How To Avoid Business Failure

For most people the ultimate purpose of starting a business is to make money, much more than you could ever hope to make in a paid job. In their anxiety to earn money most new entrepreneurs venture out ignoring some of the basic requirements necessary to run a successful business, resulting in business failure. Failure can indeed be a very costly affair. On the other hand successful entrepreneurs are those who really did their homework and knew what running a business was all about.
Here are some of the major factors that cause business failure and the steps that should be taken to avoid them.

1. Lack of Proper Planning:

One of the major reasons for the failure of a business is the lack of planning which is the most fundamental factor which revolves the success of a business. Set out your goals and prepare a strategic plan. Formulate a short term plan and a long term plan. It is these plans that will guide you every step of the way. If you are unable to prepare one yourself get outside help before starting your business. If you are already in business and if you don't have a plan, your first priority should be to prepare one immediately.

2. Unsuitable Location:

Before starting a brick and mortar business it is extremely important that you choose the proper location for your business. You have to study several factors before choosing the location. The factors you should consider to eliminate business failure are:

* Is there a demand for your products?
* Are there too many competitors?
* Is there sufficient parking space for vehicles?
* Is there sufficient movement of people in the area?

These factors are very critical for the success or failure of a business. Hence locating the business even with the best of products in the wrong place can be disastrous.

3. Lack of Capital:

In spite of having started successfully we have witnessed the failure of several businesses due to cash flow problems. A proper business plan will clearly indicate the capital necessary and the cash flow requirements to operate and sustain the business. Once your financial requirements are known and if you do not have the necessary capital, you can obtain a loan from your bank or insurance company. Thus you will be able to devote all your attention to your business and avoid business failure and unnecessary stress

4. Bad Management:

More often than not the failure of a business can be traced back to bad or sub standard management. Many new entrepreneurs lack sufficient skills and expertise to run a business successfully. If you are running a business, especially a small business, you should be knowledgeable about purchasing, marketing, finance and production. If you are not skilled in certain areas the best option is to employ someone skilled in those specific areas thus solving your management problems. Good management means that you also keep a watchful eye over your competitors and come up with your own formula to beat them.

5. Lack of Public Awareness:

Stocking your store with the best of products and at competitive prices is great but that will not draw in the customers unless the public is aware your business. A misconception among some entrepreneurs is that money spent on advertising is waste of money. It pays to advertise so be prepared to spend some money on advertising and promoting your business. A well written jingle with captivating music, advertisements in local newspapers and attractive brochures are great ways of promoting your business.
A professional looking website is an absolute necessity today. Similarly joining social networking sites such as Facebook and Twitter will be very useful. Unless you take these steps and keep up with the present trend, your competitor will certainly have an edge over you.

There may be ups and downs in your business but never ever think of failure or quitting. Remain motivated, think positively and work with determination. Follow the above tips and success will be yours.

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