Common Causes of Business Failure
Businesses do fail. Keep these points in mind:
- Choosing a business that isn’t very profitable. Even though you generate lots of activity, the profits never materialize to the extent necessary to sustain an on-going company.
- Inadequate cash reserves. You must have enough cash to carry you through the first six months or so before the business starts making money.
- Failure to price your product or service correctly. You must clearly define your pricing strategy. You can be the cheapest or you can be the best, but if you try to do both, you’ll fail.
- Failure to anticipate or react to competition, technology or other marketplace changes. It is dangerous to assume that what you have done in the past will always work. Challenge the factors that led to your success.
- Over dependence on a single customer. Whenever you have one customer so big that losing would mean closing up shop, watch out. It’s preferable to have a large base of small customers.
- Believing you can do everything yourself. Let go of the attitude that you must have hands-on control of all aspects of your business.
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