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Why is my business failing?

Updated on March 4, 2014

The basics

Starting a business is one of the hardest things most of us will ever do, sometimes you have to be able to take criticism, we all think we know our business best but the truth is, if it's failing maybe we need to get with the times and have someone take an outside look at things.

I can usually walk in to a business and tell them at least 10 things they are doing wrong within the first hour. A lot of business owners are stuck in their ways and hate to admit they're wrong. But if you're breaking even or even making a loss you don't really have much choice.

Are you cut out to be a business owner?

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Reasons why a business fails...

Lack of focus on your niche:

If your business has a niche, market it properly, and if it doesn't, take the time to develop a well-defined niche for your business. It is so much easier to develop a marketing plan when you are clear on your target.

The wrong employees:

When first starting out and hiring, it's easy to get suckered in to hiring family and friends. This can be detrimental to your business, they can often be lazy and hard to control, you may feel embarrassed to give them menial chores and may feel you have to take their ideas on board.

When hiring outside remember you have a business to run and anything that interferes with daily operations must be addressed immediately. Be careful not to rush in to employing someone and use this checklist below:

  • Don't Hire a person who lacks the proper skills for the job
  • Don't Bring in a new employee whose personality rubs everyone the wrong way
  • Don't employ a person who quickly demonstrates a poor work ethic (this is why trial periods are handy)

Failure to adapt to the changes in the market:

Now this is THE most important factor in your businesses failure. Your business must continually adapt to both the changing marketplace and new technology. It is one of the key ways to survive and sustain the advantage over your competitors.

Change is necessary in a business environment, if you are not prepared to move with the times it can almost certainly mean the end for your business. However, if you choose to adapt you can position yourself ahead of your competitors.

Not managing your brand Online:

The way forward in this day and age is to go Online where appropriate. This is not always easy, there is much more to getting online than building a website.

Do you have a good, helpful website? Do you Google yourself and your business monthly? Do your social media accounts tell people how to hire you? Do you have a blog that hasn’t been updated in six months to a year? Do you have bad reviews online that you have not responded to? Can your website be seen easily from a mobile device? People will search for your company online before they ever call you, what would they find about your business today?

This article (here) goes much more in-depth about SEO and getting you an online presence.

No marketing plan:

Too many small business live off referrals, which is good, but that eventually will dry up. You must put some effort each day into generating sales for your small business. You can make a call, send an email, write a blog post, and ask for a testimonials from a happy clients. Do not rest on your reputation. Actively let the world know you are open for business.

Poorly designed business model:

What is your business model? This basically means how do you plan to make money? and it's the first steps to planning out your new business. There are so many things you have to factor in to making a good business and here's just a few of them...

  • Who's your target customer?
  • How will you reach, acquire, and keep customers?
  • How will you define and differentiate your offering for other businesses?
  • How will you market your business?
  • How will you generate revenue?
  • What's your cost structure?
  • What's your profit margin?

All these questions should be looked in to in depth and answered BEFORE you launch your new business and not during. It takes time, effort and lots of research!!!

Poor internal control and execution:

If your business has poor internal control, there is a greater opportunity for your employees to commit fraud and steal from your business. There must be a proper segregation of duties

The internal control system begins at the top management level. Employees should receive a code of ethical conduct to read, understand and sign. Duties should be properly allocated and segregated to prevent any opportunity for theft of your company's assets like stock or even cash, and people should understand when they need someone else's approval for certain tasks within their role.

Accounts should be regularly reconciled by a third party who is not part of the check-writing or collections-receiving, or recording process.

There should always be an anonymous system in place for employees to report any fraud they see occurring in the workplace as well as an internal audit function monitoring to see that the controls work as designed and that they are being followed correctly.

Failure to control costs:

Cost control is a particularly important area to focus on for small businesses, which will often have limited amounts of time and money.

If your business is losing money, you need to increase profits by becoming more competitive. You will also need to cut expenses in order to succeed. Knowing how to implement effective cost reduction and profit increasing strategies can be the determining factor in the survival of any business.

Free online marketing websites for uk businesses

Management in complete denial:

Denial is endemic to management. It's a natural part of human nature, and a part of the survival instinct. It can be useful and it can be disastrous. If the people in charge are digging their heels in and the business is failing, they need to take a step back and realise that if changes aren't made quickly then the business could quite well fail.


The real dangers for any expanding businesses is that they do so too quickly or in an uncontrolled way. If this happens, cash flow and customer satisfaction are usually the first casualties and, in extreme circumstances, these can result in the demise of a once flourishing business.

Be sure not to run before you can walk, make sure each step of your business is up and running to perfection before taking the next step.

Poor location:

You should do lots of research before renting or buying a business premises, be sure to check your competition in the area and that you're not over paying for it. There's no point opening a betting shop for instance right next door to an already established one. Or opening a cafe in the middle of nowhere.

Personal use of business funds:

You should never be tempted to dip in to the businesses cash flow for any personal reasons, it should be implemented from the start and carried on for the entirety of your businesses life span.

Lack of experience:

This is another main factor in a business failing. Lack of experience coupled with the unwillingness to change will 100% end in a failed business. There's no saying someone with not much experience can't go on to be a highly successful business owner, but without the ability to learn and adapt there is no chance of this.

Not communicating with existing customers:

It’s easier and cheaper to keep a customer you already have than to go out and get a new one. You should keep a database, CRM system and email marketing program to communicate with your customers so that they don't forget about you and are kept up to date with any offers/deals, new products or services etc your business may provide.

What have you got to lose?

If you're sick of banging your head against the wall then try some of the tips listed here. If you're unsure where to start or don't have the time to do it yourself then there are plenty of people in marketing that can do it for you.

I myself offer an affordable solution to get your business noticed online, contact me here.

The key is research, research research!!! Get on Google and spend the next week there until you have looked through all of your competitors Websites and Online marketing. What works for them? Why aren't you doing it? can you do it better? You need to look at relative company's inside and out of your locality. See what works for them and see if it could work for you, remember they're already established so you can learn a lot from them.

Just remember to be open minded, allow the changes and give the results time. What have you got to lose?

Do you think you always know best when it comes to your business?

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      Belle 4 years ago

      The points make a lot of sense, I can definitely attribute a lot of my problems to a few of these. A big problem is lack of focus and proper marketing.


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