Why Most Businesses Fail? In the world of businesses, being a small fish is not an option, even if you are running a local, small business.
According to the U.S. Bureau of labor statistics, roughly 20 in 100 small businesses go bankrupt and fail within the FIRST YEAR.
The more that time frame grows, the more the percentage of businesses failing increases, until after a decade, where just a third of the businesses have survived.
And here arises a question … Why does that really happen, why do MOST businesses fail?
Well, the truth is that business failure (and success) is a complex thing which depends on a variety of factors,
Ultimately it boils down to 3 main aspects that have been faulted and/or ignored, so let’s have a look!
Poor planning is without a doubt the most common reason why beginner entrepreneurs FAIL in the early stages of their company.
Many people simply have a good idea that gives them a strong emotional/mental response that makes them truly believe in that idea, leading to them starting a business before making a plan.
Running a business on the move is NOT how you should approach this as a beginner businessman.
Instead, make a concrete plan that has everything down, pen on paper!
Oftentimes, businesses fail due to a lack of funding or income stream, as well as poor overall financial management.
As a business owner, you must ensure that you know EXACTLY how much money you need to keep all internal operations going on a day to day basis.
You need to know the total amount of money needed across all operations and then divide them into sub statistics about things like payrolls, rent, utilities, etc.
Financial management is key, and in the very beginning of a business, that must be even more clear.
In the early stages of your business journey, you will likely have to take many roles, including the role of a manager.
However, as your company grows, management will be delegated and your sharpest set of skills will shine in the process of growing the company.
Nevertheless, though that happens naturally, you must aim to choose the right managers, as inadequate management can RUIN your business.
Most businesses fail because of poor planning, management & financial faults, so make sure to learn those ropes before jumping into the business world!