Reasons For Business Failure With Examples
Every business starts with a eureka moment.
It’s the sudden realization that your idea could, indeed, become a business.
Having a good idea, however, doesn’t happen overnight. It takes a lot of time, a lot of bouncing back and forth in your mind before finally, it starts making sense.
Indeed, there is no such thing as going to bed one night and waking up the next morning with a killer idea. It’s a long process during which you question your belief in yourself; you discuss your inspiration with friends at the risk of them mocking you – after all, criticism helps your idea to grow.
Therefore, it’s not uncommon for enthusiastic first-time entrepreneurs to assume that once they’ve finally sorted out the business idea, they can just let it roll and hope for the best.
Let me shock you – your brilliant business idea is unlikely to be successful if you miss any of these essential building steps:
#1. Lack of Planning
Your idea is only the beginning of your business journey. However, if you want to navigate safely to the market, you need to build a business plan.
Indeed, your plan includes the estimated costs of launching your company and the forecast revenues.
By using these two figures, you can define when and where to spend money to establish your presence. More importantly, you can know how to recoup your investment.
Without a plan, you’re unlikely to be able to monitor your profits or control losses.
Why? Because losses happen during the first few years as you’re building a brand new presence in the market.
#2. Lack of location research
Where should you establish your business idea? For new entrepreneurs keen to have an office instead of working from home, the cheapest option is typically better.
As a result, it’s not uncommon for startups to establish themselves in rural areas or on the outskirts of large cities.
Unfortunately, the location can have an impact on the facilities available to your everyday processes. Water supplies, for instance, could be limited when you’re away from the town.
Small manufacturers, agricultural businesses, or even industrial firms that have not planned for a large water tank to harvest rainwater as a backup might find themselves unable to work for long periods of time.
Additionally, rural broadband access also plays a significant role in everyday business. Rural locations can dramatically affect your activities.
#3. Businesses not suited to customers
Who are the customers of your business idea? If you can’t answer the question, you may not know how to target the right target.
Your first step as a new business on the market is to study your customer personas.
Use keyword tools, social media information, Facebook Insights, and data-driven surveys and feedback. Then you can gradually build a realistic customer view that encompasses many audience types.
#4. Lack of financial backing
Lastly, without funding, you’re going to struggle to bring your business idea to life. A commercial loan can be tricky to obtain when you’re a new entrepreneur, but you can consider crowdfunding platforms, local investors and even bootstrapping.
The risk is less if you go for the latter.
From knowing how to establish your business to understanding the limitations, there are questions you need to answer before your idea can be a successful company.
Don’t be tempted to rush through the steps; your future success depends on your patience and strategic approach.
I hope this helps!