The reasons for the failure of most business projects

Every day, many business projects are failing on a number of different reasons. According to managing a small business of the United States of America (SBA), approximately 90%%%% of all small businesses fail within their first two years, primarily because many entrepreneurs lack the basic knowledge and experience in dealing with problem situations that arise at the initial stage formation of the company. Below are some common problems that occur during this important preliminary step. Business entrepreneurs should be aware of possible problems here and work hard to resolve them in order to avoid failure.
Insufficient training

Careful planning is key to success and a marked effect on the stability and profitability. Often, entrepreneurs do not wait to start a business that they neglect the basic training, which includes the development of literacy and working business plan. This business plan should contain a clear description of your business and vision, the main purpose for developing such a plan - is to convince potential investors to help you in translating your project. The first step before starting any business is to develop a carefully constructed and detailed business plan to ensure the company's success and high level of performance.

Lack of funds

Another common mistake that many small businesses, it is an insufficient amount of funds needed to launch and promote the business. Lack of funding greatly limits the expansion of any business, and will greatly threaten the potential growth and business stability. Entrepreneurs should try to identify and correctly assess the amount of funds needed to run their businesses. It is essential to determine the amount of money needed to run the business, while taking into account not only the costs associated with starting the promotion of the company, but also those costs which are needed in order to keep the business afloat. Entrepreneurs should not run any business project, if they do not have sufficient funding to cover costs for at least one year.

Poor marketing strategy

Quite feasible to run your business and sell the best products and services at competitive prices, however, the company may be in danger of collapse, for the reason that the target customer base may not be aware about products and services. Advertising is a vital factor for success in business and if the entrepreneur does not know how to sell to the public, he should seek help for marketing a marketing expert who can help in organizing the effective promotion of business. By the way, the number of Internet users has increased dramatically, and e-commerce is spreading actively in the past few years, so every company must have its own Web site, made by professionals, where customers can easily find all that they care about the business, location, products and services.

Unreliable postavshiki

For many successful businesses, the ability to maintain the number of total number of items directly related to the reliability of suppliers. First, work will be difficult, as once to find reliable suppliers is a pretty daunting task, but through proper research and find suppliers, the entrepreneur will be able to continue to successfully earn the necessary lines of supply and to find reliable people to work with. It is very important to maintain effective relationships with suppliers and actively seek to establish trusting relationships with reliable suppliers.

The lack of reliable staff

Remuneration is the largest expenditure items for many small businesses. The company must use the exact number of workers with the necessary skills and experience in a particular area. If a company attains a lot of unproductive employees, any extra labor costs. If the staff is too small, the load may be too large, and as a consequence, the efficiency of the company may suffer. The entrepreneur must bear in mind the issue of employment and create some balance in the working space by the correct allocation of tasks among the staff and also need to ensure that the company does not appear incompetent staff.

The low level of sales

The level of sales is a key component in the success of any business. The low level of sales, acting as a warning that the business could be under threat. Companies must keep abreast of current state and prospects in the fields of sales, and be prepared to react promptly to any problems in this area. They must also have sufficient information about their competitors, in a timely manner to regulate prices for products and services and hire qualified personnel who can do the most good for business.

Lack of diversity of products

Some companies may only offer one product or service. This lack of variety can be dangerous because, if production stops, the entire business can fail. It is important that all companies have some sort of diversification of products and services to ensure a high level of sales.

The company's reputation

The company's reputation is also an important factor for success. Everything connected with customers, professional behavior exhibited by employees and managers, the purity of the store, prices, quality goods, etc., greatly influence the overall impression of the company and its credibility. Companies with good reputation, are more successful and profitable than companies with bad reputations.


Overexpansion occurs when entrepreneurs are under the influence of business success incorrectly expanding their business. This is a pretty solid reason why the company could go bankrupt, but this can be avoided if the owners of more focus on low and stable development of the company before considering any expansion. As soon as you create a valuable customer base and will be a steady income, then entrepreneurs will be able to think about the development and expansion of the company.


Business location is also important for success in business. A good location can help the fight against competitors, and ultimately ensure the prosperity of the company, at the same time, if the location of the company is not entirely successful, it could badly affect the affairs of the company. One of the important factors to consider when determining the location of your company, is home to targeted customers, records of traffic jams, the physical distance from competitors, as well as state and safety of the building.
There are many factors that can adversely affect the successful development of business. Every entrepreneur should be aware of these problems and should be able to keep track of those moments in time in the company, which in turn will facilitate the training and the expertise entrepreneur.

10 June 2011
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