It's the dream of every entrepreneur to become a successful businessman. When an entrepreneur starts a new business, his goal is to shine like a star and beat his competitors. But it's a fact that only dreaming is not enough and that's probably where they fail. At least, the studies are indicating the same thing so far.
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I was doing some analysis regarding the success of businesses that how many businesses fail each year, and I came across a survey of Bloomberg where they reported that "8 out of 10 businesses fail". Though that's not the answer to my question but the fact that 80% businesses fail shocked me a lot.
It made me ponder on the possible reasons why 80% businesses fail. I've read a lot of studies and researches and found a few reasons in common for failure in businesses. In this article, I'll discuss whatever I've learned from those studies. Due to a shortage of time, I'll keep my post limited to three reasons why 8 out of 10 businesses are a failure.
# 1 - Lack of planning:
One of the main reasons why businesses fail is lack of planning. Yes, every entrepreneur makes a plan but the thing is, the plan should be long-term. A short-term plan usually leads to mistakes and shows the mindset of a planner.
You should plan with the vision that you are entering into the business world to stay forever, and you'll have to admit that the time will shift and there will be changes in the tactics but you need to make sure that you are able to adapt to those changes easily. If your business is solely dependent on one thing, that's a first sign which shows that you are not ready to adapt with time.
# 2 - Not taking lessons from failures:
Regardless of how solid your plan is, you must admit that there will be troubles in your way and you'll have to face them with courage. Yes, the failures may come but the key is to learn and take lessons from those failures instead of quitting the business due to them.
Most entrepreneurs are afraid to admit their mistakes and they believe that their business failed just out of luck. Though I may agree to some extent that luck plays an important role in the success too, it doesn't change the fact that only lucky people are those who never give up.
# 3 - Poor management & Lack of focus:
Management is the key to success in every business. You must be able to manage your employees well enough, appreciate their good performance, warning them on their mistakes and understand the mindset of each employee and assign the work accordingly. Management doesn't only revolve around employees but rather it covers the financial area as well. Poor financial management is the reason for the failure of most businesses.
All of that happens when an entrepreneur stops focusing on his plan and goals. His spirit starts dumping with time. Being a CEO of the company, if he fails to focus on his business, he won't be able to make necessary adjustments with time.
There are many other reasons for those failures such as teaming up with a wrong partner and regretting later due to the shift in the partner's interest that often leads to fighting and leads to a dissolution of the firm. Does it mean that you should stick to the jobs? No, learn from the mistakes of these entrepreneurs and plan for long-term if you want to profit for long-term.