Six reasons why businesses fail

the last thing you want to focus on is failure. 
Stories abound in Zimbabwe where innovative entrepreneurs have started off brilliantly only to fade away unceremoniously.
There was a time when there was a flurry in business activity when flamboyant young entrepreneurs were the talk of town, driving flashy cars and spending money with reckless abandon. 
Their lifestyles raised more questions than answers and clearly it could be seen that this was unsustainable and in no time they vanished from the scene like burnt out candles. I am told that some of them are now driving pirate taxis in town or roaming aimlessly in the streets without a penny to their name.
Statistics gathered over the years show that seven out of 10 new businesses survive at least two years and 51 percent survive at least five years. 
This is in sharp contrast to the previously held view that 50 percent of businesses fail in the first year and 95 percent fail within five years.
I could pick on a few names, but for fear of litigation I will avoid naming some of the wannabes that have fallen victim over recent years, but instead I will dwell on reasons why such businesses fail. 
Although there is no formula that guides businesses afloat here are some of the reasons why some enterprises sink:
l Starting your business for the wrong reasons — Some people go into business with the mistaken conception that they want to make a lot of money. There is a price to pay for going into business and this may cost you your relationship with your family as you get more and more engrossed in the affairs of the business and thus ignore your family relationships. If you are passionate about what you are doing and have a strong belief that you will succeed, you most definitely will. You should condition yourself that failure will not defeat you but instead you should exhibit drive, determination, patience and a positive attitude. When others throw in the towel, you are more determined than ever.
l Poor Management — Most start-up entrepreneurs lack relevant business and management skills in areas such as finance, purchasing, selling and distribution, production and hiring and managing employees. There is nothing wrong in hiring experts who can help you run the business, otherwise you will be digging your own grave.  Systems should be put in place to detect such vices as fraud and other leakages. Neglecting such critical issues can only be done at one’s peril and one should continuously study, plan and control all activities in operations. A successful manager is also a good leader who creates a work climate that encourages productivity. He or she has a skill at hiring competent people, training them and is able to delegate.
l Capital insufficiency — having insufficient operating funds can be a fatal mistake for many failed businesses. More often entrepreneurs underestimate how much money they need and are inadvertently forced to close before they get a fair chance to succeed. In some cases there could be unrealistic expectations of a boon in revenue from sales. It is critical to ascertain how much money the business would require, not only the costs of starting, but also the costs of staying in business. Considering that most businesses require at least two years to get going, you will need enough funds to cover all costs until sales can eventually cover these costs.
l Location — while a good business location may enable a struggling business to survive and thrive, a bad location could spell disaster even for the best managed enterprise. There are certain considerations such as traffic, accessibility and lighting that can influence the location of a business. You also have to consider the location of competitors, the condition and safety of the building and the history, norms and their receptiveness to a new business in the area. 
l Lack of planning — success does not follow mediocrity. One has to be careful, methodical, strategic and work hard to be associated with a successful venture. A business plan should be the Bible guiding the operations of all businesses. Records show that most small businesses fail to make the grade because of shortcomings in their business plans that are unrealistic.  A good business plan should be realistic, accurate and carry current information with educated projections for the future.
l Overexpansion — Most business owners confuse success with how fast they can expand their business.  It is imperative to focus on slow and steady growth, in other words going for bite size chunks that you can easily swallow. There are numerous cases of bankruptcy caused by rapidly expanding enterprises. A solid customer base and a reasonably good cash flow should, however, drive expansion.
We are living in a global village and one cannot avoid the technological advances that are taking place. 
Every business no matter how small now needs a website and one can only ignore this fact at their peril. 
With the rising literacy and tele-density rates in Zimbabwe, the market is ripe for the picking. 
Increasingly more and more business is now being conducted over the Internet and at the very least, every business should have a professional looking and well-designed website that enables users to easily find out about their business and how to avail themselves of their products and services.
If you do not have a website, you will most likely be losing business to those that do.
All said and done, remember that the success of any business rests ultimately with the owner. Setbacks can only be viewed as opportunities to learn and grow.
There is increasing evidence that most self-made millionaires possess average intelligence and what sets them apart is their willingness to learn.
As always, let’s make money.
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