Top 10 reasons Why Companies Fail!!

Top 10 Reasons Why Companies Fail
by: James Walsh

Many determined company owners have done just that and have turned
successful enough to change the statistics! The latest figures
indicate that 66% of the businesses survive the first 2 years.

10 Top Reasons Why Companies Fail

Given herein are the reasons that lead to business failure.

1. Why was the Company Started?

Many people start a company and it promptly fails.

This prompt failure can be accounted for the fact that the company
was started for the wrong reasons. Profit motive determined the
starting of the business enterprise. Faulty business motives lay the
wrong foundation.

Money is important, but it is the passion for the job that
determines the success of a venture.

2. Good Location

Having the business enterprise in a good location is important
whether the company solicits public customers or supplies good
elsewhere.

Improper location results in the failure of even well-managed
businesses. Failure of this aspect is evident, when clients begin
soliciting the services of better-located competitors.

3. Innovative Products & Services

New products and services must be constantly introduced at regular
and predetermined intervals. This helps retain the existing
customers and garners new clients.

Business failure is definite when instead of coming up with
developmental ideas, entrepreneurs fail to even maintain the
existing standards.

4. Marketing Techniques

Mere offer of good products and services does not ensure constant
customers. Good marketing practices dictate that customers have to
be approached.

Disregard of good marketing techniques is evident when:

* Customers who come up with specific requirements are repeatedly
turned back with their needs unmet.
* When the entrepreneur relegates advertising products to the
background.
* Or when the company owner falsely believes that their qualitative
products or services would generate customers effortlessly.

5. Business Techniques

Many people are good at the services they provide, or the products
they sell are the best; yet, their business fails. This is due to
the fact that they are not good at managing the other aspects of the
company.

This failure occurs when:

* The employer fails to induct the right employees
* When the company owner lacks the basic skills of maintaining good
public relations

Some companies are successful initially, but fail later when
business techniques are not sharpened in tandem with business
growth. When the business develops, the businessman should change
from a technical expert to a good manager versatile at public
relations.

6. Good Book Keeping Practices

A system has to be developed that reflects all the business
transactions clearly. Entrepreneurs love the practical side of the
business, but neglectfully postpone the paper work.

Mounting paper work hampers business success when the company owner
starts procrastinating.

7. Proper Maintenance of Accounts

Proper accounting methods have to be evolved and the cash flow
should be clearly calculated. Good accounting practices also mean
that sufficient funds are diverted to all the requisite fields of
business. And, if the company owner is not aware of finance
management, that job has to be entrusted to trained personnel.

8. Adherence to the Business Plan

Successful businesses begin, develop and rest on proper planning.
Company owners who lack vision of the future are big failures.
Planning pertains to detailing out the steps required to achieve a
target.

9. Personal Qualities

Personal qualities also determine business success.

* Businesses are built and developed on trust.

* Persistence to continue when things go wrong and patience to wait
till the lean phases are over are important.

* A positive attitude is necessary for the business survival. This
quality has to be developed if people lack them.

10. A Website

E-commerce is gaining prominence. Markets are turning global. The
current e-market leader of Western Europe is the UK. Even in the
year 2004, value of sales made over the internet stood at £ 71.1
billion. But after 2010, Italy and Spain will experience tremendous
rate of growth.

Companies fail when they do not have a website.

Business is always risky. But, with the identification and
management of the causative factors of failure, business risk can be
managed.