Why do businesses fail?

[ovwilliams]

This is a great post. I think businesses seem to fail in the first year because of poor panning. I know this is a generalization but I have found that people get so excited with a new idea that they fail to plan marketing, sales, management, workforce and etc. They jump in with both feet and sink to the bottom.

[Driven_Magazine]

We believe that novice entrepreneurs dont take into consideration, if their idea is marketable. We all have had that idea that we believe will work, but honestly the world see's it different. Be real with yourself, and study the trends!

[Bdaily]

I would say businesses fail because the owner is a technician not a owner. A mechanic could open his own shop and serve a certain amount of customers with great care (10). He would be a technician. A business owner starts his own business and hires 5 mechanics to serve more customers (10*5=50).

Getting caught up in the "front office" work of a business is what kills owners. If you want to be successful, hire someone to do the work and watch the financials.

[hippie_wantab]

the business owner starts with certain expectations, when the business doesn't meet those expectations and the owner isin't willing to either change their definition of success or change themselves, find their faults and make changes

[WButler]

ppl.blastoffnetwork.com/wbutler

[CKrecicki]

People don't use accounting systems the correct way. They get to carried away with ideas for making the money, and not sticking close to financial statistics.

[Louis]

Beside everything passion is the best because you won't get tied only the field will get tied.

[sajis18@yahoo.com]

Why do businesses fail? Ironically, the main reason is that the business owners didn't take the time to learn why most businesses fail before they ventured into starting a new business. Here are common pitfalls that can lead to business failure. Your mission? Understand them and avoid them!

Small businesses fail at an alarming rate in the U.S. Every day, hundreds of small businesses close their doors because they weren't able to effectively blend the many elements needed for success.

Unfortunately, many of these businesses could have succeeded if they had only known how to avoid the top six pitfalls that commonly plague struggling companies.

1. Lack of planning

2. Inadequate funding

3. Bad marketing

5. Staffing imbalances

6. Ineffective sales performance.............................

[kashish86]

@ACMAir - I agree management fails.

I have worked with 3 web design companies before starting my own. ( Will Start by end of november )

There is no specific reason why business fails but as per my knowledge mostly business fails due to lack of planning, lack of funds and lack of interest.

Most business owner start business with great passion but soon within a year there passion is gone either lack of funds ( no sales ) or lack of planning.

[melittle]

As per my experience I also want to share my ideas on why most businesses fail?
In my opinion mostly business fail because of no introduction of advanced information systems and also lees motivation and no learning attitude. Technology is also important as a part of this issue and also poor planning causes a business to fail. All businessmen should try to overcome these barriers.

[ar887]

do not market or manage their money well

[melittle]

I agree with you. It is true that poor marketing and management skills leads towards business failure. All should focus on these two issues in real meanings.

[khushi]

25 Top Reasons Why Businesses Fail

Starting a business, whether it be from home, or in an office somewhere, may sound like the perfect solution to your working blues, but unless you’re committed to making it work, you can find yourself on the losing end real quick.

Businesses fail for many reasons. It is important to understand those reasons so that you can decide whether or not you are up to the challenge. Those reasons include:

1. Fear—Whether it is the fear of success or the fear of failure, fear of stepping out of one’s comfort zone to try something new, or the fear of trial and error. Fear can freeze a person dead in his or her tracks.

2. Failure to plan.

3. Lack of funding.

4. Procrastination

5. Excuses. Especially making an excuse for any and everything that causes you to stumble.

6. Doing busy work. Keeping busy doing unimportant tasks.

7. Inability to delegate tasks. Sometimes delegation saves your business. If you have a weakness, hire someone who could turn that weakness into a strength. Use others to complete simple time consuming tasks so that you can do other things.

8. Failure to Research.

9. Failure to Market.

10. An inconsistent advertising campaign. It is better to have a ton of small ads on a regular basis than one large ad on a monthly or yearly basis.

11. Your pricing is too low, thus resulting in a negative cash flow.

12. Bad accounting practices.

13. Choosing quantity over quality. Cutting corners is bad business sense.

14. Dishonesty.

15. Not fixing mistakes.

16. Not completing tasks in a timely manner.

17. Inability to follow-up. You should always follow-up by email, snail mail, or phone.

18. Not listening to client or customer. Talking too much.

19. Spending too little. It takes money to make money.

20. Spending too much. Purchasing items when you don’t need them, upgrading when the older version will do, letting suppliers talk you into things you cannot afford, and not budgeting.

21. Being unprepared for fluctuations in business. Boom times when demands are high as well as slow times when you are struggling to get by. (Put money away during boom times to prepare for slow times.)

22. Lack of diversification. If you only offer one product or service, losing it can destroy your business.

23. Reputation. While a good reputation will gain you tons of business, a bad reputation could close your business.

24. Cockiness. There is nothing wrong with feeling great about your products, services, or accomplishments. Just don’t let pride and arrogance destroy your customer relations.

25. Discouragement. Giving in to your feelings of discouragement, when things do not work out the way you planned or succeed as fast as you thought. Also allowing others to feed on any discouragement you may already feel.


Thanks

[pjakesmith]

All I can say is mismanagement and unable to cope up well with the changing business environment!

[lelah_jones]

Why some businesses fail and why some succeed is a matter of debate, although there are some common mistakes that can sink a business in no time. Some reason are Over expansion,Poor capital structure,Overspending,Lack of reserve funds and Bad business location.