Research has shown that an average of 7out of 10 businesses shut down within their first five years of running. While there are so many reasons as to why problem persists, there are a number of obstacles more peculiar than others.
This article will be focusing on the top reason why business fail and tips to avoid the big mistake.
- No market need to satisfy
Still on the survey carried out, 42 percent of businesses failed because they had no need to satisfy in the market. Your product can be the best,affordable, convenient, top quality or highly advanced and still have no market need to fulfill.
This is the biggest problem for startups and the best way to handle this issue is by making use of a sample version of your product to determine the market’s reaction and with the feedback gotten, the product can be tweaked to fit the market’s needs. Only with this can you proceed with a big production budget.
- 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. No matter how brilliant your business idea could be, if you don’t 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 on what you need in terms of skills, expertise, and contacts in your business. In the process of not wanting to run your business alone, you can either have people with expertise as partners or you hire them as staff.
- The Competition
A wise man once said “the art of business can be likened to war and only the strong survives”. 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.
Jack Welch has been quoted to say “if you don’t have a competitive advantage then don’t compete”. 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.
Yet another way to beat this issue is to run your business in a way that your target consumers remain loyal and committed to your business alone.
- Pricing and cost
In a recent survey, 18percent 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 cost and bring profit to the 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.
- Terrible Marketing
A wise businessman once said “if a tree falls in the jungle and nobody heard it, did it really fall?” likewise if you have a product or service that people are unaware of, do you actually have a product?
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 in the real business world. Asides focusing on the manufacturing of your product, an entrepreneur has to be interested in the sales and marketing of 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 canal ways 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.
- 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.
CHECK OUT THIS 9 THINGS YOU MUST KNOW BEFORE STARTING A BUSINESS IN NIGERIA
Adhering to the reasons outlined in this article, you will be able to avoid the common mistakes made by startups. What better way to avoid mistakes than learning from the experience of others in the business.
You can check out this 10 Reasons Why You Should Start Your Own Small Business Now
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