In August 2015, an online business threw open its door to allow Nigerians sell and buy everything from its website. It employed over three hundred staff and went viral on social platforms to capture the attention of Nigerians. It sure did and business was booming. Then suddenly, the unexpected happened. The business announced it was shutting down. The CEO declared that operations would commence from outside the country. It’s been months and not a sign of a comeback. The business was less than three years old before it died. Research shows that more than ninety per cent of startups start and close down within three to five years. There are several reasons why startups fail. Here are the few reasons for their sudden disappearance.
Published May 2nd. 2021
Starting
Big:
There is nothing wrong with thinking big, but starting big can be a disaster.
Except you are already a player in a particular industry, it is not a fantastic
idea to start big. Even if you have access to grant, loan or personal capital,
be cautious, play safe and start small. Focus on building your system precept
by precept until it becomes formidable.
Unnecessary
overhead: Even if you have an excellent structure or system
that will run your business, be very careful not to accommodate unnecessary
money draining overhead. From production to marketing to logistics to
administrative must be managed under a considerable budget. This is important:
don’t employ an entire community as staff because you have access to fund; a
sizeable number of employees can get any business off the ground if they are well
coordinated.
Lack
of startup capital: Nothing kills business faster than not
having access to the required capital needed to run the business successfully. Don’t
be misled by those who said you don’t need money to start a business. You need
money; you may not need plenty of it. As an entrepreneur, you need to learn how
to be a fundraiser. You must learn how to raise capital for your business
because it will need money at different stages. So, one of the skills you must possess.
Irregular
or uncoordinated system: Business is not about a fantastic
product; everyone’s product of course is fantastic. What runs and makes money
for any business is the system. Even if you have a fantastic product, your
business may die if the structure isn’t in place. What your business needs to
survive in any condition is a well structured network of system. System makes
every activity in the business work on autopilot. Once activities are on
autopilot, the rest is history.
Poor
Management: What makes a great business great is
the management team. As a business owner, you must work hard to build a team
that will relentlessly be committed to the growth of your business. Your major
activity is to make sure the business operations are well managed by an
experience team. This is the secret behind successful businesses.
Lack
of vision: I hate to talk about this, but it is important.
I’ve seen quite a number of entrepreneurs who run their businesses without a vision.
Isn’t that absurd? The vision of a business will inspire the owner, motivate
and propel the team that will be working in the business. So, get the vision
right so you can channel the course of your business.
No
quality control: Good product or service will introduce
you, but it won’t sustain you. Consistency will sustain you. That is why every
arm of your business must be supervised by experts and yourself. Ignore any
area of your system at the detriment of your business.
Lack
of mentors: Most business owners don’t have business
mentors and so they end up reinventing the wheel. Mentors will guide and advise
you. But they are not to make decisions for you. You must make all your
decisions yourself.
Being
Rigid: A rigid business will soon fade out. As a business
owner, be flexible. Nothing is carved on stone; anything can be
changed—product, service, team member or any part of the business. So be very
flexible and be ready to change when it becomes necessary.
Understand
the business environment: Once you don’t understand the policies
that govern business operations in a country or particular industry, your
business can hit the rock bottom. Always be close to the government so you can
be aware of whatever business policy they are introducing. You are not an
island, so don’t pretend to be one. Be proactive; know what the government is
doing that is affecting your industry.
Lost
in an age: Some businesses are trapped in the past age; they
have refused to transcend into the new age. Some businesses are still trapped
in the industrial age. And that is why they may extinct like the dinosaurs. You
must be conscious of the age we are in and the new one that is fast
approaching. Then, you have to position your business in such a way it will
smoothly transit into the new age.
There are many more
factors, but these should sustain your business.
Share post:
We simply include your name and email in our mailing list so we can send you our newsletter and other necessary information about BusinessIQ, its events and products. We do not make your data available to any third party. Read our privacy policy for more information.