6 reasons why you may fail in business
When starting a business, weighing the pros and cons, one way or another you remember that only 20% of new businesses "survive" the first year of operation. Not all great ideas are profitable. Sad statistics are often the result of untested ideas and ill-conceived decisions.
Even after thoroughly researching the market, an entrepreneur cannot insure himself and his business against unexpected turns and unpleasant surprises. And while each failure is a unique story of a particular business, there are several common reasons why hundreds of thousands of new businesses fail year after year.
Unsuccessful choice of business idea
In a competitive environment, strong ideas do not lie on the surface. Those who think that creativity is only about being creative are sorely mistaken. Generating ideas is a routine process. Without it, business turns into a game, temporary income and expensive entertainment. The wrong choice of idea, on the basis of which the marketing policy of the enterprise is built, becomes the main cause of business failure. You are taking a huge risk by opening a coffee shop in a neighbourhood where there are already several such establishments!
Got an idea? Ask yourself: "Who will definitely be interested in it? What 'pain' does it cover? Is there a need for it?". Your honest answers increase the chances of success of the idea.
A failed partnership
Many businesses fail because of relationship problems. Business is first and foremost about trust. A partner in business is someone who shares your values and is on the same wavelength with you. It is not easy to find such a person or people.
Insufficient preparation and planning
Another cause of business failure is insufficient preparation and planning. Haste, superficial analyses, and a careless attitude to details can provoke erroneous decisions, and the result is loss of money. Without thorough market research and competitor analysis, you should not start. For example, a growing market is the most common reason for new products and services. A business built on a hunch, a hobby or a fleeting insight is more likely to go bankrupt. Is it possible to make money now by opening another food delivery or online school? A growing market is a signal, but not a good reason.
Misallocation of resources
You need money to survive. It sounds commonplace, but it is. In business, 90% of time and effort is taken up by preparation. First of all, this applies to the financial component of any endeavour. A company can invest money in marketing and advertising without paying attention to quality. With this attitude, the business will sooner or later lose even the most loyal customers. Nokia is an example of such a situation. The company dominated the mobile phone market in the 90s and early 2000s, but failed to adapt to changing market demands and strong competitors such as Apple and Samsung.
Misguided strategy
Errors in strategic planning, overestimation or incorrect assessment of the market potential lead to the fact that the company wastes time and money on projects that lose initially.
Kodak seemed to be a business powerhouse, was a market leader and produced camera films for decades. But it eventually left the market after making a huge strategic miscalculation - the company failed to adapt digital technology to its business in time.
Lack of innovation
Lack of innovation leads to the fact that the company cannot compete in the market. Its products become outdated, irrelevant, unpopular and do not meet the requirements of customers. Competitors do not slumber, constant search for new solutions, analysing current affairs and creating new products is a guarantee that you will not be left behind both business and history.
It is worth remembering Blockbuster. The company, which was the market leader in video rental for many years, failed to adapt to changes in the industry and did nothing to occupy the online niche.
Startups and Halla Systems
Halla Systems supports budding entrepreneurs, startups and new ideas, and is there for them every step of the way. Our simple and affordable solutions help start-ups to open and promote successful online shops, create effective sales channels, and form optimal supply chains. Halla Systems can act as an intermediary and integrator, conclude transactions on behalf of the customer.