FIVE REASONS AN ENTREPRENEUR FAIL IN HIS ATTEMPT TO START A BUSINESS.
Most people believe a personal business is an ultimate ambition. They aspire to be free from the many hassles of paid employment and embrace the seemingly limitless opportunities that come with being their own boss.
But after a year or even less as business owners, for a greater majority, the story changes. Sometimes the company folds up entirely while in some cases it goes comatose neither dead nor alive, the pitiable carcass of a shattered dream.
So why do many entrepreneurs fail in their attempt to set up business? Below are a few reasons I think may be responsible.
1. INADEQUATE PLANNING OR PREPARATION
Many aspiring entrepreneurs dive into the game (i.e. business) without planning or thinking it through adequately. As an example – they see a friend, a neighbor or family member open up a boutique, selling clothing items imported from Dubai or some other places. Having heard stories of imaginary profit lines, they make up their minds to go into the same business without any knowledge or experience of importing fabrics.
2. INADEQUATE CAPITAL
One of the critical factors militating against business success is little funding or insufficient money. While this may be as a result of underestimating the financial outlay required to implement the business idea in the first instance, it could be due to the inability of the entrepreneur to raise the required funding. Either way inadequate capital is a recipe for failure.
3. POOR FINANCIAL MANAGEMENT
Poor financial management is a typical factor responsible for the collapse of many businesses. For some entrepreneurs, it is an impossible task to separate their finances from the firm finances, so they dip their fingers in at will. Rather than re-invest the profit that is coming in, they begin to spend and enjoy “the fruits of their labor.” But they eat up their seed capital without even realizing it and pay the ultimate price for the failure of their business.
4. POOR QUALITY PRODUCT OR SERVICE
Nothing sets up a business for failure as fast as the inability to offer the customers what they want i.e. good quality product or service. A restaurant owner that aspire to maximize profit by scaling the quality of its food or service will soon realize that you can only fool the customer once or twice before they take their money elsewhere.
5. NOT ADAPTING TO CHANGE
It is said that change is the only thing that is constant in life. While some individuals are quick to adapt to change in technology and other ways of doing business, some are slow to pick up. Equipment and tools change and while some embrace the new way of doing things others remain stuck with their old ideas. An example is a music studio in my neighborhood that refused to upgrade to the new digital mode of musical recording. It has remained moribund, while new digital studios have sprung up in the same vicinity and enjoying better patronage.
Refusal to embrace new ways of doing business can hurt an entrepreneur and align the business for failure.
So to fool proof your business from failure kindly take note of the points listed above.