Topic: WHY SMALL BUSINESSES FAIL

WHY SMALL BUSINESSES FAIL

POOR LOCATION: Some of the reasons why start-up fail is the inability to situate in a good area for business. Sometimes some organizations are located far away from raw materials and factors of production like labour. If a fast food is located close to a bank, the business will thrive and if a boat manufacturer is located in the neighbourhood there will hardly be sales because it is not a riverine area.

MISUSE OF FUNDS: Mismanagement of business of business fund is a big problem that causes stunted growth. If a business begins to make profit, part of it should be reserved for the future plan and continous existence. Atleast 40% should be added back to the capital and not misused by the business owner for luxurious spending.

LACK OF SUFFICIENT CAPITAL: So many small businesses have this problem as there number one, because it is the capital that will make provision for office and equipment, staffing, cost of production and advertising. Sometimes start-ups need good capital depending on the plan of the business for instance, you cannot run a cyber cafe with as low as a hundred thousand naira. You would have to consider the cost of getting an office that is the rent, then the computers, printers, ISP(Internet service provider), furniture etc.

LACK OF EXPERIENCE: Where a business owner fails to make a good plan there would be failure in the long run of the business and this is as a result of inexperience,also if a businessman does not understand the kind of business to do and how to manage people very well there would be problems.Inability to convince investors with a good business plan and a proposal is going to be a big problem,a business person should enjoy and be passionate about his or her business.

OVER-INVESTMENT IN FIXED ASSETS: Sometimes some companies have made mistakes in the area of acquiring gadgets, machinery and buildings. If an upcoming business should have over sufficient space and they paying for the rent, it affects the size of their capital because such space is not used to give them extra income. It is dangerous to have excessive working equipment and over staffing.


COMPETITION: Some business cannot cope with the rising effects of competition in their area of specification, because of lack of good planning strategy which could sometimes be as a result of piggy-backing. Piggybacking means depending on a bigger business for survival, some businesses find it difficult to build their brand and differentiate themselves from the crowd which a problem and one of the biggest reasons small businesses fail.

I remain your business consultant anytime,always at your service,keep a date with me weekly(every wednesday).See you at the top.Wishing my dear readers, a Merry Christmas and a Prosperous New Year.

Mr Emmanuel.
07040406923.

Thank you for this informative and educative topic.

It really affected me directly because i''m on the way to getting frustrated to a cafe business i started a year ago. And you know the frustration that follows it.

It was undercapitalised and so it was so difficult to break-even. Though I have a diploma in computer maintenance and a passion for computing...joyfully i can stay on the net for over 12 hours.

However, the problem is more compounded by lack of capital.

I wish to get anyone with capital; I will be a good partner. This business is so lucrative.

I wish you guys would reply to save this situation.

God bless.

[email protected]
07030331927