7 answers
Adriana
Student
Northport, Alabama
1
Question
Asked
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Why do businesses not work out ?
Why do some businesses owners not have successful businesses why do they fail or get bankrupt
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7 answers
Glen Mbaku
Financial Analyst
2
Answers
Austin, Texas
Updated
Glen’s Answer
Excellent query, Adriana! There might be a few reasons behind the success or failure of businesses. The primary reasons for a business's downfall could be evolving trends or factors, organizational culture, and public image. Emerging trends and factors can alter a company's business volume, as customers might shift their purchasing habits based on these new trends. The culture within a company can also impact its business, as many customers prefer to support companies known for treating their employees well and contributing positively to the community. This is closely linked to public perception - if a company isn't seen as a positive force, it's likely that their sales will suffer. I hope this provides some clarity, and I wish you all the best in your future endeavors!
Jessica Tolbert
Project and Process Manager
3
Answers
Memphis, Tennessee
Updated
Jessica’s Answer
My top answer is poor planning and lack of actional vision. Many companies have a statement or vision defined. However oftentimes it is not defined thoroughly nor does it consist of measurable, actionable, or reasonable goals. Many companies focus too much on stretch objectives - goals that will be more manageable in the future once the business has matured further. Mentorship is important too. In a multitude of counselors there is strength. Many business owners or boards make decisions without consulting the Subject Matter Experts (SMEs) and all other relevant stakeholders. This is a big part of poor planning as well. Making decisions in a vacuum or with profits being the only priority leads to pricing products too high, advertising and marketing ineffectively, and making other poor business decisions related to their product or the management of money for that company.
Christina Ridgely Aschenberg
Lending Call Center Manager
17
Answers
Aurora, Colorado
Updated
Christina’s Answer
There are many reasons businesses fail, but in short business owners need to do a lot of homework exploring the items that David and Jessica mentioned earlier. Owning a business is not for the faint of heart. It requires big financial and time investments. Furthermore, business owners need to seek out those who can help them and be willing to listen to and take the advice given. Collaboration is key for any career really, but especially for the business owner. They need to find other business owners and network and frequently ask for advice. If you are considering going into business - start with the SBA and get help from the resources there. Best of luck in your journey!
david kirk
Retired Computing Manager
480
Answers
Syracuse, New York
Updated
david’s Answer
Great question! Businesses can fail for many reasons, but it is usually due to mistakes made somewhere. To run quickly through the basics:
- the potential audience must exist and demand must exist. They may be buying from an already-established business and yours isn't needed
- the product may have little interest, even though your friends like it
- it may be a great product, but customers can't find your location, or it's too far away
- you may have priced the product or service too high
- the startup costs may have taken all your funds (property insurance, liability insurance, rental property, tax advisor, legal advice, new employees, advertising, inventory stock,licensing, and more)
- sufficient funds to live on (food, clothing, transportation and all the demands of life) may not be available to sustain you for the first year or two that often show no profit.
- the potential audience must exist and demand must exist. They may be buying from an already-established business and yours isn't needed
- the product may have little interest, even though your friends like it
- it may be a great product, but customers can't find your location, or it's too far away
- you may have priced the product or service too high
- the startup costs may have taken all your funds (property insurance, liability insurance, rental property, tax advisor, legal advice, new employees, advertising, inventory stock,licensing, and more)
- sufficient funds to live on (food, clothing, transportation and all the demands of life) may not be available to sustain you for the first year or two that often show no profit.
Harry Clapeck
Manufacturing
28
Answers
Scottsdale, Arizona
Updated
Harry’s Answer
Hi Adriana, A great question and many great answers. Let me try to add to them without being redundant.
There are two basic groups of factors why a business fails: Those out of your control and those within your control. Some of those out of your control you cannot obviously manage, some of them you may be able to react to. EG: a competitor comes up with a better product - do you react to it to make yours better? Do you keep yours as is because you still have market share? Have they infringed with a patent? These are fighting/reacting issues that may or may not save your company.
Deal with those issues primarily in your control and rely on your ability to identify and react. This is a business. Don't fall in love with your product/service. You need to be objective with your analysis and actions. Seek outside-expert-legal opinions. You don't know everything (a down fall of many business owners.) There is nothing wrong with seeking or asking for help.
One of the most important things in a business is constantly watching the bottom line. Again - this is a business. Many small business owners don't know their bottom line nor do they understand costs or what a P and L looks like.
There are/were business that were successful but got too greedy or attempted to move/grow too fast - mistake. There is a reason "slow but sure" is a valid saying. Trust it.
Hope these thoughts/comments help Adriana and good luck!
