Hello readers, I came across this article from the Nigeria number 1 job search engine NaijaHotJobs. This piece is for every business owner and start-ups who wants to avoid the avoidable mistakes some business owners have always taken. Kindly drop your replies at the end of this article.
6 REASONS WHY SMALL BUSINESSES FAIL
POOR LOCATION: Some of the reasons why start-up fail is the
inability to situate in a good area for business. Sometimes some
organizations are located far away from raw materials and factors of
production like labour. If a fast food is located close to a bank, the
business will thrive and if a boat manufacturer is located in the
neighbourhood there will hardly be sales because it is not a riverine
MISUSE OF FUNDS: Mismanagement of business of
business fund is a big problem that causes stunted growth. If a business
begins to make profit, part of it should be reserved for the future
plan and continous existence. Atleast 40% should be added back to the
capital and not misused by the business owner for luxurious spending.
LACK OF SUFFICIENT CAPITAL:
So many small businesses have this problem as there number one, because
it is the capital that will make provision for office and equipment,
staffing, cost of production and advertising. Sometimes start-ups need
good capital depending on the plan of the business for instance, you
cannot run a cyber cafe with as low as a hundred thousand naira. You
would have to consider the cost of getting an office that is the rent,
then the computers, printers, ISP(Internet service provider), furniture
LACK OF EXPERIENCE: Where a business owner fails to
make a good plan there would be failure in the long run of the business
and this is as a result of inexperience,also if a businessman does not
understand the kind of business to do and how to manage people very well
there would be problems.Inability to convince investors with a good
business plan and a proposal is going to be a big problem,a business
person should enjoy and be passionate about his or her business.
OVER-INVESTMENT IN FIXED ASSETS: Sometimes
some companies have made mistakes in the area of acquiring gadgets,
machinery and buildings. If an upcoming business should have over
sufficient space and they paying for the rent, it affects the size of
their capital because such space is not used to give them extra income.
It is dangerous to have excessive working equipment and over staffing.
Some business cannot cope with the rising effects of competition in
their area of specification, because of lack of good planning strategy
which could sometimes be as a result of piggy-backing. Piggybacking means depending on a bigger business for survival,
some businesses find it difficult to build their brand and
differentiate themselves from the crowd which a problem and one of the
biggest reasons small businesses fail.