Why do businesses fail…?

The most important cog

1.    Incompetence

In a recent survey it transpired that 46% of businesses fail due to the incompetence of management.

What can be considered and understood by our entrepreneur reading this, as incompetence.

We feel the following headline criteria do;

  • Over or even under-pricing the goods and services on offer. If over-priced no-one buys and while under-priced, the business makes a loss.
  • The entrepreneur draws too much from the business, starving the business of vital cash resource.
  • Creating a backlog of liabilities can create an inflated bank account, the potential of this being that incorrect decisions and spending plans can derive.
  • A lack of market awareness on the services on offer by competitors.
  • No strategic planning.
  • No knowledge of financing and how to finance the short term, medium term and long term expenditure.
  • Poor administration.

Successful salesmen and marketeers who turn their hand to become an entrepreneur can quite often forget that the most important cog to running a successful business is the administration. This covers a wide variety of disciplines. Not least record keeping, simple filing and keeping sales contracts and databases up to date and accurate. Good human resource policy and operating procedures are paramount.

Knowing where you are – is as important as selling your product.