If you are thinking of starting a new commerce you will definitely think approximately the number of startups that fail both in the short and long term, unfortunately business failures are common, about 20% of small companies fail in their first year , 50% will fail within 5 years, and 33% Fail after 10 years or more, to protect your company from failure, you must know the reasons for business failure, and we will mention to you at the end an example of a large company that failed and returned to success after knowing the reasons for failure.
Reasons why startups fail
Running a trade is not for the faint of heart. Entrepreneurship is inherently risky. Successful entrepreneurs must have the ability to mitigate risks for the company, while offering a product or service to the market at a price that meets consumer demand levels.
But why do companies fail ? And what makes one entrepreneur succeed, and another suffer a trade failure? Whether you want to succeed in your commerce, you must know the reasons for the failure of startups that we will mention now.
Lack of an effective action plan
Provided you don’t have an effective commerce plan, you won’t be able to properly communicate your vision to your team. Too often, entrepreneurs believe that it is easy to build a product, create a service, or a website, and acquire customers, but it is difficult to accomplish without Clear and effective action plan. The commerce plan focuses on discovering a scalable way to gain more sales, and generate better income.
Not hiring the right people
Hiring the correct people has a huge impact on nearly every area of your commerce. One of the most apparent examples is sales. If you don’t have enough sales, you won’t be able to pay your staff, or yourself, and your startup will not be able to grow. Sales representatives are the key to increasing sales.
Numerous companies also fail due to naughty stock management, whether they have to hire someone skilled in stock management, or use good inventory management software.
do everything yourself
Yes, you are an entrepreneur, but that doesn’t mean you have to do it all on your own. A strong business depends on trusting others and this is an fundamental leadership trait. Provided you want to control everything, you probably won’t succeed in the long run.
Delegating is a skill that must be mastered to effectively run a business. It helps you manage your time, focus your energy on what things most, and identify emerging potential leaders within your company.
Failure to adapt to market changes
Entrepreneurs who fall in love with a service or product and refuse to change it to meet the trends demanded by the market are likely to fail. The key to long-term success is flexibility and a willingness to change when essential.
lack of innovation
The failure and success of startups is linked to two main factors: innovation and marketing. Innovation means finding a new way that is better than any other company to meet customer needs. Any entrepreneur can make some money in a short time, but whether you want to become successful and maintain that success over the years, decades, you must find a way to add more value than any other person or company, and this only comes through non-stop innovation .
Ineffective marketing strategies
Provided your company is big or small, marketing is the step that will determine the path to success or failure. If you can’t find a way to market your product or service, your business will have a hard time getting off the ground. You could have the best product out there, but it doesn’t get a good percentage of sales because of marketing strategies that don’t work. For example, McDonald’s has the best burger in the world? Probably not, but their marketing strategies are very unique, which is why they are fairly successful.
Not having enough funds
Startups need enough time and money to run smoothly. There is no answer as to how much money an entrepreneur needs to spend on their business. But it can be argued that many startups fail due to inadequate funds, and a number of them fail due to their inability to promote additional funding.
Anxiety about competition
It is common for any company to face brilliant competition from competitors however, startups should not pay much attention to competition. This does not mean that companies should not worry about competition, but that there should be a balance between being overly concerned about competition, and ignoring it.
Expensive product prices
The pricing of the product must be appropriate for any startup to succeed, if the price of the product is too expensive it may fail to attract more customers. The price can only be high if there is a meaningful benefit to the customer, but it makes sense, in which case the customers will not complain approximately the price of the product.
How did Apple overcome its failure?
Everyone hears approximately Apple, one of the most valuable companies of our time, with a market capitalization of more than $2 trillion . But it wasn’t always this way, as Apple is actually the best example to look at when thinking approximately why startups fail.
Apple founder Steve Jobs was fired from the company in 1985 to return to it in 1997 when the company was operating at a loss, sliding toward bankruptcy, so that Michael Dell (businessmen and CEO of Dell Computers) advised decision makers to close Apple and return the money to shareholders.
But Apple persisted, and Steve Jobs asked himself one of the most important questions of his life, “What business do we really do?” At first, the answer seemed apparent, since the company was in the computer commerce, but how was it supposed to win back customers.
That’s why Jobs asked himself a moment question, “What business should we be in?” This question helped change Apple’s life. The company moved on to building core technology that connects people with what they love, as the company arranged a partnership with Microsoft and Apple released the iMac just a year later.
The company returned to profits and left its mark, and then soon the iPod, iPhone, and iTunes appeared, increasing their net sales profit. Since then, Apple has never stopped innovating, and its marketing campaigns have propelled the company into a whole new world.
Today, is Apple only working in the field of computers? Only 10.4% of their business is computers, which means that 90% of sales are for iPhones, iPads, and Apple Watches, which is lucid evidence that they have adapted to market changes.
Sources:
https://www.tonyrobbins.com/career-business/why-do-businesses-fail/
https://siliconcanals.com/news/common-reasons-why-startups-fail/
https://www.investopedia.com/articles/personal-finance/120815/4-most-common-reasons-small-business-fails.asp
