Many entrepreneurs are closing down their business daily because of costly mistakes. I actually came across many people who failed in their first business which eventually is their last business. Why? because they lost all their money in the business.
It is informative to have an idea of these mistakes that could liquidate a business.
Poor Financial Management
Financial indiscipline, poor record keeping and lack of proper internal control system could liquidate any business. It is very important for business owners to treat their business as a legal entity. It means separating the owners personal expenses and liability from that of the business. Secondly, zero budgeting techniques is recommended to eliminate unwanted expenses.
Recruiting the wrong person
Recruiting the wrong person for the job could liquidate a business. When recruiting, priority should be on knowledge, Skills, experience, passion, attitude and ability of the potential employee.
Lack of Focus
People that are known for many things seldom specialize in any. Entrepreneurs needs to master one process and trade before moving to another.
Poor Decision Making
Decision is essential to every business. Poor Decision on the part of business owners could liquidate a business. The decision of what to produce, how to produce and whom to sell to is crucial.
Insufficient Information About The Competitors
Competition in business is stiff. It is only the most principled and focused that survive. To compete effectively, adequate information of the market and competitors is needed.
Hostile office environment
A hostile and dictatorial business environment stifles innovative ideas. Innovative companies like Google, Facebook and recently uber has an accommodating work environment where employees has a sense of belonging.
Poor Business Strategy
Strategy is everything. It is the difference between the successful and less successful. for instance, poor marketing and sale strategy could lead to poor sales which will reduce revenue.
Poor organizational structure
Organizational structure is the system put in place to ensure business continuity. This structure must be solid and tested to ensure it will work in a real life situation.
Lack of winning Mentality
Winning teams have one thing in common- 'the target'. People that gives excuses for their weakness fail most time. Building a winning mentality is essential to business continuity.
Emphasis on Quantity rather than Quality
Leading brands understand how quality is key to the survival of any business. Such brand spend huge sum on quality assurance purpose. The recent volswagen carbon emmision scandal is a good example. Therefore, business that emphasizes mainly on quantity rather than Quality might not cross the century mark. There has to be a balance between quality and quantity.
Believing Money is the sole aim of doing Business
Profit oriented entities believes generating return for shareholders is the sole aim. Businesses that only focus on percentage seldom cross the century mark. That doesn't mean that the business should run at a loss. Company like GE understand the risk associated with this. At GE, employees are made to understand that working there is beyond the paycheck. Employees goes through training and induction processes aimed at educating them what GE as a company stands for. These employees in turn become brand advocates and ambassadors.
Wrong Business Ethics and Principles
Any Business without a clearly defined code of conduct for employees is vulnerable. Business ethics dictates how employees interact with both internal and external customers. It is the duties of the business to educate the employees about what is required of them.
Lack of clear goals and targets
It could be costly for any business to operate without targets and goals. It is the overall target of the business that translates to each department which also translates to each unit/person.
Absence of Strategic plan or Foresight
Strategic plan is also known as long term plan. Businesses without this plan only exist for now. Such business may go down in the long run.
Poor change management plan
Business process is changing daily due to innovation and cost reduction measures, trade laws and labor regulations. Business without solid change management plan may struggle and eventually quit.