Why Small Businesses Fail?

It is no secret that many small enterprise do not succeed in achieving their business goal. It is also a fact that the challenges faced by the enterprises, irrespective of the size, are more or less the same. Therefore it is the way the owners deal those challenges decide the fate of the enterprise.

The reasons for the failure of small business are many, a few of the common one is as below

1) Lack of Vision

Most of the successful enterprise has a well define a vision to keep the business on track. Driving enterprise without it is similar to driving the vehicle without a map. It serves as a road map to see where we are today I relationship to where we want to be tomorrow. Thus business with a clear vision and mission helps are generally successful. It helps you keep a check on your direction and helps to avoid waste of your resources.

2) Lack of Business Acumen

The desired skill is essential for success in any field; business is no exception. Many small enterprise owners lack the business acumen or expertise. Thus they fail in driving it successfully. There should be a regular up-gradation of the skill & knowledge of the owners to keep the pace of changing environment.

3) Insufficient Funds

Fund management is vital for business survival. Failure to manage cash flow has been the primary reason for many business failures. At times the enterprise is forced to take on expensive loans to survive, which gets it into a vicious cycle of high expense, low profit. It is crucial to ascertain how much money is required to run the business and plan accordingly.

4) Lack of Business Plan

Small enterprise often overlooks the importance of business planning before taking off their project.

The business plan is a strategy which details business description, target market, marketing plan, financial projections, capital need, cash flow details, current and future employee and management needs, SWOT and completion analysis etc.

The business plan provides the strategies you need to move from where you are today to where you want to be. A business that does not regularly review the business plan to adapt the changes in market or industry finds it difficult to move on smoothly in its growth journey.

It is always advisable to craft the business plan carefully and use it guide for the progress.

5) Lack of Marketing Initiatives

Much small business lack in their marketing strategy/plan. It is imperative to define a marketing plan identifying the program for reaching the target audience. The enterprise should have a marketing budget and a way to calculate the ROI for each marketing initiatives.

In the current world of the enterprise must use the full potential of digital marketing as their marketing strategy.

6) Unwillingness to Delegate

Many of the owners think that "No one can do it better than me "or "No one can be trusted to take his responsibility". Such observation may be correct in some cases; however, such thought in most of the cases become the worst enemy for the progress of the business. The owner should learn to delegate some of his work. This would help him to concentrate on the activities that contribute to the growth of the company. It is also true that no employee would be ready to take responsibility, but it the owner's job to empower their employee and make them responsible and accountable.

7) Underestimating the Competition

Many a time, the small enterprise has a very sound business model with sufficient funds and management skills; still, they struggle to be successful. They face challenge form their competition. At times the completion is underestimated or not estimated, even leading to failure. To increase the chance of success, it is always advisable to periodic review the competitive analysis with competitors strength and weakness and strategies to improve competitive advantage

If you as an owner are facing similar symptoms with your enterprises, it is high time to review and act. In case you need any help to make a move in this regard and learn more, please get in touch.

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