Why Small Businesses Fail?

Owning a business big or small has always been a dream of many. People always tend to go into businesses and want to become owner of their own destinies. Economic recession has also made people think of running their own business ventures. Before jumping into something that committing, you will have to think on it and then decide about your way through. Here are some of the most important points to consider that would help you narrow the margin of making mistakes.

1. Management
2. Culture
3. Finances
4. Place
5. Business Plan

1. Management

First and foremost important thing is the management heading all the business processes. It is very important that you should have the right expertise mix to manage your day to day affairs. It is not an easy decision to make. Management plays a very vital role in the overall success of the business. It is not necessary that you hire all the experts of the field right away. However it is always better to get an advice on how to handle the management issues. Initially you can take opinion from the experts through the consultancy services. This would help save cost and improve the likelihood of organization’s survival through the most obvious managerial mistakes.

2. Culture

An organization at the start, though how small it may be should have set cultural values. There are certain things that should be the aim of setting the culture. First thing is that the culture should reflect justice and equality for all. Then it must be able to give employees the freedom to share their creativity. Next, it should be able to give the employees a sense of belongingness and praise for their efforts. A rewarding culture that promotes individualism will also help organization move on a faster track to success.

3. Finances

Finances play a vital role in the overall success of an organization. At the earlier stage it is not advised to tie up too much capital into unnecessary ventures. First of all, it is very important to realize that extra cash should always be available to meet the unforeseen contingencies. It is also important to have a contingency financial arrangement plan, if the original plan fails to deliver in time. Sales not always comes quick. Unavailability of cash at the right time can bring the business down in no time. A tight spending policy with an eye on the revenue generation should be the aim.

4. Place


Selecting a business place is also very important. While deciding about a place it is very important to keep in mind some of the most important things. There are some businesses where place has a lot more importance. There are others where place is not that much important. For example a service providing hospital should be reachable while a manufacturing firm’s reach ability is not that important for general public. You have to look into it by yourself to see how important the location of the place is, where you want to start your business. Starting a business at the heart of a city will result into greater expenses. You should only go for locating your business inside the city once you see it necessary. The other consideration can be the commuting of the staff. For that you should be able to figure out the location according to the available public transport.

5. Business Plan

Last thing that really matters in planning a business is the business plan itself. No business plan is complete in itself. The key to having a good plan is to first make it straight out. Then revise and proof read it many times. After you are satisfied with your plan, then get it rechecked with your future top management. If they too approve the plan, then go to a business consultant. Paying some thing to a business consultant for the business plan is much better then getting trapped into something really faulty.

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