Why so Many Start Up Businesses Fail and What You as an Entrepreneur Need to Do to Enhance Your Chances of Surviving the First Year

978 Words Jun 13th, 2013 4 Pages
Why so many start up businesses fail and what you as an entrepreneur need to do to enhance your chances of surviving the first year

Business failure refers to a company ceasing operations following its inability to make a profit or to bring in enough revenue to cover its expenses. A profitable business can fail if it does not generate adequate cash flow to meet expenses. According to The Dun & Bradstreet and INC. magazine, we can see a result of 33% of all new business fail within first six months. Fifty percent of new business fail within their first two years of operation and 75% fail within the first three years.

Here are the leading reasons of business failures. The first main reason is people open their business without any
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The second major caused of business failure is weak and inexperienced management. Management is the process of dealing with or controlling things and people, the responsibility for and control of a company or similar organization. Poor people management skill leads to poor human resource relations. Successful businesses motivate their employees to work hard to help the business to succeed. Beside than business planning and management. The last major of causing business failure is poor marketing. Successful modern businesses are the ones that understand and meet the requirements of their customer. Here are some points of poor marketing: first, failure in targeting customer. Do not expect that just because you are now in business, that customer will flock to your door. If you do not understand your target customer, how do expect to effectively reach them? Second, cannot attract new customers. By understanding the demographics and psychographics of your target customers, you can identify how to best reach them. Thirdly, underestimating the competition. And lastly, not cost competitive. For example, if your selling prices are the same as your competitors and their operating costs are lower, their margins will be higher. If that is the case and you get into a protracted price war with a competitor, you will not

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