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Why Do Major Businesses Fail?

Failure of businesses can be attributed to a wide range of conditions and situations. Most of the times a startup has to face the problem of getting funds for startup, In the following discussion, weu2019ll look at some of the major reasons why startups fail.<br><br>

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Why Do Major Businesses Fail?

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  1. Why Do Major Businesses Fail? Failure of businesses can be attributed to a wide range of conditions and situations. Most of the times a startup has to face the problem of getting funds for startup, In the following discussion, we’ll look at some of the major reasons why startups fail. 1.No Actual Need For The Product In The Market: A major reason why companies fail can be credited to the lack of requirement of a product/service in the market. Such a situation may arise from the following reasons: ● Weak Value Proposition: lack of a compelling event to motivate the buyer into opting for the service or buying the product. Oftentimes, a product may even lack the backing of a ‘necessity factor’, which determines whether the product is a vitamin (good to have), or an aspirin (must have). ● Incorrect Market Timing: One could launch a product well-ahead in time, but would likely fail due to the lack of realization of the necessity of the product among the wider sections of the target market. 2.Exhaustion of Available Funds: Oftentimes businesses fail to operate lucratively. This is because of a phenomenon, we call the ‘unsustainable business model’. Startups begin by investing money in activities and services that can initially be well-managed in-house. That investment can rather be utilized to operate more seamlessly and efficiently. It is a popular belief that to run a capital-efficient business, a business must recover the CAC (Cost to Acquire a Customer) within 12 months. In some cases, one needs to find the investors for business to fulfill the needs of funds. 3.Wrong Leadership and Team: A devastating problem that startups face is the lack of proper team, guidance, and management. A good team would steer clear of the aforementioned challenges. An incompatible team could lead to sprouting problems in multiple business areas. ● A weak team could lead to a problematic strategy or roadblocks during the implementation of a service or installation of a product. ● Poor execution of services. ● A weak team will pave way for weak(er) teams in the future, resulting in a disruption of efficient management and lack of skills in the hierarchy of the business. 4.Technology Becomes Obsolete: In an ever-changing, ever-advancing world, technology has managed to engulf most industries and is continuing to expand exponentially. In such a condition, the technology that we are best-compatible with keeps shifting. And with progression, businesses ought to keep up. Startups, sometimes, fail to keep up with the varying paradigm of technology, which causes them to fail. 5.Competition In The Market: Businesses encounter immense competition, which forces them to focus a lot on how the competitors are keeping up with the market. Startups, mostly in the initial stages, are seen troubled due to the continuous need to focus on the competitors, whilst also engaging actively in the strategy, implementation, and execution of their own business activities.

  2. 6.Failure Of Product Development: In such a situation, it boils down to two things- a failure from the business’ end to develop a product that fits the needs and demands of the target audience, or a lack of understanding of the product from the audience’s end. If one thinks carefully, it is really only the flipside of the same coin. In such a scenario, it is a clear indication that it is a failure of the team to be able to validate their ideas to the customer before, or during, the development phase.

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