In the world of today, being an entrepreneur has become very watered. Entrepreneurship is gradually becoming a market place where everybody goes to. This explains why a fellow will create a WhatsApp group where he/she posts some unsolicited messages and then call himself a CEO or entrepreneur and when the whole gig wears out, he will say his business crumbled.
According to The National Bureau of Economic Research, the rate of applications for new businesses is higher than ever. While going into business is advisable and key to financial freedom, diving into a business without fundamental knowledge of how it works is like gambling. Little wonder the failure rate of small business remains high: 20% fail after 2 years, 50% after 5 years, and 70% go under after 10 years.
Though the reasons for the failure of most businesses are not far-fetched, experts have revealed the following as the topmost reasons.
1. Experts are of the view that the major reason for the failure of businesses is failure to assess the market. It’s not enough to create a product, you must carry out a feasibility study of the market. Research have shown that 42% of businesses go under because there is no market for their product.
The truth is that if you have a product and take it to where it’s not needed, failure of that business is inevitable. Going to market fish in a community where fish is not eaten by the majority of the population is already a setback.
While you create a product, you must do a proper assessment to ascertain where the product is appreciated. You must understand that business is all about providing a solution to a need. Do they want the product? Why do they want it? You must have a target audience if not, the business will crumble even before you start. This is why it is recommended that before launching a business, you should do a feasibility study of the market.
2. Failure to build a successful team leads to untimely death of business.
If you fail to build a successful team, the reality is that when that process breaks down, the business will suffer or collapse. This explains why successful business owners separate their business from their personal life so that even if they go down, the business will continue.
As Ananth succinctly puts it, if you’re starting a company, “you have to build a team with a purpose in mind,” and they all must “help you get to that purpose.”
Steve Jobs also explained why you need a successful team when he said: “You’ve got to be a really good talent scout because no matter how smart you are, you need a team of great people. You’ve got to figure out how to size people up fairly quickly, make decisions without knowing people too well and hire them and see how you do, and refine your intuition . . . because you need great people around you.”
3. Apparently, failure to create a distinct product leads to early dwindling of business
If everybody around you is selling white beans and you choose to join the queue to sell white beans, it may be difficult to sail through the hurdles of business. Reality is that failure to create a product that is differentiated in the market is a set out for failure.
Why do I need to do what the next person to me is already doing in the same hood? There are instances of many companies that folded a few years after launching because they didn’t have a distinct product.
The topmost USP of a business is when it has a product that is differentiated from what is obtainable around the business. You must have a product that is distinct. Your product could be different in terms of texture, quality, quantity, packaging, etc.
4. According to experts, failure to finance your business contribute to the untimely death of the business.
It is money that makes the world go round and businesses are no exception. It costs money to run a business, and if you don’t have it, you’ll fail.
No business can thrive without adequate funding. Even while you’re not making sales or profits, you need money to keep the business afloat. While good products and loyal customers will—eventually—allow your business to thrive, in the startup phase, you’ll need adequate funding and a sharp eye on all expenses.
5. Finally, failure to get the tech right, is another reason why businesses fail. Today’s world revolve around tech. In reality, if you separate tech from businesses, the world will crash. And that is because virtually all sectors are going digital.
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