Lack Of Planning, Insufficient Capital In Business
Every entrepreneur who wishes to start up a business or set up a venture always have one at heart, and that is making as much profit as possible as a result of the business adventure. However, for a business to blossom depends on the plan on ground, like the saying goes “When you fail to plan you plan to fail”. As rightly outlined, every business deserves a chance to grow and how do you achieve this, it is only by having a plan that and then following the plan to the latter.
As stated continuously on many of the articles on this platform, a business plan is like a roadmap to the success of a business concern, it is an outlined manual for how a business will be set up and run. A business plan must contain all the necessary plan steps, actions as well as other guidelines needed.
Study The Following Failure Factors
Lack Of Planning – Plans are guidelines of necessary actions and steps to be taken before venturing into any enterprise. Planning is very important in anything one does including business and should be the first step in attempt to start up venture to set up, location, required space, capital, assets, accommodation, number of personnel and remunerations for them as well as other necessary machines, materials and protocols. In competitive business of today, planning has to be continuous upgraded to reflect changes in the business environment. Business person who does not plan, therefore plan to fail an adage says. Resources are not allocated, no challenges/task. No established procedure. Absence of these facts will definitely lead to failure of the business.
Inadequate Training – Training inform of education be it formal or informal in the area of business of choice is very important to the success or failure of business enterprise. Untrained entrepreneurs will not understand the need to plan, the need to strategies, the need to motivate staff, the need to keep customers and the need to embrace good business ethics. Untrained business owners are afraid, suffer from inferior complex, they cannot compete, they feel threatened and are limited in thinking. They are not innovative, they lack vision, find it difficult to accept new ideas or adopt new ideas, technology or expansion. They rely mostly on their family members to run the businesses and circulate within their environment. These categories of businessmen cannot differentiate between business capital and domestic budget. All these are negative tendencies that can result to business failures.
Poor Management – Management is an act of getting things done in order to achieve a desired results and meeting the set goal. Management comprises of the following; planning, staffing, organizing, directing/leading and controlling group of people in an organisation and resources towards accomplishment of a desired objective. Usually resources to manage include financial, technological, human and natural. Management can still be defined as human action design to facilitate the production of useful outcome from a system. The primary function of management is to satisfy stakeholders, by making profit, creating valued products, at a minimal cost and providing rewarding employment opportunities.
The basic roles of management are interpersonal that involves coordination and interaction with employees, informational that includes handling, sharing and analyzing information. Any organisation whose management is not conscious of these criteria will definitely head for disaster and such management is regarded as ineffective and poor. Poor management has no priority or scale of preference, it does not consult, or engage experts rather, it looks for cheap labor and other ineffective means of production. It does not plan for short or long time period. These facilitate business failure.
Bad Location – Ideally, a business should be located in a particular place where all the factors which favors the business exist. This includes the availability of raw materials, work force and target consumers. Business location however, requires proper investigation and planning before final decision is taken. Too often, beginners ignore this important step. Some entrepreneur, choose business locations just because there is vacant building. Such poor locations will eventually lead to collapse of the business.
Lost Of Customers – Business booms when customers are available to patronize the entrepreneur. Lost of customers has its chain reaction, such as drop in sales, decline in profit, gradual drop in working capital and failure in the business venture entirely.