“Why do businesses fail?” is the
title of chapter six in my book, Business Fits. Here are some of the highlights from
that chapter.
The number one reason businesses
and especially new start-ups fail is under-capitalization. If you’re starting a business from scratch
everything takes longer and costs more than you expect.
I give an example in the book of
how quickly increasing sales in my Ford-Mercury dealership almost broke
it. Growth is not always good.
The second leading cause of
business failure is the lack of a proven business system. People often start or buy a business with no
plan. They think they are going to learn
as they go. Think again; It doesn’t work that way.
The new entrepreneur often makes
the mistake of getting so excited about his emotional perception of the demand
for a product or service that he ignores the business system. The new entrepreneur may also ignore what
role they must play in the business to be successful.
Poor management is the third
leading cause of failure. Every business
must have marketing and management. A
business can have the best business system in the industry, but if management
doesn’t implement the system, it will fail.
A lot of other factors contribute
to a business failing. One of the major
reasons is divorce. A divorce can mean
dividing assets, which may mean putting the business in a position of
under-capitalization. The business may
have to be liquidated.
There are many other factors
including changes in the market, changes in the competition, a bad location,
changes in traffic patterns, economic changes, changes in government
regulations and more. Proper planning
can prepare for these changes.
Franchise operations fail less
often and for different reasons. A good
franchisor will not award a franchise to someone who is under-capitalized. A good franchise will have a proven business
system, but the franchisee must follow the system. Not following the system is probably the
second most frequent reason for a franchise failing. I have seen that the number one reason for a franchise failing
is divorce.
All of these issues and many more
are covered in my book, Business Fits.
http://BusinessFits.com
Please note, I have only
addressed private sector businesses.
Government and especially our federal government don’t have to operate efficiently
or at a profit. Federal agencies are
seldom as efficient or productive as the private sector. They have unlimited resources. Historically the federal government just
increases the debt and taxes on the working middle class to stay solvent. It is time for a change.
God bless President Trump and guide
him to make America
No comments:
Post a Comment