CAUSES OF BUSINESS FAILURE by grace-p

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· @grace-p ·
$3.22
CAUSES OF BUSINESS FAILURE
Running a business is not for the faint-hearted; the project is fundamentally risky. Successful business owners need to be able to mitigate identified business risks while providing products or services to the market at prices that meet customer standards.



![images (10).jpeg](https://cdn.steemitimages.com/DQmRWTUsDT92f7yZAGEgM2xUfirAwKR59Qtb5NMA9wnBPNp/images%20(10).jpeg)
[Image source](https://thetotalentrepreneurs.com/10-causes-business-failure/)

There are so many small businesses in various industries that actually perform well and as the same time continue to make a profit, 20% of small businesses go bankrupt within the first year, 50% of businesses go bankrupt after 5 years, and only 33% of businesses operate for up to 10 years.

In order to protect a new business or organization, it is important to understand what can cause business failure and how to manage or avoid each obstacle altogether. The most common reasons for the failure of small businesses are lack of capital or financing, lack of suitable managers, defective infrastructure or business models, and unsuccessful marketing plans.

One of the main reasons small businesses fail is lack of capital or working capital. In most cases, business owners are well aware of the amount of money needed to maintain day-to-day operations, including the financing of salaries and the payment of fixed and miscellaneous administrative expenses such as rent and utility bills. ; And to ensure timely payments to external suppliers. However, the failed project owners didn't know much about the proceeds from the sale of products or services. This breach leads to lack of funding and can quickly infect small businesses.

The second reason is that business owners lose value when they value products and services. In order to beat the competition in a highly saturated industry, companies may evaluate products or services at significantly lower prices than similar transactions in order to attract new customers. Although this strategy is effective in some cases, the company that eventually closes keeps the price of the product or service at an extremely low level for a long time. When production, marketing, and distribution costs are greater than new sales revenue, small businesses have only one choice, they can only close.

Another special cause of small business failure is lack of business acumen on the part of the management team or the business owner. In some cases, the business owner is the sole senior manager in the business, especially if the business is in its first or second year of operation.

Although the owner has the skills to create and sell valuable products or services, he usually does not have the qualities of a strong manager and has no time to supervise other employees. Without a dedicated management team, business owners are more likely to mismanage certain aspects of the business, whether it is financing, recruitment or marketing.

Business owners often fail to prepare for the marketing needs of their businesses in terms of required capital, scope of potential customers, and accurate success rate predictions. When an organization reduces the total cost of initial marketing activities, it can be difficult to obtain funding from other business units or transfer funds to make up for the shortfall. Since marketing is such an important aspect of any early stage business, it is imperative that companies ensure they have a realistic budget for their current and future marketing needs.

In conclusion, accurate forecasting of target audience and sales volume is critical to the success of marketing activities. Businesses That Take the Time to Create and Run Profitable Campaigns Businesses that don't understand these aspects of health marketing strategies will fail.

Thanks for reading this article.
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vote details (222)
@lanzjoseg ·
Not all people are prepared to be entrepreneurs, and all those who want to be entrepreneurs and do not know how to be one, are destined to fail, so they must know very well what they want in order to achieve it.
👍  
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@chesatochi ·
At least when you face a lot of challenges, you learn so much!
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@benie111 ·
Well done, let me just add this few line.  U see  business failure is an aftermath of lack of proper preparation.  Any business that will  trieve must have a good plan for the work  i. e a good prototype.  U dont just venture into a business because u like it but u engage it because u have an understanding  on how it work.
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@adityajainxds ·
Their can be many reasons for the business failures like less profit margin , bad debts , less customer , employees not efficient etc etc. But miss management is also the main cause of failure we need to do full study before we start a business.
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