Results have shown that start-up businesses normally fail after just 3 years of kick-starting. That is a major problem, and business owners should seek solutions to overcome this challenge.
In this article, we will show you the reasons why start-ups fail, how to ensure that your business succeeds and stands strong in the current market space.
1) Starting With Too Much Debt
Sometimes, it’s necessary to go into debt to finance the launch or purchase of your business. Few aspiring business owners have the cash on hand to pay out-of-pocket, so loans are a reasonable choice to help finance a new venture.
But if you don’t prioritize repaying your debt and making timely payments, it becomes harder and harder to grow operations. Small business owners across all industries report that adding the weight of debt makes it even more difficult to reach profit.
To avoid starting with so much debt or so little capital, many aspiring small business owners are looking towards alternative funding methods. There are so many funding options in Nigeria for start-ups and they include:
- TEF Entrepreneurship Program,
- African Development Foundation,
- The Government Enterprise And Empowerment Programme (GEEP) and so man more
Learn more about your funding options by contacting us Here to get our book on Funding Your Business Idea (Its speaks to all you need to do to make your business/idea attractive to investors, it also curated over 100 links to grant-awarding organisations globally
2) Ineffective Business Planning
Small businesses often overlook the importance of effective business planning before opening their doors. A sound business plan should include, at a minimum:
- A clear description of the business
- Current and future employee and management needs
- Opportunities and threats within the broader market
- Capital needs, including projected cash flow and various budgets
- Marketing initiatives
- Competitor analysis
Business owners who fail to address the needs of the business through a well-laid-out plan before operations begin are setting up their companies for serious challenges. Similarly, a business that does not regularly review an initial business plan—or one that is not prepared to adapt to changes in the market or industry—meets potentially insurmountable obstacles throughout its lifetime.
To avoid pitfalls associated with business plans, entrepreneurs should have a solid understanding of their industry and competition before starting a company. A company’s specific business model and infrastructure should be established long before products or services are offered to customers, and potential revenue streams should be realistically projected well in advance. Creating and maintaining a business plan is key to running a successful company for the long term.
Get a professionally built business plan in 30 days or less by contacting us at https://bit.ly/TSSWP
3) Inadequate Management
Another common reason small businesses fail is a lack of business acumen on the part of the management team or business owner. In some instances, a business owner is the only senior-level person within a company, especially when a business is in its first year or two of operation.
While the owner may have the skills necessary to create and sell a viable product or service, they often lack the attributes of a strong manager and don’t have the time to successfully oversee other employees. Without a dedicated management team, a business owner has greater potential to mismanage certain aspects of the business, whether it be finances, hiring, or marketing.
Smart business owners outsource the activities they do not perform well or have little time to successfully carry through. A strong management team is one of the first additions a small business needs to continue operations well into the future. It is important for business owners to feel comfortable with the level of understanding each manager has regarding the business’ operations, current and future employees, and products or services.
4) Failure to Adapt
It’s no secret that small businesses suffered during the 2020 COVID-19 pandemic. There were, and continue to be, small businesses that failed through little fault of their own. However, many businesses succeeded by smartly pivoting their business model. New or adjusted business models kept many businesses running during times of no or limited in-person occupancy. Restaurants moving to deliveries or gyms adopting digital fitness classes ensured money came in. During the coronavirus pandemic, businesses that couldn’t pivot quickly or refused to adapt to the ‘new normal’ suffered. But many businesses with flexible models and management that opted for innovative thinking managed to make it through.
Change is a constant, so it can be dangerous to grow complacent. Even if things are going well with your business at the moment, being unprepared or unwilling to adjust can be dangerous. Regularly looking to improve your processes, tweak your business model, and innovate your product or services all help you prepare for future success – and protect against future change.
The CEO of Treskaro Group (Osayi Tres Omokaro) once said that “you don’t wait for things, you go for them, even waiters serve while waiting”.
Curated by Team-CECD
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