Causes of Business Failure
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A business is an enterprise that involves professional, commercial, and industrial activities. Entrepreneurs start businesses to make a profit. Companies vary from small scale to large corporations. These businesses may face some challenges that may lead to their poor performance and eventually closing. Many companies survive for a short period when confronted by these shortcomings. When a business is not rewarding, it becomes risky and stressful, making the owner continue operating. This paper explains the major causes of business failure.
Inadequate market research is a major cause of business failure. An entrepreneur has to research first before venturing into any business. Well-structured and organized business in Kenya may be profitable and successful than a poorly structured one in China. The research conducted by the entrepreneurs should ascertain if the business were useful in the location chosen. If the services or products offered by the business are not required by the people where the business is situated, no profit may be realized (Muñoz-Izquierdo, Segovia-Vargas, & Pascual-Ezama, 2019). For example, the pork business may not thrive in a Muslim society since they do not consume pig meat.
Lack of right customers cares for another cause of business failure. Every business should treat his customer well. The presence of reliable customers enables the business to grow well since they bring more customers to the business. If the customers are not treated well, they shift to the competitors (Amankwah-Amoah, 2016). An entrepreneur should show appreciation to the customers always. Allowing the customer to ask questions about the products offered enables them to feel appreciated. Poor customer relationship has led to the failure of many businesses. Quitting too soon makes many business to fail. One has to inquire, try, and try again, fail, research, and persevere. An entrepreneur should strive against all the odds to enable the business to succeed. Lack of adequate finances leads to business failure (Muñoz-Izquierdo et al., 2019). When funds are inadequate, the operation may be delicate, especially where many competitors are involved.
In conclusion, entrepreneurs should ensure that they conduct proper market research before starting any business. They should also ensure that there is enough funding to sustain the business and relate well with the customers. Selecting a suitable location is also another factor to put into consideration. Every entrepreneur should consider these factors before starting any business failure to which they may end up on the wrong side of the business survival statistics.
References
Muñoz-Izquierdo, N., Segovia-Vargas, M. J., & Pascual-Ezama, D. (2019). Explaining the causes of business failure using audit report disclosures. Journal of Business Research, 98, 403-414.
Amankwah-Amoah, J. (2016). An integrative process model of organizational failure. Journal of Business Research, 69(9), 3388-3397.