Business Failure Case Study

Failing business

Running a business is risky. In fact 49% of businesses fail within their first five years and 30% of businesses don’t even make it through the first two years.

What is business failure?

Some conclude that businesses fail due to bankruptcy, “organizational death” which including merger or acquisition and failing to meet responsibilities to the stakeholders of the organization including employees, customers, owners, and suppliers. Organization death is also known as organizational mortality, exit, decline and retrenchment, (in downsizing a business.)

When does a business fail?

A business is considered failing when it is viewed from a rate returned perspective. A business needs to meet any of the following to be failing and continue

• Bankruptcy- failed if legally deemed bankrupt.

• Loss cutting- failed if the owner disposes of the business or its assets in order to avoid further losses.

Why does a business fail?

1. Starting a business for the wrong reasons • Starting your own business because you want to make a lot?

• Owning a business would give you more time with your family?

• Starting a business to show off to others?

By starting a business you need to have good entrepreneurial qualities.

• You do have determination, drive, patience and a positive attitude.

• Failures don’t get you down; instead you learn your mistakes.

• You are physically mental fit to withstand potential challenges.

2. Poor management Some manager has great concept but lack in management/ leadership skills. 1. Lack of experience and understanding the business:The good manager should have been around a lot longer and understands all aspects in managing a business. A manager can’t be new to the industry and company and become a manager. 2. Unable to prioritize:Running a business requires multi-tasking, a good manager must be able to decide what is important and shouldn’t leave anything

• Work force needed.

• Budgeting and managing of company growth.

• Marketing, advertising and promotional activities.

• Financial- capital, cash flow, sales, income.

• Competition. 6. No communication No communication such as websites emails and phones. A business without communication looks unprofessional. It makes it harder for customers to get a hold of you. A well designed website enables customers to easily find out about the business, where it is located and products and services offered. An email address allows customers to contract the company with enquiries, quotation and final order. Successful Business What is a successful business? A successful business can be defined in many different ways. A successful business depends on what the owner considers a success. For some, success is getting a great product off the ground and deployed. For others, success means providing sustainable employment to people with room to grow their careers as they grow the company. Yet others see success as reaching out to the underprivileged as non-profits and social entrepreneurs. Success here is not measured in rands or cash