5 Reasons why Many Young Businesses Fail

By Psirmoi Daniel

Many people begin business with the sole purpose of making profits.  However to say that most of the fledgling businesses go past the infancy stage and perform well, giving the much needed profit to the owner will be stating the undecorated truth.Entrepreneurs and businesspersons often ignore that their projects are likely to fail at some point if some factors remain unchecked. The major reasons for business failure include: bad reason for starting the business, poor location, insufficient capital and poor customer service.

1.       Reason for starting the business. 

Did you start your business because you saw your neighbor has begun one and is making supernormal profits? Most Kenyans fall for this temptation which they cannot resist. It is not uncommon to see one line of business in one street. You doubt this? Stop reading this and look around in your nearest town. Our country people have been become masters of ,for a lack of better word copy pasting other persons business, not knowing that a venture you imitated from a friend is surely bound to fail if you lack passion, resilience and do not carry out intensive market research before  start of.  

2.       Poor Location  

Yes, your primary school business education teacher was dead right! The location of a business and the nearness to the customer or proximity to the target market determines the performance of a business.A firm that is located close to its customers will obviously perform well. It is preposterous and foolhardy for example, if your target market is up-market people and you set up your business, in lets say Kibera.  This is akin to opening a pork butchery in Saudi Arabia! For sure you will not sell. The business will close shop as fast as it opened. Smart business chaps, before situating a business in a certain area consider factors like the ease of accessibility, security, neighborhood and nearness to competitors.  

3.       Expanding too quickly.  

Success in any field has been known to get into the mind of human beings.  Business People, being mere mortals at times get confused with little success. These chaps may decide to expand the business or open other branches or chains elsewhere, which in real sense is counterintuitive if the mother business is not doing well. The little profits made should be ploughed back t the venture instead of eyeing other markets. 

   4.  Poor customer service. 

In the business world, a customer is the king and rightly deserves to be treated as a royalty. This is because they are the main drivers of the business. If the customers keep off, an organization is bound to fail, unless of course yours is a non-profit or charity organization.  How you serve your day to day customers determines if they will make subsequent visits, if they will refer the business to their pals via the effective word of mouth and also entices would be or potential customers.Precaution in handling customers should be therefore exercised because customer service is the face of the business. It should be noted that customers in this age and time have very many options and that there exists supplementary goods in the market and competitive services.  The prospects of an organization that does not value its customers will for sure dwindle and it is only a matter of time before such organization finds its way in the business recycle bin.

5.       Insufficient  promotion.  

Promotion  simply refers to the marketing activities. Making the buyer aware of the existence of a good or service in the market. Promotion should be carried out extensively and on a large scale. A serious business man, who is just starting out should look at the cheapest options to market or promote his goods or services.The Internet , in this century is one platform that is suicidal to ignore} it offers many free opportunities to market your business. Don't rely on free marketing only, because it's not sustainable. You have to incorporate low cost methods as well, and as your business grows, you'll have more money to invest in marketing. Successful businesses that have avoided small business failure invest immensely in marketing.

Other reasons why businesses fail include among others:
-Inability to adapt to a changing marketplace
-Failure to keep overhead costs low
-Underestimating competitors