Low capital enterprise are least hit because recapitalization
is relatively easy. However mid-range businesses need to turn a profit to remain
in business. The profit usually goes into re-investment, transportation, supplies,
staff wages and utility bills.
1. Learn
from Others
Any business you wish to start has competitors. To
succeed study your competitors business model and learn from them. Study the
business format, staff strength, service or product. Look for ways to improve
on their technique to stand chance at success.
2. Why
do they fail?
There are many reasons businesses fail in the first year.
Most become bankrupt or fail due to inexperience.
Others are poor business structure and inadequate knowledge
of the industry they operate. Another key pointer is poor planning, un-qualified
staff and competition from established brands.
How
to Avoid Business Failure
3. Write
a Business Plan
Any investor looking to start business should write a business
plan. The plan should cover every aspect of the business. It should have goals,
business structure, qualified staff and ideal location. Other considerations are
funding, sourcing products and branding.
4. Carry
out Feasibility Study
The next step is to carry out feasibility study. Then conduct
a comprehensive market research. The market research should focus on customer
needs and preferences. Find the product and gain a good market for your
products or services.
5. Funding
Major factor to
the liquidation of business is funding. Every businessman grapples with funding.
Without adequate funding the business will not grow and would remain stagnant.
You need money to cover the working capital or you are
sunk. You could seek bank loans to boost your company or increase inventory. Make
sure the loans attract low interest rates and are long termed.
6. Plan
for Growth
The mistake new entrepreneurs do is starting the business
without a view for growth. Plan for future growth and make adequate provisions.
This could include extra office space, large warehouse, aggressive
advertisement and increased production. Other ways is to seek partnership or sell
shares to prospective investors.
7. Always
Have an Exit Strategy
It is important you plan for growth or have an exist
strategy. Along the line you might decide to change business or develop new
interests.
An exit strategy would minimize the financial implication
and reduce liabilities. An exit strategy should only be implemented early in
the business.
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