It’s a sad fact that most businesses fail within the first 18 months of operation. There can be a multiple of reasons for it but here are some of the most common:
Cash flow problem
Simply running out of cash is one of the most common reasons businesses have to close down. This could be due to poor planning or unexpected costs. If the money is only coming from one source, say a loan or an investor and they disappear, then your business is left dry and forced to close in a lot of cases.
Not enough market need
Did you research the market before you went into it? A surprising amount of business owners don’t research well enough and simply think the opinions of their friends and family are enough research to make it work.
You need to research your market to check whether there is a need of your product or service and whether it’s a need that will last a long time and give you a sustainable business.
Not listening to customers
You might not be outright ignoring them but if you’re not taking the time to ask them what they want from a business like yours then you’re essentially going in blind. How are you meant to give them what they want if you don’t know what they want?
Have you made plans for your business over the next few months and years? What’s your next step to expand? Businesses with unsteady cash flow in particular are solely focused on keeping afloat so there’s not a lot of thought for the long term future. If you don’t plan ahead though, your business model runs the risk of becoming stale and left behind the competition.
Some people get ahead of themselves in business and throw money in all directions too soon. Expansion is great, but it needs to be controlled and careful. Whenever you put new money into the business, you need to know where it’s going to come out too.
Not keeping with the times
Your business needs to be flexible to adjust to market changes, economic changes and new developments in policy and technology. If you are not willing to move with the times, then as the saying goes, you will get left behind.
You started it for the wrong reasons
Finally, one of the reasons why businesses fail is because you started it for all the wrong reasons and your heart wasn’t really in it. If you don’t have the drive and the passion to make it work, it’s so much harder to make a success of it. So if you started it for money, then have a think next time about a business that means more to you than just that.
What do you think are the top reasons why businesses fail? Have you ever experienced any of the above? Let us know your thoughts.
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About The Author
An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.