WHY MANY COMPANIES AND BUSINESSES FAIL


Take a look at the records, most small businesses and companies fail within the first few years of start up. Some of the ones that manage to survive at first sometimes still end of folding up. There are many reasons that can be associated to a business running down but mostly, the lack of good leadership and the inability to seize the right opportunities are notable reasons why businesses suffer untimely death. The type of leadership a business has and the type of attitude directed towards productivity are important factors amongst many others that determine the success of any venture. Resources and opportunities are however the most important factors that determines the success or failure of a venture.

The Resources include:

Brand: The promise you make (and keep) to your customers
Capital: Investment funds necessary for growth
Products: The things you sell that deliver value to customers
Other assets: Your people, core competencies, intellectual property, etc.
The Opportunities include:

Customers: Willingness of people to pay you for the value you deliver
Innovation: Ability of technology to lower costs and / or improve quality
Disruptive trends: Changes in the rules of the game
Macro economics: Changes in the way customers evaluate options

Business is likely to fail when resources and opportunities are not managed efficiently.  This doesn’t necessarily mean that a business’ leaders are bad people or even that they don’t know how to manage. Poor management means that poor decisions are made and this can happen for a number of reasons. Management may not be fit for purpose, they may not simply know how to respond to internal or external changes that have taken place. Management might not be flexible enough when making decisions and this could affect the success of the company.

Some other times, the company could have a strong team, lack of proper data could be the problem. Data could include: financial investments, organizational efficiency, sales performance, cost containment, customer retention and so on. Some companies do not properly define their data, thereby making wrong analysis and evaluation. A company need to have the right record of its performance and productivity if it plans to stay in check.

A company that is setting short term goals is likely to fail. It is important to think ahead and save for rainy days if you desire to stay long in business.