Failure is a subject that most people would rather not talk about. But ignoring the warning signs is a path that will end up with the business being on the wrong side of the business survival statistics.
Statistically speaking, roughly 68% of new businesses tend to survive for more than three years, 54% of the business survives for more than four years and just 38% of the business survive for more than six years.
Here are some of the main reasons why your business workshop can be forced to close down.
Lack of managerial know-how
During the process of the workshop progression and development, it may need skilled personnel to properly manage and plan it. If an enterprise ventures without a correct managerial strategy, it may not be able to cope with threatening conditions that can lead to its failure.
Poor financial management
Poor record-keeping techniques can be a major reason that can lead to the business collapse. It may be as a result of not being a priority or due to lack of basic management skills.
Poor location of the business
The physical location of a business can be critical to its success. A good location can make a business that was previously struggling to ultimately survive and start competing whereas a bad physical location can spell disaster to even the best managerial talent.
These factors include lack of education and entrepreneurial culture. A business can fail if it is located in a social system that hinders the application of creative activities.
Lack of business planning
Lack of a clearly outlined vision of where the business should be in the future and lacking a detailed documentation about all the details of the business can lead to business failure. It is highly critical that a business has a business plan and most businesses fail due to fundamental shortcomings of their business plan.
Inadequate market facilities
Small-scale workshops and businesses face hardships in the process of marketing and distributing its products. This is because they lack their own marketing network, hence they find it difficult to sell their products at a premium price as a result high cost of production and lack of price standardization of the product price.
Poor market research
Poor market research strategies can lead to an inaccuracy in understanding the customers’ needs and wants. A business can fail as a result of not fully investing their resources, and neglecting to determine whether there is sufficient demand from their clients.
A business can have a high start-up cost e.g. registration and licensing requirements which can pose an excessive and unnecessary burden that a business can find difficult to cope up with.
High operational cost
A business can face a number of problems as a result of largely fixed cost absorption, obscene economies of scale and expensive key factors of production.
It is a constant challenge running an organization, but by being aware of factors that can lead to a downfall of a business can help proactively elude them.