Factors that can lead your business to fail

Factors that can lead your business to fail

Most people are afraid to fail. The fear of failure prevents them from trying new things in life. They don’t want to make mistakes. What such people don’t realise is that if you are afraid of failure, there is no way you can achieve greatness.
The fear of failure makes all your dreams impossible to achieve. To have a good perspective of success you need to experience failure. C S Lewis said, “Failures are finger posts on the road to achievement.”

As a business person you can reduce the impact of faili,ng by anticipating the hurdles and coming up with strategies to minimise the impact.
The main challenges that business leaders meet and that may eventually derail them from achieving their goals are: poor leadership, lack of financial management skills, inappropriate business model, not listening to customers and not providing a unique value proposition or rapid expansion.
Lack of leadership skills can prove to be the Achilles’ heel for a business leader. A business is bound to fail if its leader exhibits poor management skills, or fails to make management decisions, supervising staff, or not having the vision to lead the organisation.

As a leader, you can deal with such dysfunctional leadership by ensuring that you develop an attitude to learn, study, have a mentor, enrol in training, or at least do whatever you can to enhance your leadership skills and knowledge of the industry.
Poor financial management is another challenge that will surely lead your organisation straight to the annals of history of business failures. You must know, down to the last penny, where the money in your business is coming from and where it’s going in order for your business to succeed.

Don’t be pennywise but pound foolish. If you lack skills in financial management, then you need to consider hiring a professional bookkeeper or financial adviser to help you manage your organisation’s financial affairs.
Sometimes, you might have a very good product or idea but still fail to make it because of an inappropriate business model. You need to have a business model that is sound which shows proven revenue streams.

Your business plan should show financial forecasting based on predictable revenue streams and strategic marketing and a sound business model that incorporates best practices.
Another factor that derails a business is when it operates like any other business because of a mediocre value proposition. You need to have a strong value proposition that makes you different from your competitors and literally make your organisation stand out in the crowd.
You should discover what sets your business apart from competitors. The way you conduct your business should be unique. Your business should have a customized approach or service package that no one else in your industry is using.

All this will be expressed in your brand, that is, the image your customers recognize and associate with your business. Your brand identity should be supported by your value proposition.
A unique value proposition will enable the company to capture the market and thereby increase the market share. The public should know what you are good at so you need to publicize your brand and what sets yourself apart from competition.

You need a robust marketing plan with tried and tested marketing techniques that can highlight clearly what you are giving your customers. If a business neglects the needs of its customers it’s bound to fail. A business needs to constantly keep its pulse on the needs of its customers.
A shift in the needs of customers can spell doom if an organisation is not keeping its ears open to what the customers are saying.

The best way to avoid losing touch with customers is to frequently carry out customer satisfaction surveys and find out what their interests are and keep abreast of changes and trends.
If you can’t carry out surveys, then you should at least talk regularly to customers to get their views about your product and value proposition. Ensure your value proposition is still relevant.
Ironically, businesses sometimes fail because they might be experiencing rapid growth or they might be over expanding. Growth in itself is desirable but rapid growth creates a number of challenges.

Because of a sudden spike in orders, a business might over commit itself by building inventory thereby tying a lot of cash.
If this stock fails to move, the business might experience serious cash flow problems. Every business growth and expansion must take place after much careful strategic planning.
A business should make sure that the initial business is stable before expanding to an additional location and should not order inventory unless it’s sure the stocks will sell and be paid for fast.
If the issues that have been highlighted above are addressed the chances of failure are minimised. However if you do fail, don’t quit. Keep on trying.
Johnny Cash said: “You build on failure. You use it as a stepping stone. Close the door on the past. You don’t try to forget the mistakes, but you don’t dwell on it. You don’t let it have any of your energy, or any of your time, or any of your space.”

l Stewart Jakarasi is a business and financial strategist and a lecturer in business strategy (ACCA P3), advanced performance management (P5) and entrepreneurship.
He is the Managing Consultant of Shekina Consulting (Pty) Ltd and provides advisory and guidance on leadership, strategy and execution, corporate governance, preparation of business plans, tender documents and on how to build and sustain high-performing organisations.

For assistance in implementing some of the concepts discussed in these articles please contact him on the following contacts: sjakarasi@gmail.com, call on +266 58881062 or WhatsApp +266 62110062.

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