Top 10 Reasons Why Companies Fail
by James Walsh
Many determined company owners have done just that and have turned successful enough to change the statistics! The latest figures indicate that 66% of the businesses survive the first 2 years.
10 Top Reasons Why Companies Fail
Given herein are the reasons that lead to business failure.
1. Why was the Company Started?
Many people start a company and it promptly fails.
This prompt failure can be accounted for the fact that the company was started for the wrong reasons. Profit motive determined the starting of the business enterprise. Faulty business motives lay the wrong foundation.
Money is important, but it is the passion for the job that determines the success of a venture.
2. Good Location
Having the business enterprise in a good location is important whether the company solicits public customers or supplies good elsewhere.
Improper location results in the failure of even well-managed businesses. Failure of this aspect is evident, when clients begin soliciting the services of better-located competitors.
3. Innovative Products & Services
New products and services must be constantly introduced at regular and predetermined intervals. This helps retain the existing customers and garners new clients.
Business failure is definite when instead of coming up with developmental ideas, entrepreneurs fail to even maintain the existing standards.
4. Marketing Techniques
Mere offer of good products and services does not ensure constant customers. Good marketing practices dictate that customers have to be approached.
Disregard of good marketing techniques is evident when:
* Customers who come up with specific requirements are repeatedly turned back with their needs unmet.
* When the entrepreneur relegates advertising products to the background.
* Or when the company owner falsely believes that their qualitative products or services would generate customers effortlessly.
5. Business Techniques
Many people are good at the services they provide, or the products they sell are the best; yet, their business fails. This is due to the fact that they are not good at managing the other aspects of the company.
This failure occurs when:
* The employer fails to induct the right employees
* When the company owner lacks the basic skills of maintaining good public relations
Some companies are successful initially, but fail later when business techniques are not sharpened in tandem with business growth. When the business develops, the businessman should change from a technical expert to a good manager versatile at public relations.
6. Good Book Keeping Practices
A system has to be developed that reflects all the business transactions clearly. Entrepreneurs love the practical side of the business, but neglectfully postpone the paper work.
Mounting paper work hampers business success when the company owner starts procrastinating.
7. Proper Maintenance of Accounts
Proper accounting methods have to be evolved and the cash flow should be clearly calculated. Good accounting practices also mean that sufficient funds are diverted to all the requisite fields of business. And, if the company owner is not aware of finance management, that job has to be entrusted to trained personnel.
8. Adherence to the Business Plan
Successful businesses begin, develop and rest on proper planning. Company owners who lack vision of the future are big failures. Planning pertains to detailing out the steps required to achieve a target.
9. Personal Qualities
Personal qualities also determine business success.
* Businesses are built and developed on trust.
* Persistence to continue when things go wrong and patience to wait till the lean phases are over are important.
* A positive attitude is necessary for the business survival. This quality has to be developed if people lack them.
10. A Website
E-commerce is gaining prominence. Markets are turning global. The current e-market leader of Western Europe is the UK. Even in the year 2004, value of sales made over the internet stood at � 71.1 billion. But after 2010, Italy and Spain will experience tremendous rate of growth.
Companies fail when they do not have a website.
Business is always risky. But, with the identification and management of the causative factors of failure, business risk can be managed.
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