Reasons Behind The Failure of Entrepreneur Business

I often discuss about what we should do or prepare in order to become a successful entrepreneur or running a successful business. I also post lots of motivating related articles, posts and examples so that we can continue to pursuit money making opportunities. In this post, let’s talk about some of the reasons that small businesses fail. Check out the post title “Top 10 Reasons Small Businesses Fail” from Yahoo Finance and take note on some of the points we should considered as an entrepreneur or running a business. According to the writer of the article, Jay Goltz who owns five small businesses in Chicago, It seems like in most failure cases are mostly related to our own attitude and behavior. Below is the list of the top 10 reasons which I quote from the article but rephrase according to my understanding.

  1. The market of demand is not big enough to make a profit to sustain the business. Although there are sales but the money earn is not enough to cover business expenditure.
  2. Instead of practicing the right attitude and thoughts of an entrepreneur or businessman should have, people tend to choose their own way of doing business. Sometimes they just can’t help themselves but making the same mistakes again and again.
  3. Fail to control business growth. Expanding business is good but it must be done properly with careful planning. There is always risk involves when expending business. That is why most people choose to just hold on to their business without expending unless it is necessary. One of the examples is the Toyota design problem back in 2010 which the company claims due to business expanding too fast.
  4. Fail to manage business account properly. If you don’t know how much money your business makes and how much your business expenditures, you’re unable to make adjustment accordingly until it’s too late. That is why most small businesses let accounting firm manage their account if they can’t afford to hire a financial officer.
  5. Not keeping enough funds for unexpected event. In most cases small businesses fail because they don’t have enough money to turn around or sustain economic crisis before things become better.
  6. Operational mediocrity. Guess we have to be unique and special in our own way in order to survive in business competition.
  7. Operational inefficiencies. Spending more than we earn is going to end up losing money.
  8. Dysfunctional management. Every little things including employee, project, account, product and services are crucial towards a success of a small business. Mismanagement of any single small area might just lead to failure.
  9. The lack of a succession plan. It’s a competitive world especially in business field. It’s difficult to survive if you don’t have a good plan.
  10. A declining market. It’s not just the competitors from the same business field that we need to face. We have to make changes to cater for new demands due to changes of technology.  One of the examples is the bankruptcy of Blockbuster video-rental chain store.

In my opinion success and failure are two events which every entrepreneur need to go though. There will surely be at least couple of failure before we are able to taste the sweetness of success. We just have to learn from our mistakes and make failure as a stepping stone. Remember that we need to change in order to success and that includes our attitude and thoughts.

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2 Responses to “Reasons Behind The Failure of Entrepreneur Business”

  1. John says:

    I think consistency and discipline are the main factors which are behind entrepreneur failure. The above reasons are correct and as well missed business opportunities.

  2. Jenny says:

    To be successful entrepreneur you have to promote your name and your brand. It is obvious that current market situation is not the best. Planning is very important part.