Four Reasons Businesses Fail
We’ve all seen the statistics, read the news, seen the way that businesses close when they seem to be in their infancy. Anyone who has ever even contemplated starting a business knows that 90%
If you’re a business owner, there is a strong feeling of empathy when this happens. We feel for our fellow entrepreneurs, while also silently crossing our fingers and hoping we will never find ourselves in the same situation. If you want to avoid becoming another miserable statistic, then it’s vital you understand why businesses tend to fail – so you can be sure you’re avoiding the same mistakes.
#1 – Overcommitting Financially
Perhaps the biggest reason for failure there is; committing to spending more money than a business can realistically generate. This problem is often found when a business should be hitting the heights; when they’re expanding and taking on new business. Expansion is an important part of business growth, but it’s also a time of perilous uncertainty for business finances. When businesses get their math wrong, then everything can come falling down like a house of cards.
#2 – Lack Of Futureproofing
Businesses that we once considered staples of life are now becoming obsolete. Just think of the high street; it would once have been populated by independent butchers, bakeries, and small general stores. Now, everything is grouped into huge chain supermarkets and grocery stores. No matter how advanced your company is, there is always a chance that something will come along in the future that renders your business a thing of the past. Having a diverse business model is essential to surviving any bumps in the road.
#3 – Lack Of Imagination
Not imagination in terms of ideas and creativity, but a lack of imagination in terms of the things that can go wrong. No business owner enjoys thinking of the problems they might encounter; the lawsuits they may find themselves saddled with; the infuriated customers they have to soothe. So when these things happen, they’re not ready – and their business folds. It’s vital that you look at the legal coverage for your business, as well as investigating business insurance quotes that can ensure you’re covered for any eventuality.
#4 – Faults Not Of Their Making
Finally, it’s a difficult one to get your head around, but it has to be acknowledged: sometimes a business will fail due to no fault of their own. They might be based in an area that struggles economically or subject to a natural disaster; nothing the business could have done would have prevented it.
It’s preferable for business owners to believe that something goes wrong because of a mistake or a lack of foresight, because those are the things we can avoid. However, sometimes, a company has done everything right and it still might fail. This is the risk you take as a business owner. Focus on the things you can control and for everything else, crossing your fingers isn’t a bad idea.