Top 10 Reasons Why Companies Fail

Reasons Why Companies Fail

               

Bad Idea: It is very important to have faith in what you are about to do. Your business should be like a religion to you, and you should be able to defend it as a parent defends a child. But is your idea something you really believe in? If you don’t, the chances are slim that other people (especially investors) would.

 

Estimating the Novelty Factor: You feel that the service or product you are floating is ‘one of a kind’ in the market. But there may already be a surfeit of the same concepts in the market – just packaged differently. Worse still, there may not be enough demand for your wares – and that is why the idea is so novel – everyone else has already failed at trying to do it. Be dispassionate while judging the virtue worth of the novelty factor, otherwise you may run into trouble.

 

Lack of Funds: It is not possible to do great business without money. There is no use dreaming of the empire you will run one day when you have to hire premises outside London to save costs.

 

Ignorance of the Market: Time is important, and the early bird does get the worm. You are ready, and have everything in place, but do you know where to look for the worm? Market research is extremely important, no matter how charged up you are with the brilliance of your concept. Know your rivals, your idols, and definitely the rules of the game before jumping in.

 

Knowing the Customer: A survey, once again, is of prime importance. Do not proceed without adequate research on who your prospective customers are, and what they are like.

 

The Super Boss: It is laudable to be a superman or a super mom – but not a super boss. If the company owner decides he is going to run the whole show himself, chances are that he will run the whole show aground as well. A carefully built team is what runs successful companies, not one bright individual.

 

Inadequate Control: Not doing things yourself does not mean letting everything move on its own. You will have to find out a methodology of keeping track of the work, without standing in vigil behind your employee’s chair.

 

Lack of Protection: Fire, water, thieves, viruses, hackers, negative publicity – we have a lot of enemies – human or otherwise. We should be well protected against all of enemies – human and otherwise. We should be well protected against all of them in advance. Discovering that your firewall does not work after all your data has been stolen is hardly a wonderful learning experience.

 

Crisis Management: Now that you know what the pitfalls are, you need a place to avoid them. It is not your duty to check the anti-virus on each computer, but it is definitely your duty to fix who is going to do that. At the moment of crisis, there shouldn’t be panic, but a plan to work out of it.

 

Excessive Fast Growth: Pride goes before a fall, and a boom before a slump. There is a great need to stay in the race, but it should not spiral beyond one’s control. You may spend a lot of money and put in new departments, infrastructure and people – and then the returns may be much slower than expected.

 

Why, How, Why and How to Avoid

 

These reasons of company failure would occur to people who have not done their research prior to the company or product / service launch, do not have a good team, and are not taking time out to analyse the market. Why are they the targets? It is because ambition and hard work are not enough; planning is what runs a good company.

        

The way to avoiding disaster is neither easy nor fast. Your groundwork must be impeccable, your protection system fool-proof, and your team motivated. Do not leap into action till everything – most importantly the capital is in place. If one is reckless, one has to pay for it, literally.

 

 

 

James Walsh is a freelance writer and copy editor. If you are interested in starting up your own business and would like some help with your <a href="http://www.smart-businessplans.co.uk">Business Plan</a> see http://www.smart-businessplans.co.uk

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