MAJOR CAUSES OF BUSINESS FAILURE

 

MAJOR CAUSES OF BUSINESS FAILURE.

Hello reader, today we’re going to study some of the main causes of business failure. I have witnessed the closure of several businesses and I made an observation and came up with these causes which I saw led to their failure. To avoid failure, understanding these major causes is crucial . Some of the main causes are elaborated below: 

. Ineffective planning.

 Lack of a strategy in carrying out business operations is a major cause of business failure. Simply working without a plan mostly for entrepreneurs is fatal. Most operations won’t be done in accordance, money will be used inappropriately, much money will be wasted on unproductive activities as well as the main thing being incurring loses. Hence you as a business person should implement plans and strategies before venturing into any business. Plans have always proven effective in achieving success hence it is important to plan.

. Mismanagement of funds is another cause of business failure. If you as an entrepreneur mismanage finds mostly your capital, be guaranteed of failing in your business. If you are unable to manage them yourself, you may opt to hire a financial expert or advisor. They are able to account for every penny circulating within your business and this has proven effective as less money will be wasted or lost. Due to efficiency and effectiveness in your financial management, funds will be used appropriately in the routine running of your business hence creating a surety of continued success for your business and you as an entrepreneur. Thus, management of funds plays a vital role in eradicating business failure.

. Poor communication is another major cause of business failure.

This may be in terms of language barrier or poor communication skills by you as an employer or an entrepreneur to your employees or customers. Poor communication is a major hindrance in disseminating relevant business information. If this information is distorted or misinterpreted, there will be confusion and many business operations won’t be performed as expected at all. Hence the entrepreneur will end up incurring losses in the long run. Therefore for the success of the entrepreneur and the business, effective communication is key.

. In addition to this, incompetency too has been a huge cause of business failure.

 Working with people who lack in professional skills, knowledge and abilities guarantees you that most of the business operations will be performed inappropriately. Hence even the end product obtained will be of low quality and quantity therefore this will be a huge blow to the entrepreneur as he/she will loose more and more customers in the long run. Thus the entrepreneur ends up incurring losses and failure in business. To eradicate this cause, the entrepreneur should try as much as possible to be effective in hiring new employees in his/her business. Through this, he/she will succeed eventually.

. Poor market research is also a major cause of business failure.

Venturing in any business you find without effectively researching of what it deals with only leads you to failure. Market research is crucial in eradicating business failure. Before venturing in any business, an entrepreneur should take into consideration carrying out research of the business, what it deals with, is it marketable, what kind of government policies are involved, in it can generate as well as having the know how of what kind and level of skills, knowledge and expertise are needed. Having all these information guarantees you of continued success of you as an entrepreneur as well as the success of your business.

. Inability to problem solve has been a major cause too of business failure . Lack of this skill only leads to business failure. Issues arising in your daily business operations calls for effective implementation of problem solving skills. Hence as an entrepreneur, you should purpose to adopting and learning this quality as it majorly helps in eradicating business failure. Ability to solve business related problems and challenges provides a guarantee of success in your business as an entrepreneur.

In a nut nutshell, we all as business men and women should take a close look at all these causes and many other major causes of business failure and try to find the relevant solutions to them. Through this efforts , we’ll all eradicate business failure and embrace success in the running of our daily business operations.

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