Small Business Failure
Causes of Business Failure
Lack of Skills
For whichever business you are in, it is essential that you (as the owner) have the required core skills to manage the business. This does not necessarily mean all business skills, such as accountancy, but those that will be needed to run the business successfully.
There is no problem of moving into areas of business where you have a limited amount of skills to contribute so long that you have the staff that can make up for your lack of skills and that they remain loyal to the business.
The time you spend preparing to start a new business is the most valuable time you will use and will arguably have an effect on the outcome of your success. During this time, you should ensure that you have all the skills that you need to run the business and you should take the time to learn those skills that you do not have.
The risk of business failure will be reduced if you take this preparation time to get things right even if this means delaying the start up of your business for, say, another year.
Sales
When businesses introduce a product or service, the demand may be minimal for the business to survive. The demand for your product/service will gain no influence from your selling skills or current financial situation: you may have highly skilled sales staff working on commission, but if nobody wants your product/service, then why would people change their mind.
The competition in the market may also have an effect on the number of sales: this is a reason within itself why many businesses fail. If there is no room for your product or service to enter the market because of the amount of competition, then your sales figures will be very low because similar products/services will be available that people have grown to know and trust.
As a general statement, it can be said that no sales result in no business and so it is important that you know where, how and who will bring in your sales once you start trading. This area should be covered in your market research, which is another area that most small businesses fail to use properly resulting in business failure (detailed later).
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