Makings of a failing business
1. Choosing a bad business opportunity
A good business opportunity is that which has a large market and easy to find customers who can buy the product. Additionally, it should have a high conversion rate and the potential for a good profit margin.
You should be qualified to do the business or be in a position to hire qualified people.
2. Choosing the wrong customers
Businesses fail because of choosing or targeting the wrong customers.
For your idea to succeed, you should have the right product and target the right customers. Identify and market to customers who have specific needs to be fulfilled and the money to pay for the services.
Remember, not all customers are the same. A mismatch occurs when you try to sell to a customer what they don’t truly need.
3. Choosing the wrong products or services
Right products or services are those that satisfy the customer needs at a price they can afford and which earns you a fair profit. To reach the right customer, you have to use the right delivery channels. For example, you can reach most young people by marketing on social media sites.
4. Pricing products or services improperly
You need to choose a price that customers can afford and which earns you a fair profit.
5. Not selling to customers fast enough
Products with short lifespan need to be sold faster. You have to sell a lot of low prices, low margin products to succeed.
6. Bad execution
Once you get the customers you have to deliver quality products/services on time, every time and defect–free at a profit. You have to have efficient processes, efficient distribution, and customer relationship channels.
7. Employee dissatisfaction
The success of the business will depend on how your employees treat customers and how your employees carry out their responsibilities. Not having the right employees doing the right work leads to failure. How you treat your employees determines their motivation levels hence output.
8. Mismanaging growth
Success comes with challenges. The failure to manage success well can be catastrophic to your business. Too much success can overwhelm you. More customers may mean poor quality products, poor customer service, missing customer delivery times, employee theft, hiring too many employees too fast, improper training of employees and promoting people before they are ready for the next job.
You need to establish quality controls and even use of technology to make sure that your growth doesn’t overwhelm you and lead to your ruin.
Source: So You Want To Start a Business: 8 Steps to Take by Edward D Hess and Charles D Goetz
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