Why do businesses fail?

[dan7]

Originally Posted by andrewlm

I think there are many reason for fail of business like ineffective marketing and self-promotion and poor customer support and Underestimating the competition. Business location, poor management etc.

..and the world is still in crisis, many projects are frozen and related businesses fail..

[FoxTopper]

when losses exceed profits

sometimes a business fails because of the mere mismanagement of it. sometimes it fails because of the wrong location of the business. sometimes it fails because the business is a bad idea to begin with. different reasons for different circumstances.

[JayZSoho]

One reason why a business may fail is due to the lack of a competitive advantage in the marketplace.

[ACB123]

Really, I believe that a business will truly "fail" is when you, the entrepreneur, loses faith in it's success and stop trying.

To truly fail is to quit applying yourself or lose your motivation.

[Go Green Giants]

expenses to keep the business going is more than the profit. a simple example would be, if you are running a store, and the space rent is higher than what you sell in the store. then eventually your business will fail.

[pjakesmith]

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[shubh09]

The major cause of failure for the new business is lack of risk assessment. Most of the new business owners take the success granted and plan according to the current trend without analyzing future threats to the business. You must analyze the activities of your competitors, compare the financial capacities, targeted client base, time of launching your web portal and the method of implementation.

[SteveG]

in 1982 I started a business. I had no knowledge of the business, very little prior business experience, no money and the economy was in a recession. I made a profit from the first month on and continued to grow until I went broke 8 years later. Right before I went broke I had plenty of knowledge in my business, adequate working capital, a good customer base, and well trained efficient emplyees. Why did I go broke? many reasons, overhead got a bit too high, I extended too much credit, and most importantly my partner who was my wife and I began to fight for power and the direction the company would take. Within 2 years we were broke, divorced and the company had disintegrated. Steve

[chinaoilpainting]

SWOT is a tool to analyse. Some start a business without analyse, then they will lack direction and money. At the beginning, you should think it fully, because you will get in trouble befor success.

[cynthiarose]

Insufficient knowledge and lack of funds.

[josephcounseling]

There are huge list which contributes to a failure in business like:

1. Not reading the market before commencing any business.
2. What is the ratio of demand and supply.
3. How much cost will be applied? and how much i can earn and save from it.
4. Reading all the market strategies.
5. Analyzing your competitor
6. Suitable location and weather before commencing any business.

[JeremyF]

Are we really even sure as many businesses fail as statistics tell us? There are many businesses that just changed their focus. For example, a landscaping business that realized competition was too fierce in that market decided to shift their focus into installing and maintaining lawn fountains. They changed their niche and business name. On the books it looks like their first business failed but it really just evolved. Another one is a bricks and mortar business that decided to drop their rent obligations and create an online presence only. Did that business fail or become more efficient and profitable? Great discussion.

[Dan Nichols]

Above everything else they fail because people either lose their passion for what they're doing or didn't have it to begin with.

Addendum - passion is the solvent that cuts through all the other mistakes. This isn't some esoteric answer. Take 2 people with exactly the same circumstances in the exact same field and one will fail, one won't. One persists where the other surrenders. I know this story personally. The biggest percentage of failures are because people often have to stumble through a bunch of mistakes to find that one thing that despite all the mistakes in the world there wouldn't be enough to stop them from achieving their vision. (long sentence/ugg). So much more around all this but that's the jist from where i stand.

[epvirtualassistants]

It's the idea that you did not give the best service you could offer. Some services do not meet the standard of your clients that's why your business fail. People always settle for the best and if you did not meet their standard, you'll end up losing all your clients. Moreover, you have to love your business and your clients. Give them the assurance that you could meet up deadlines, could work under pressure, and end up giving them the best service you could offer.
Luck is something that comes to those people who tried their best to succeed.

[shubh09]

Using too much unreal assumptions, lack of using business analytical tools.