Why Businesses Fail in the First Year

Thousands of businesses fail in the first year due to avoidable reasons.  Large number survives an additional year before closing their doors.
Low capital enterprise are least hit because recapitalization is relatively easy. However mid-range businesses need to turn a profit to remain in business. The profit usually goes into re-investment, transportation, supplies, staff wages and utility bills.
girl
1. Learn from Others
Any business you wish to start has competitors. To succeed study your competitors business model and learn from them. Study the business format, staff strength, service or product. Look for ways to improve on their technique to stand chance at success.
2. Why do they fail?
There are many reasons businesses fail in the first year. Most become bankrupt or fail due to inexperience.
Others are poor business structure and inadequate knowledge of the industry they operate. Another key pointer is poor planning, un-qualified staff and competition from established brands.
mistake
How to Avoid Business Failure
3. Write a Business Plan
Any investor looking to start business should write a business plan. The plan should cover every aspect of the business. It should have goals, business structure, qualified staff and ideal location. Other considerations are funding, sourcing products and branding.
4. Carry out Feasibility Study
The next step is to carry out feasibility study. Then conduct a comprehensive market research. The market research should focus on customer needs and preferences. Find the product and gain a good market for your products or services.
5. Funding
 Major factor to the liquidation of business is funding. Every businessman grapples with funding. Without adequate funding the business will not grow and would remain stagnant.
You need money to cover the working capital or you are sunk. You could seek bank loans to boost your company or increase inventory. Make sure the loans attract low interest rates and are long termed.
6. Plan for Growth
The mistake new entrepreneurs do is starting the business without a view for growth. Plan for future growth and make adequate provisions.
This could include extra office space, large warehouse, aggressive advertisement and increased production. Other ways is to seek partnership or sell shares to prospective investors.
7. Always Have an Exit Strategy
It is important you plan for growth or have an exist strategy. Along the line you might decide to change business or develop new interests.
An exit strategy would minimize the financial implication and reduce liabilities. An exit strategy should only be implemented early in the business.



0 comments:

Post a Comment

Note: Only a member of this blog may post a comment.