Why is it that some businesses thrive and yet others fail? Well, a business is like a car it’s made up of many components that could enable it to move forward or stay stagnant. The different parts of your car such as the steering wheel, gearbox and other parts need to work in order for the car to move. And in your business, human resource, accounting and marketing departments need to do their work in order for the company to be successful;.
The presentation of your car plays a role. Have you ever had passengers in your car and were embarrassed by McDonald’s takeaway boxes and piles of paperwork lying in your car? Well, the way your business is presented will either attract people or drive them away. If something was wrong with your car, you would assess it to see what is wrong with it. And if your business is sinking, you need to evaluate it. Here are a few reasons your business might be failing:
Lack of planning
When you fail to plan, you’re basically setting yourself up for failure. The first thing you need to have as a business is a plan of action on how you’ll execute your vision and reach business goals. When a business doesn’t have clear and definite goals it will be hard to succeed and do well in the long run. Having a plan is like a roadmap which will guide you on the right path. The right plan should have specific deadlines and timelines. You can use a Google Calendar which helps you stick to deadlines or use spreadsheets to outline your goals and deadlines you want to meet.
Poor location
Location can make or break a business and you have to choose it wisely. You need to make sure the location you use is accessible to your customers. For example, a coffee shop situated on a busy street is likely to attract more customers than one located in a quiet neighbourhood. The right location is important as it can attract customers or they may not even notice it.
Skipping the business plan
Some people believe you need a business plan and some feel you can do without it. But a business plan can help give you direction when you lose your focus. And it can also help communicate business strategies effectively to stakeholders, employees and partners. And it also helps connect the dots so you can see your business as the whole. Are your products/service right for your target market? Does your sales strategy align with the sales plan you have enforced in the company? A business plan is a guide, which helps you see if you’re on the right track or not. If your business is sinking, you may need to refer back to your business plan to see if you’re still on course.
Wrong partner
The wrong partner could be detrimental to the success of your company. If you are a person who sticks to ethical standards and your business partner wants to cut corners, then your business probably won’t survive the long haul. Or if you contribute more to the business than what was initially agreed, your business probably won’t work out. When partners disagree and have a falling out, the partnership usually dissolves and it has to be terminated.
Ignoring customer’s needs
When you don’t cater to your customer’s needs, your business is headed for failure. Your clients are what drive your company’s sales and when you ignore their needs you could end up losing a huge market. It’s important to continuously adhere to customer needs in order to provide them with service they want. Find out who your customers are, what they buy and what they like. Because the more information you have on them, the more you’ll be able to apply marketing strategies that suit them.
Personal use of funds
If you use your working capital to pay off personal expenses, your business will likely fail. Your business should not be your personal bank account that you can dip into whenever your run into an emergency.
Macroeconomic factors
These are the factors that the entrepreneur has no control over but can impact a business. Wars, recession, natural disaster and government are just a few outside factors that impact a business success or failure.
Poor leadership
Have you ever used a GPS to navigate you to a particular destination only to have it take you off course and to the wrong destination? Well, poor leadership acts in the same way. If a leader lacks experience or has poor management skills, they may find it hard to direct a company and push it to success. A leader will have to make difficult financial decisions like whether to use asset finance companies in South Africa to lease assets or whether to buy them. These decisions can impact the profitability of a company and lead it to success or failure.
When your business is failing, you might not know where to start but you need to assess all the part in the company that play a role in the company’s profitability to see where the problem lies.