No owner or businessman starts business for failure. But certainly different types of risks are involved. In other words business is another name of risk. You can be successful or failure would be your destination. But all the businesses never fail because they have certain clear goals to achieve. The percentage of failure is higher for small businesses compared to the large businesses. Small business fails due to several factors that are discussed in this article.
You purpose is either wrong or not clear:
Some small businesses usually fail because they are not started with some good objective. Most of the people having money start doing business with the aim of making more money out of it. One should remember that business is not just about profits rather it carries risk as well. Those owners who are not physically strong can’t bear the risk and stop doing the business. So, for a successful business you need to have enough patience, clear objective/goal, passionate about your field of doing business and lastly determined.
Your research was either inadequate or improper:
Those business owners who start their business without making any proper search face the failure soon. Obviously when you enter the market without proper search you can’t stay longer in the competition. The market is very competitive now and in this competitive world only those businesses can survive that make a proper search about the demand of their products, competitors, suppliers, market opportunities, threats etc. And the research needs money but the small owners usually lack with large capital. Shortage of capital ultimately lead to the failure of the business. Continue reading this for more info.
Positioning yourself is as important as having capital to initiate a business. If you have wrongly positioned yourself in the market, the chances of survival are very less. Let’s suppose you are selling the products for old aged persons and you have chosen online mean for placing orders. Here you have positioned yourself wrongly. The reason is that most of the old people don’t use internet and its really dreadful for them to find you. In this way you will attract no sales from them and ultimately you will move towards failure.
Poor financial control:
Small business owners can’t keep eye on all the important factors. They usually don’t hire experts for managing books of accounts. Bookkeeper can manage all the work efficiently and when the books are proper, being an owner you can take good decisions. But what often happen is that their financial control remains so poor and ultimately their wrong decisions lead them towards failure.
You attained success rapidly:
Some businesses that grow so fast are also exposed to failure. Because in the run of making a lot of profits and name, they usually face cash flow problems in the long run. Rapid growth leads to some problems and having a small business they can’t meet the requirements.
In short, small businesses can save themselves from failure if they hire proper bookkeeper or outsource some of their business functions.
Read this post for more info: http://www.brentwoodfcu.org/financial-statements-expect-receive-bookkeeper/