What Causes Business Becoming Failed?

Regardless of the type of industry, the short answer is the result of a lack of management skills or lack of sufficient capital or a combination of both. Konsultan Iso Freelance 

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Common Causes of Business Failure


  • Choosing a business that is not too favorable.


Although businesses generate a lot of activity undertaken but the advantage would not suffice for operational costs or what it takes to keep the company running.


  • Inadequate cash reserves.


If the company does not have enough money to get through the first half a year before the business started making money then the prospects of the company will not either. Consider the costs of doing business and personal costs when determining how much money is needed.


  • Failing to understand the market.


Companies must be able to identify who their customers are clearly in one or two sentences. How to achieve it? Is the product or service is seasonal? What will be done outside seasonal? How loyal potential customers at this time? Whether customers continue to come back, or they only buy occasionally? Do take a long time to make closing sales or whether the customer is prompted by impulse purchases?


  • One set price of the product or service.


Companies must clearly define pricing strategies to be the cheapest or the best, if companies try to do to apply both are doomed to fail.


  • Failed to anticipate the exact cashflow.


When the new company started its business, suppliers want payment quickly as providers of raw materials (even COD). If the company sells the products on credit, the time between making a sale and payment could be months. Perform this exact cashflow withdrawal if the company does not want to fail in his business.


  • Failed to anticipate the competition, technological or other changes in the market.


Very dangerous if we assume that what has been done in the past will always be successful. Identify factors that can bring success. For example, if the company is still doing things the same way when there are new demands in the market share in line with the change in time? What innovation made by competitors? The new technology is available? Is open to new ideas ?. Companies that fail to recognize the question eventually become a pawn for competitors.


  • Dependence on a single customer.


Focusing on one big customer can be very profitable but also will make the company concerned if the customer loses could be the beginning of bankruptcy. Therefore, have a small customer in large amounts much more profitable.


  • Business uncontrolled development.


Growth can be predicted far superior surge and leap volume. Hard to believe that too much can ruin your business, but the full text of the book with case studies. After all the business you can spend your money and actually reduce overall profitability. You may incur significant costs in advance to finance the huge inventory to meet new customer demand. Do not take yourself so far that if the economy stumbles, you will not be able to repay your loan. When you catch everything, you usually become less selective about the customers and products, both of which were spent advantage of your company.


  • Handle all aspects and responsibilities of business.


One of the biggest challenges for the entrepreneur is letting go of that should have direct control over all aspects of the business. Remove the belief that only you can make a decision. Concentrate on the most important issues being faced by the company. Give responsibility and authority to persons or competent employees and let them do their responsibilities respectively.


  • Hiring incompetent people.


The common problem faced by the company is about human resources and skills. Along with the advanced enterprise employers may have had a lot of experience to manage and plan the business, but if necessary a change then do not lower the standards just to fill vacancies or to accommodate someone in the company. Determine the skills required for a position and make sure employees have certain skills that are needed.

In conclusion, the attitude of an entrepreneur, the ability to be objective, the will to bring the necessary assistance, and a power-sharing is essential for success. Most entrepreneurs make the mistake that too in love with their products or services, in the end, the lack of criticism that causes many startups and their colleagues to be a failure. Businesses that suffered this fate more often because there are more of a dreamer than a doer.

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