Research has shown that an average of seven out of ten businesses shut down within their first five years of running.
While there are so many reasons to be linked to the reason why this problem persists, there are several obstacles more peculiar than others.
This article will be focusing on the least reason to the top reason why businesses fail and tips to avoid the big mistake.
Why Businesses Fail
Some of the reasons why businesses start up and fail at the end plus how to avoid them include:
- Disregarding Customer Feedback
A good percentage of business owners can attest to the fact that listening to complaints from their consumers would have helped in making incredible changes to their brand, but they were only concerned with the vision they had in mind for their business.
If you want to keep your consumers, then you have to give them what they ask for and not just what you have to offer else they retreat. Your design and input for your business can change when you give a listening ear to the people whose needs you are meant to satisfy.
A good way to avoid this problem is to be easily accessible and open minded to truthful feedbacks and criticisms.
- Terrible Marketing
Some entrepreneurs may think all they need to do is have a good product and customers will show up from every nook and cranny to patronize them, but that is not the case when it comes down to the real business circle.
Asides focusing on the manufacturing of your product, an entrepreneur has to be interested in the sales and marketing of the same product.
You will be surprised to know that some entrepreneurs are scared of selling while others lack the basic skill set in selling a product, but it can always be learned.
A way to avoid this problem is to either learn the basic skills of selling and marketing or employ an individual with expertise in marketing.
- Pricing and cost
In a recent survey, eighteen percent of businesses had to stop functioning because they were losing money instead of gaining, and they only realized this when it was too late.
The process of tagging the right price to your product is quite technical because while you are trying to fix a price that is good enough to cover the cost and realize a profit in your business, you may also want to fix a price that will be enticing to the target consumers.
There must be a balance between these two, and this is what leads to problems in the business if not handled the right way. A good way to handle this issue is to study the target consumers, know what they value and how much they are willing to pay to get their needs satisfied.
- The Competition
This issue is a big obstacle to a lot of businesses out there as the competition gets stiff and one is liable to shut down.
The competition can be stiff because fellow competitors will do everything within their power to entice your consumers, poach your staff, and willing to spend more in the area of marketing.
A way to beat this issue is to have a competitive advantage, and what does this mean? It means you have to think of what you are capable of providing for your consumers that your fellow competitors can’t provide. Think of a need only you can meet that is unknown to your competitors.
- Wrong Team:
One-quarter of the businesses that failed during a recent survey carried out failed because they had not just an incompatible team, but they were also indecisive in the area of decision making.
It does not matter how brilliant your business idea could be; if you do not have the expertise and resources to execute the idea, then you do not have a business.
To avoid this problem, you have to be clear about what you need in terms of skills, expertise, and contacts in your business.
To Sum It Up
Adhering to the reasons outlined in this article, you will be able to avoid the common mistakes made by startups. What better way is there to avoid mistakes than learning from the experience of others in the business?