Why do Small Businesses Fail?
There are so many small businesses starting up in India now. However, it is a sad fact that most of these businesses do not flourish due to several reasons. Several such new and small businesses had to close down due to improper planning and strategy. Some of the main reasons why small businesses fail are as follows.
Lack of a business plan: This is among the most common reasons why some small businesses have to shut down very soon. After you have decided to start a business, there are so many things that you have to plan. You must make a proper business plan based on careful analysis of the market.
Running out of money before you start making profits: This is another major reason why businesses are often forced to close down. Lack of operating funds is a huge problem that is faced by small ventures. Quit being over optimistic. Plan for some extra cash, you will mostly need it.
Lack of strategic planning: you have to remember that businesses can face competition from several areas. The owner of the business must have a clear cut idea of the market, its direction and the profitable opportunities available in the market.
Lack of financial analysis: Small businesses should be careful not to do too many things. You are only in the beginning of your business and you have to do things step by step.
Lack of expertise: this is also a major reason why some businesses don’t flourish. It is true that no individual can have expertise in all areas. Business however needs expertise in Marketing, Selling, Finance, Purchasing, Production, Hiring, Motivating and Managing. So, you might need to look for outside help.
Incorrect business location: This is also an important choice to make. Location is a very important aspect. Several factors like customer convenience, Subsidies, Taxation, Manpower Availability, Cost of Raw Material, Customer Traffic, Ease of Parking, Availability of Electricity, Water and Transportation are all dependent on where your business location is.
Business expansion without putting systems in place: Expansion of business is definitely a requirement. However, small businesses have to make sure they have all their systems in place before they make a venture into business expansion.
No professional website: For a business to succeed today, it is very important to have a professional website. A website has now become one of the most important requirements of customer acquisition. A carefully designed website can in fact reduce your workload by automating several tasks.
Now, these are some of the common mistakes that small businesses make. But, do not fret. Most of the big businesses today have flourished from small beginnings. It is not an impossible task, but make sure you tread your steps carefully.