business failure factors

Ways to get success in business and avoid failure

Business

A business deal is a mutual agreement between two or more parties or entrepreneurs who want to business together. A deal carried out to exchange items of value such as goods, services, information, and money between a seller and a buyer. A successful business deal is considered to be finalized if both buyer and seller parties reach a deal agreement on the terms and conditions.

Business parties must decide to deal essential to protect their interests and rights on the terms and conditions. After signing the deal papers where the terms of their business dealings are written out they conclude the deal.

Research says, 70% to 80% of the business deals do not get success, only 30% are successful. Mostly this impact has been seen on the new small businesses or start-ups that fail within their first year. According to data from the U.S. Bureau of Labor Statistics, approx 20 percent of small businesses fail within their first year. By the end of their fifth year, the failure rate of small businesses is reached to 50%.

What is the theory behind this, not getting the success in a business deal or the deal gets canceled immediately before signing the deal agreement papers and it is concluded with co-parties? It is very difficult to find out the exact reason behind this, but here are some reasons that can be behind this.

1. Lack of Planning

Businesses or business deals fail because of a lack of planning and execution of plans. You should include everything in your business plan, like where will be your business in the next few months or years. Plans for your business must have measurable goals with dates and deadlines such as weekly or monthly to-do lists to get results. Lack of planning can fail your business and deals.

2. Poor Leadership

Poor leadership is one of the reasons for the failure of businesses. Good Leadership is the one who can make the right decisions most of the time according to situations. Poor leadership can damage various aspects of your business like your financial management, operations, and even employee management. The most successful entrepreneurs always improve their leadership skills. According to market needs, they learn to study and do intensive research to reach out to their goals swiftly and in the most profitable manner.

3. Customer Relationship

Lack of trust by the customer is also a factor leading to business failure. Salespersons must know their customers’ business first (what they do and how your products or services will help them in their business) before going for a business meeting. They must maintain discipline such as reaching out at least 10 minutes before meeting time with suitable well-dressed up attire. Tell them about your product & service, how it will help them in their business. If possible, share your happy customer’s feedback and testimonials. It will help you to build a good relationship and thus win customer’s trust as well. You know 7 out of 10 business deals fail due to lack of customer trust in you and your products and services.

4. Poor Financial Management

You must know your business financials; where from money is coming in your business and where it’s going to succeed in your business. A contingency funding plan can create a situation of the financial crisis that is enough to fail any business. Most people start businesses with a dream of making money but they don’t have the skills to manage their cash flow, expenses, taxes, and other financial problems. Poor financial management or accounting practice can lead a business to a path of failure.

5. Premature scaling

Scaling is a good aspect if it is done in the right way at the right time. But if it is not at the right time and you scale your business prematurely, you will face losses in the business. For example; you launched premature products, you quickly hired too many people, or spend too much money on advertising and marketing. Pets.com is one of the examples of this that failed because it tried to grow too fast. For this, they opened nationwide warehouses too soon, and it broke them. Even they couldn’t save the great brand equity that they had built. Within a few months, their stock went down from $11 to $0.19. So, don’t scale your business unless you are ready.

These are only a few reasons for any small and big business failures. I hope it will help you save your small business new startups entrepreneurship to stop going on the path of failure and help you in taking necessary steps and changes which ultimately will lead you to a successful business.

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