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Reasons of Failure of Business
Reasons of Failure of Business
• Failure to understand your market, your
customers, and your customers’ buying habits.
Two easy questions: Who are your customers?
And why do they spend their money with
you? You should be able to clearly answer in
one or two sentences. Customers are the only
people that put money in your account.
Without them, you will not survive.
Reasons of Failure of Business
• Choosing a business that isn’t very profitable.
Even though you generate lots of activity, the
profits never materialize to the extent
necessary to sustain an on-going company. We
all learned the dot-com (obvious) lesson that
to survive, you must have positive cash flow. It
takes more than a good idea and passion to
stay in business.
Reasons of Failure of Business
• Failure to understand and communicate what
you are selling. You must clearly define your
value proposition. What do you do that can
help or benefit me? Once you understand it,
ask yourself if you are communicating it
effectively. Does your market connect with
what you are saying?
Reasons of Failure of Business
• Inadequate financing. Cash is king. If you don’t
have enough cash to carry you through the
sales cycles and downward trends, your
prospects for success are not good. When
businesses go looking for lenders to provide
that cash, they quickly find that funding
sources are finicky and difficult to please.
Reasons of Failure of Business
• Failure to anticipate or react to competition,
technology, or other changes in the marketplace.
It is dangerous to assume that what you have
done in the past will always work. Challenge the
factors that led to your success. Do you still do
things the same way despite new market
demands and changing times? What is your
competition doing differently? What new
technology is available? Those who fail to do this
end up obsolete.
Reasons of Failure of Business
• Overdependence on a single customer. Pay
attention to your revenue sources. If you have
a customer that is providing a majority of your
income, ask yourself what would happen if
they left or went out of business. Where
would you be? Whenever you have one
customer so big that losing them would mean
closing up shop, watch out. Having a large
base of small customers is a safer beat.
Reasons of Failure of Business
• Failure to define your product/service
offering. Trying to do everything for everyone
is a sure road to failure. Spreading yourself too
thin diminishes quality. The market pays
excellent rewards for excellent results.
Excellent results come from doing what you
do and doing it well over and over again.
Reasons of Failure of Business
• Keeping your house in order. Slow and steady
wins every time. It’s hard to believe that too
much business can destroy you. To serve your
customers well you have to focus on quality,
delivery, follow-thru, and follow-up. How do
you feel when your suppliers say they are
“slammed” all the time? -
Reasons of Failure of Business
• Poor management. Management of a business
encompasses a number of activities: planning,
organizing, controlling, directing and communicating.
The cardinal rule of small business management is to
know exactly where you stand at all times.
• No planning. If you don’t know where you are going,
you will never get there. No clear picture of success
will lead to status quo or worse. To grow and be
successful you have to actively work on your business.
As the saying goes, failing to plan is planning to fail. -

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Reasons of failure of business

  • 1. Reasons of Failure of Business
  • 2. Reasons of Failure of Business • Failure to understand your market, your customers, and your customers’ buying habits. Two easy questions: Who are your customers? And why do they spend their money with you? You should be able to clearly answer in one or two sentences. Customers are the only people that put money in your account. Without them, you will not survive.
  • 3. Reasons of Failure of Business • Choosing a business that isn’t very profitable. Even though you generate lots of activity, the profits never materialize to the extent necessary to sustain an on-going company. We all learned the dot-com (obvious) lesson that to survive, you must have positive cash flow. It takes more than a good idea and passion to stay in business.
  • 4. Reasons of Failure of Business • Failure to understand and communicate what you are selling. You must clearly define your value proposition. What do you do that can help or benefit me? Once you understand it, ask yourself if you are communicating it effectively. Does your market connect with what you are saying?
  • 5. Reasons of Failure of Business • Inadequate financing. Cash is king. If you don’t have enough cash to carry you through the sales cycles and downward trends, your prospects for success are not good. When businesses go looking for lenders to provide that cash, they quickly find that funding sources are finicky and difficult to please.
  • 6. Reasons of Failure of Business • Failure to anticipate or react to competition, technology, or other changes in the marketplace. It is dangerous to assume that what you have done in the past will always work. Challenge the factors that led to your success. Do you still do things the same way despite new market demands and changing times? What is your competition doing differently? What new technology is available? Those who fail to do this end up obsolete.
  • 7. Reasons of Failure of Business • Overdependence on a single customer. Pay attention to your revenue sources. If you have a customer that is providing a majority of your income, ask yourself what would happen if they left or went out of business. Where would you be? Whenever you have one customer so big that losing them would mean closing up shop, watch out. Having a large base of small customers is a safer beat.
  • 8. Reasons of Failure of Business • Failure to define your product/service offering. Trying to do everything for everyone is a sure road to failure. Spreading yourself too thin diminishes quality. The market pays excellent rewards for excellent results. Excellent results come from doing what you do and doing it well over and over again.
  • 9. Reasons of Failure of Business • Keeping your house in order. Slow and steady wins every time. It’s hard to believe that too much business can destroy you. To serve your customers well you have to focus on quality, delivery, follow-thru, and follow-up. How do you feel when your suppliers say they are “slammed” all the time? -
  • 10. Reasons of Failure of Business • Poor management. Management of a business encompasses a number of activities: planning, organizing, controlling, directing and communicating. The cardinal rule of small business management is to know exactly where you stand at all times. • No planning. If you don’t know where you are going, you will never get there. No clear picture of success will lead to status quo or worse. To grow and be successful you have to actively work on your business. As the saying goes, failing to plan is planning to fail. -