It is believed that more than 50% of startup businesses fails and pack up after two years and a higher percentage fails to make a profit as the business goes on.
The most tasking stage of any business is the startup stage, and it takes more than just hard work to keep the business going.
In this article, we are going to look at seven reasons why a startup business will likely fail to make it through the early stage.
One of the reasons most startup business fails is that the owners lack passion for driving the business and they usually give up as soon as they face the slightest challenge. Every business does have its downtime and through those down period, the passion of the entrepreneur will drive them to see the business through a hard time.
The drive that passion brings will also make the individual go extra steps and take the necessary risks to make the business successful. Thus you should ensure that you choose a business you have passion about to succeed in the business.
Capital is essential in starting a business and most startup business fails due to inadequate capital when starting the business.
Some people have been encouraged to start a business with the little capital they have, but the problem with starting with small capital is that it might limit your scope. Inadequate capital will limit the scope of your business especially to compete with your competitors.
- Lack of knowledge of The Business
This is another major reason why startup business fails to make it past the infant stage, most people decide to go into a business they know nothing about. And because they believe they can do it if someone else is doing it. They fail to get the necessary training or acquire the necessary education.
When you lack the knowledge of the business, you fail to give the customer the desired services and lost their patronage. This will lead to a drop in sales or demand in services which will lead to the collapse of the business.
No Business Plan
A business plan is very important is the successful running of a business, it will keep your expenses in check as you work with the set budget. A business plan will also enable you project when likely the business will start making a profit and will enable you to keep on a track to the aim and objective of the business.
There are a high percentage of startup business without a business plan and lack direction and focus in the business, which is one of the reasons they fail.
Research are very important in starting a business, as you have to research on the goods and services you intend to offer, research on the best product to use, the best location and what to expect from your potential customers. A proper research will enable you to provide quality services for your customers and keep you in business.
The Right Personals
It is important as a startup business, that you get the right personals as your staff, they should be qualified and have the right attitude. The mistake some startup entrepreneurs makes is to try to cut cost by hiring family and less qualified people, this will result in bad services and will invariably result in dissatisfied customers.
Ignoring The Competitors
The most startup makes the mistake of ignoring their competitors, or they might feel too good to be concerned about their competitors. You should study your competitors; get to know why customers prefer them and what you can add to outdo them.