Most wannabe entrepreneurs, (including myself) charge into the marketplace with high hopes of success, but many face crushing disappointment when their businesses fail. According to Bloomberg report, 8 out of 10 startups fail within the first 18 months.
I quit my high flying job in one of the big Audit firms in Kenya few months ago to venture into business world. At that moment i had two business ideas and my plan was to venture into both. To tell you the truth, i only had minimal planning and a huge hope for success.
I did venture right into the deep end. But,one of the business failed terribly. The other one is still in ICU.
So, i set out to do research on why startups(mine included) fail. Here are 3 of the major reasons.
1. No business plan.
Truth is, if you don't know where you are going, you will end up anywhere. Anywhere in this case may mean fail miserably.
Many wannabe entrepreneurs start their business without a plan and expect it to succeed. A solid and realistic business plan is the basis of a successful business.
In the plan, you will outline realistic goals for your business, identify what you want your business to achieve and the timelines. Also, identify the strategies you are going to utilize. These are essential for business success.
You can write your own business plan with the help of google.
2. Under funding.
In business, money runs out really fast. When starting any business, you will need money for all of your start up
costs as well as money to sustain the business for the first few months
of operation. This will mean enough money to run a business until cash flow from operations is positive. Running out of money is as a result of poor planning.
This is the reason why you should have a business plan that you should treat as your business bible. A properly developed Business Plan will tell you exactly how much money
you require for start up expenditures and to operate the business until
cash flow is positive.
3. Poor business book keeping.
Cash is king! That my rule in business. In the early days of the business, monitoring cash flows is not easy. But that what determines success and failure in business. Number one reason is; if you continue to spend more money than you bring in, you will soon be out of business.
Cash flow is all of the money that you take in each month minus all of your expenditures.
Proper bookkeeping arms you in making all your financial decisions with clarity and perspective. You will be able to know when your cash flow is on a sickbed and you will be able to plan around it.
Treat your books of account as your second business bible after the business plan.
That said, I hope your business all the possible success.
Keep it here for more insight.