There are two basic groups of factors why a business fails: Those out of your control and those within your control. Some of those out of your control you cannot obviously manage, some of them you may be able to react to. EG: a competitor comes up with a better product - do you react to it to make yours better? Do you keep yours as is because you still have market share? Have they infringed with a patent? These are fighting/reacting issues that may or may not save your company.
Deal with those issues primarily in your control and rely on your ability to identify and react. This is a business. Don't fall in love with your product/service. You need to be objective with your analysis and actions. Seek outside-expert-legal opinions. You don't know everything (a down fall of many business owners.) There is nothing wrong with seeking or asking for help.
One of the most important things in a business is constantly watching the bottom line. Again - this is a business. Many small business owners don't know their bottom line nor do they understand costs or what a P and L looks like.
There are/were business that were successful but got too greedy or attempted to move/grow too fast - mistake. There is a reason "slow but sure" is a valid saying. Trust it.
Hope these thoughts/comments help Adriana and good luck!
Harry Clapeck
Manufacturing
28
Answers
Scottsdale, Arizona
Updated
Harry’s Answer
Hi Adriana, A great question and many great answers. Let me try to add to them without being redundant.
There are two basic factors on why a business fails: Those out of your control and those within your control that you ignore or react incorrectly to. Some of those out of your control you cannot obviously manage, some of those you may be able to react to. EG: a competitor comes up with a better product - do you react to it to make yours better? Do you keep yours as is because you still have market share? Have they infringed with a patent? These are fighting/reacting issues that may or may not save your company.
Deal with those issues primarily in your control and rely on your ability to identify and react. This is a business. Don't fall in love with your product. You need to be objective with your analysis and actions. Seek outside-expert-legal opinions. You don't know everything (a downfall of many business owners.) There is nothing wrong with seeking or asking for help.
One of the most important things in a business is to constantly watch the bottom line. Again - this is a business. Many small business owners don't know their bottom line nor do they understand costs or what a P and L (profit and loss statement) looks like.
There are/were business that were successful but got too greedy or attempted to move/grow too fast - mistake. There is a reason "slow but sure" is a valid saying. Trust it.
Hope these thoughts/comments help Adriana and good luck!
There are two basic factors on why a business fails: Those out of your control and those within your control that you ignore or react incorrectly to. Some of those out of your control you cannot obviously manage, some of those you may be able to react to. EG: a competitor comes up with a better product - do you react to it to make yours better? Do you keep yours as is because you still have market share? Have they infringed with a patent? These are fighting/reacting issues that may or may not save your company.
Deal with those issues primarily in your control and rely on your ability to identify and react. This is a business. Don't fall in love with your product. You need to be objective with your analysis and actions. Seek outside-expert-legal opinions. You don't know everything (a downfall of many business owners.) There is nothing wrong with seeking or asking for help.
One of the most important things in a business is to constantly watch the bottom line. Again - this is a business. Many small business owners don't know their bottom line nor do they understand costs or what a P and L (profit and loss statement) looks like.
There are/were business that were successful but got too greedy or attempted to move/grow too fast - mistake. There is a reason "slow but sure" is a valid saying. Trust it.
Hope these thoughts/comments help Adriana and good luck!
Juney Dijkstra
Business Development / Production / Project Management
39
Answers
Hilversum, North Holland, Netherlands
Updated
Juney’s Answer
Echoing what has already been said: There are at least as many reasons businesses fail as reasons they're started. However, many of the reasons listed thus far are based on logic, good sense, and are largely within a business owner's control.
There are plenty of micro- and macroeconomic factors outside of the business owner's control that can make businesses fail, too, such as but not limited to:
- Force Majeure (e.g. war or disease)
- Timing (e.g. a competing business parallel launching)
- Luck (e.g. a competitor's virality)
- Local / Geographical Challenges (e.g. educational system doesn't meet your talent needs, infrastructure doesn't meet your operational needs)
- Governmental & Legal Challenges (e.g. policies, regulations & laws changing)
As has been mentioned, starting a business isn't for the faint of heart. Diversifying the business approach, having buffers & back up plans, but most critically, a clear, communicable, high potential vision with the right leadership team are elements that are the bare minimum to be able to weather challenges with resilience.
There are plenty of micro- and macroeconomic factors outside of the business owner's control that can make businesses fail, too, such as but not limited to:
- Force Majeure (e.g. war or disease)
- Timing (e.g. a competing business parallel launching)
- Luck (e.g. a competitor's virality)
- Local / Geographical Challenges (e.g. educational system doesn't meet your talent needs, infrastructure doesn't meet your operational needs)
- Governmental & Legal Challenges (e.g. policies, regulations & laws changing)
As has been mentioned, starting a business isn't for the faint of heart. Diversifying the business approach, having buffers & back up plans, but most critically, a clear, communicable, high potential vision with the right leadership team are elements that are the bare minimum to be able to weather challenges with resilience.