Introduction
A report released by Bloomberg revealed that 8 out of 10 businesses fail within one and half years after their creation. There are several lessons that business people and entrepreneurs can learn from the colossal amount of failure experienced in the creation of businesses. They can apply the insights they gain from the failures to improve their businesses and prevent them from crashing and failing. Studies have shown that successful companies have certain characteristics in common. These include great customer service, innovative products and services, competitive pricing, focus on customer needs, differentiation in the market, superior business models, and articulate communication of value propositions.
Reason for Business Failure
If I were to start a business, the main reasons why it would fail include poor planning, focus on profits rather than customers, and poor leadership. Many businesses fail because people do not create short-term and long-term plans (Finlab, 2012). It is important to plan and decide the milestones that should be achieved in the next few months and the next few years. The success of the business would depend on the complete understanding of customers about their tastes, likes, dislikes, and needs (Finlab, 2012). It would be important to provide products and services that meet the needs and demands of customers (Bovee & Thill, 2014). Otherwise, the business would fail because of providing products that customers do not need. The dreams, values, and goals of customers are critical in the creation and running of a successful business (Bovee & Thill, 2014). Effective leadership includes aspects such as employee and financial management, quality decisions, training and development, and timely problem-solving (Finlab, 2012). Business failure could be avoided by creating both short and long-term goals, creating business goals based on the needs of customers, and hiring a competent individual to run the business (Finlab, 2012).
Source of Advice When Staring a Business
Three sources of information when starting a business include the internet, print, and television. Technological advancement has turned the Internet into the vastest and reliable source f information. Several subscription services allow users to access databases that provide information on how to start and run a business effectively. The Internet is a great source because it contains information that includes market demographics, case studies of business success and failure, financing, tax compliance, banking, registration of companies, and government laws and regulations (Smith, 2012).
Print sources such as books, magazines, and pamphlets are also a great source of information on how to start a business. Magazines and newspapers such as Wall Street Journal, Business Week, Fortune, Forbes, and Nation’s Business provide information on a wide range of topics regarding the proper running of businesses (Smith, 2012). These sources can provide information on aspects of starting a business such as creating a good business plan, financing, laws and regulations, effective business models, and what to avoid.
Television is also a source of business information even though it is not as extensive and reliable as print media and the Internet. Several programs are devoted to businesses that could provide useful information. These programs cover stories of businesses that succeeded and those that failed. They also invite professionals to talk about how to start and run a successful business enterprise.
How Such Services Might Help Me
If I wanted to start a business, the aforementioned sources of information would help me in various ways. First, they would supply information on all the requirements of starting a business. For instance, they would provide information on how to register a company, get financing, and act within the limits of the law (Smith, 2012). Besides, they would be useful when developing a business plan. Second, they would supply information on the common mistakes that en5erpreeurs make and how to avoid them when building a business. Gaining insights from entrepreneurs who failed is would be an integral part of learning to avoid making similar mistakes in my business (Smith, 2012). Third, the services would educate me and provide insights on making effective decisions. For instance, they would teach me about choosing a business structure, choosing a business location, business financials, filing and paying taxes, and hiring and retaining employees.
Reasons for a Business’s Failure
I have shopped at several stores and eaten in restaurants that led me to conclude that they were not going to make it in the business world. The reasons that prompted me to make that conclusion included poor customer service, bad location, and lack of competitive advantage.
The places I visited had poor customer service. The attendants were rude, slow, and inattentive. The service was poor and the attendants were unreliable. Another reason was the bad geographical location. I once shopped at a store whose demographics caused me to conclude that it would fail. It had low foot traffic, was inaccessible, and had inadequate parking, and there were few businesses and services in the vicinity. A larger competitor that offered cheaper products and was accessible was a few just blocks away. The store lacked a competitive advantage. It was small, poorly located, and offered products at higher prices than the larger and conveniently located competitor. In many cases, the location of competing companies matters in the success of a business because of comparison shopping. This is beneficial only if the business offers products of a higher quality than its competitor and at a lower price. The store was offering products of similar quality but at a higher price. Lower prices and ample parking space gave the competitor a competitive advantage.
Conclusion
Many businesses fail because of factors such as lack of planning, poor leadership, lack of differentiation, inability to learn from failure, lack of capital, and ignoring customer needs. Entrepreneurs need to develop certain skills and gain knowledge on how to run a business before starting one. Sources of information include print media, television, and the Internet. Successful businesses provide quality customer service, plan properly, and choose locations that are convenient to customers.
References
Bovee, C. L., & Thill, J. V. (2014). Business in action (8th ed.). New York, NY: Pearson.
Finlab, D. (2012). Why startups fail: And how yours can succeed. New York, NY: Apress.
Smith, J. (2012). Smarter business start-ups: Tips and techniques to start your dream business. Oxford, England: Infinite Ideas.