Why Small Businesses Fail
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80 percent油of businesses hardly past their first anniversary. The rate of survival shrinks as the year go by. After ten years, only seven out of ten businesses are likely to survive. Some of the reasons responsible for this high failure rate are factors that are avoidable. Unfortunately, many entrepreneurs ignore these factors. This slide highlights some of the reasons why small businesses fail.
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Why Small Businesses Fail
- 2. Small businesses fail within their first year. Small Business Failure Rate 1st Year 2nd Year 5th Year 10th Year 20% 34% 50% 70%
- 3. 23% Of small business fail because they dont have the right team BUILD THE BEST TEAM: NO ONE BUILDS A SUCCESSFUL BUSINESS ALONE 42% Of small business fail because there is no market for their product or service INVEST IN THE RIGHT IDEA
- 5. Established Business Invest in the right idea Have a product or service that solves a need Engage your customers Build a formidable team Market your product
- 6. It is the inability of a business outfit to meet its obligation to its customers through product or service, and to its owners through profit and other non-financial benefits due to a non-financial or financial loss.
- 7. Reasons Businesses Fail Lack of Planning A good business plan does not guarantee Success, good planning does. Planning includes short-term and long- term details of what you want your business to achieve. Its not the plan that is important, its the planning. Dr. Graeme Edwards
- 8. Benefits of Planning Places a business on a better position Gives the business a direction Helps the entrepreneur to think, decide, and act more effectively. It keeps the business structure flexible.
- 9. Reasons Businesses Fail Ignoring customer needs Successful businesses dont lose touch with their customers. They understand what the customers value most
- 10. Reasons Businesses Fail Lack of capital It can lead to the inability to attract investors. It shows that a business might not be able to pay its bills, loan, and other financial commitments.
- 11. Reasons Businesses Fail Poor location Poor location is a disadvantage that might be too much to overcome. Location is a strategic necessity. A poor location might make your customer acquisition costs too high.
- 12. Reasons Businesses Fail No Core values They are the fundamental beliefs that drive your business. They are your guiding principles that should remain constant. Even as your company grows your core values should remain the same. Core values can also serve as a moral compass. . If your business does not stand for anything, it fall for anything
- 13. There is a difference between a business termination and a business failure.
- 15. Marketing Quality Products Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. Quality is most definitely a point your customers consider before buying from you
- 16. EVERY BRAND SAYS IT IS THE BEST
- 17. Businesses must show customers why their product is more valuable Market your product based on
- 18. COMPETITIVE ADVANTAGE Competitive advantages are conditions that allow a company or country to produce a good or service at equal value but at a lower price or in a more desirable fashion.
- 19. Any advantage over other businesses is relative, not absolute Customers will judge your product base on its performance with other products Areas of competitive advantage change over time. Customers tastes and priorities change as products and the processes for making them evolve Having multiple types of competitive advantage over other businesses is best
- 20. Provide a better product at a reduced costs. Differentiate your products and services. Form an alliance with another company Position your product right in the minds of customers
- 21. A competitive advantage based on differentiation means that your product or service is different from those offered by your competitors Its value comes from the fact that you can show customers why your difference is better, not just cheaper. In this way, differentiation can effectively remove direct competition
- 22. Product Differentiation All the products in the market may be designed to solve the same problem, but they will not solve it the same way.
- 23. Thank You