Recently a phenomenon is occurring at a global level, thousands of people leave their jobs every day and embark on the adventure of setting up a business by their own means, some are successful but a large percentage are not, hence the question arises Why do companies fail?. Before moving on, we need to master the concept of a business.
You might be interested in: Fatal mistakes for a company
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In this article you will find:
Definition
It can be said that a business in a productive unit that offers a good or service in exchange for an economic benefit, which is not always in money, it can also be economic participations or shares.
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Here we will list 5 causes why the company can fail:
1. Ignorance of the activity that is being carried out
When it comes to setting up a deal, many people do it empirically, without having the slightest idea of what they are doing, bringing as consequences that poor decisions are made in the investment, hiring of personnel and marketing.
2. Insufficient capital
This is one of the aspects that must be taken care of the most, since capital is the engine that moves the businessMany people start a business with little capital, hoping that sales will be very good, soon facing a completely different reality than what was planned or thought.
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3. Poor quality service
Poor quality service can doom the business to failure Sure, this can be used as a benchmark for users, people pay to receive something good, but if they receive something of poor quality they will not trust you again.
4. Poor selection of staff
A low-skilled staff is synonymous with losses, since time and money must be invested in retraining people, not counting the wages that must be paid during that time, a situation that translates into losses and directly affects the provision of the service to the client.
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5. Incorrect financial strategies
In general, before opening a business, many people apply for mortgage loans from banks, without having financial support to pay the debt, and if the expected profits are not generated, the debt becomes an engulfing cyclone between the debt capital and the interests.
Here are some recommendations for your business to be successful.
Before undertaking any kind of deal seek professional advice, if you do not have how to do it, talk to people who have run your business successfully, observe the market and think about how you are going to place your product.
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Never forget this golden rule, the capital of the business should not be touched, do not turn the income of the company into a personal petty cash, so that this does not happen get a salary as another employee.
Ask customers how they feel about the service and the product you are offering, this is a quick way to study the market.
Lastly, make sure you have enough capital to run your business and avoid future business failure.
