area. If you are planning to sell books, your location needs to be close to schools or areas where students usually walk by.
7. Poor Financial Management
Your business must keep proper records and all financial books must be used and properly kept. A business without proper accounting is like going to school without having a report card—you won’t know your stand.
Maintaining proper books of account helps you know where you are—whether you are making profit or not. It also helps you know places where you need to make necessary amendments or corrections, and you’ll be able to make proper decisions for your business growth.
8. Focus & Determination
Business is full of ups and downs, profit and loss. You must be focused and determined in everything you do because sometimes you may get what you don’t expect, and all you have to do is remain focused and move on.
9. Making Use of Business Money for Personal Use
Business is business. You must treat your business like a business. Your business account is not your personal account where you can withdraw money anyhow and anytime for personal use.
Money for business should be used strictly for business—nothing more.
10. Wrong Business Partner
It is easy to succeed in business if you have the right partner. At the same time, it is easy to fail in business if you have the wrong partner.
Before you choose your business team, make proper findings and research about whom you are choosing in business with you. It can be a business partnership; it can also be an employee.
The wrong partner can destroy your company easily. Also, choosing the right partner can easily make you succeed in business.
11. Carry Customers Along in Product Development
Most businesses fail because they build products based on assumptions. The product/services you are offering is for customers and not you.
If you want to be successful in your business, build your product alongside your customers.
12. Market It the Possible Way
You may have the best product, but if you don’t do proper marketing—especially digital marketing—you may be left out.
For people to know what you are doing, you need to advertise your product online day-in, day-out.
A business without advertisement is like winking at a girl in the dark, only you knows what you are doing, no one else.
13. No Proper Market Research
Most businesses go into business without making research on what they plan to do in business.
Customers want advancement, development, and new ways of doing things.
You need to go out, carry out surveys, check out the weaknesses of other people’s products/services within the same line of business, do necessary amendments while doing yours, and create/offer your product/service in a dynamic way.
14. Write Down Your Goals, Keep Improving
You need to write down your long-term goals and check them every day.
Once you do this, you can see what you have achieved, what you are yet to achieve, things to improve on, what you need to keep doing, and what you need to stop doing.
15. Don’t Look at Your Business Idea, Take Action
Some business persons fail to succeed because they look at their business ideas only without taking action.
Most times, they are afraid of failing. It’s not about you failing—it’s about rising every time you fall.
Having a good business idea is not enough, you need to take action and stop complaining.
Entrepreneurs don’t talk much or complain—they take action. Be an action taker, not an idea talker.
16. Believe in Yourself
Whatever will be, will be—if you want it to be. Setting up a successful business is like a miracle. You need to believe in yourself no matter the challenges.
You can make it happen once you believe in yourself.
17. Reach Out to Mentors, Connect & Network
Sometimes you can’t do it alone. Learn from people that have made it in your area of specialization. Network and make connections so that you can grow.
Having successful people around you helps you hear and know what it takes to be an entrepreneur.
18. Minimize Risk
In business, risk-taking is inevitable. There are two types of risk: certainty risk and uncertainty risk. Risk is unavoidable. Minimize the risks you are taking and ensure you take certainty risk—that is, risk that has the tendency of bringing positive results.
19. Give It Time
Some people fail in business because they expect huge returns in the first year of business. Fine, the main reason why you are in business is to maximize profit, but it is worthy to know that Rome wasn’t built in a day.
It takes time for people to know you and trust you in business. Everything you do in business will take longer than expected. Therefore, chill, relax, and grow your business gradually.
20. Prepare to Fail, Ready to Stand
This may sound funny. Like I said earlier, it is never a crime to fail. You can fail many times, but giving up is not an option. Sometimes you may need to fail to get it right properly. Expect failure at any stage of your business—but don’t accommodate it.
21. Focus & Listen to Your Customer
Your customers are the main reason why you are in business. Always listen to them to improve on your products and services. Don’t ignore them.
The customers can fire you anytime by spending their money somewhere else. Know their likes and dislikes, and improve on negative feedback.
If you want to succeed in business, you must know how to deal with the unexpected when it happens. Some businesses fail while some succeed. To succeed in business doesn’t mean you won’t fail—it means you want to be a winner, and winners never quit no matter the volume of the problem.