Every day, business ideas are birthed by self-motivated individuals with a passion for entrepreneurship. The number of new businesses that have sprung up in the last couple of years is exceeding, but it might surprise you to learn that the majority of these businesses closed down within their first five years.
The fear of business failure is one of the worst nightmares every first-time entrepreneur faces. You would agree with us that no one wants to start up a business, sufficiently invest in it only to see it crumble after a few years.
As a budding entrepreneur, the only way to save yourself from experiencing business failure is to discover its number one cause. Learning the major reason why businesses close their doors in their first few years will put you on the right path and also save you from making the same mistakes of failed entrepreneurs.
Research has shown that the biggest cause of business failure is none other than – Poor Management. In truth, managing of a business/firm encompasses a whole lot of activities to include: planning, controlling, organizing, communicating and directing. For a business to thrive it needs a competent manager at the helm of affairs. Falling short in this area will eventually lead to the death of any business.
Most businesses that failed were the results of rookie entrepreneurs with no experience of how to run an enterprise. They were passionate and enthusiastic, but they failed to come up with strategic plans to move their business forward and were also terrible at managing the business in their hands.
Running an organization isn’t an easy task, and if you own a business or wish to start a new business that thrives and goes past the five-year mark, a lot work needs to be done in the area of management. In order to avoid starting a business that eventually fails, here’s a few things you must do.
1. If you consider yourself incompetent in the aspect of business management, then it is imperative that you hire a reputable manager. A good manager is one who’s great at planning, controlling, directing, organizing and hiring the right employees. Understanding how to manage people is another area where expertise is required.
2. Consider if you are quite experienced in the field of entrepreneurship before venturing into it. Don’t just start up a business because a few individuals you know are getting rich from being their own bosses. Expertise and experience in entrepreneurship are prerequisite to making a business successful.
3. Get knowledge – There are lots of business fields out there, the fact you excelled in a particular business field doesn’t mean you’ll succeed in another. Don’t go into a line of business you have limited knowledge about. Learn about it first.
4. Ensure your funds are properly managed – Since money is one of the things that keeps a business running, an enterprise with no funds will definitely fold up. Poor financial planning and management cripples businesses like no other so it is imperative that entrepreneurs are effective in this key area.
Now you know what causes most businesses to crumble, the fear of business failure should no longer stop you from chasing those entrepreneurial dreams you’ve always had. Get your business started today, surround yourself with a good managerial team and watch your business soar to the uttermost height in no time.