Research has proven that start-ups collapse within the first or two years of operations. In this article, we take a deep dive into the possible reasons why start-ups sink before they fully take off. Steering a start-up is an uphill task that requires great management and great organizational skills. A small mistake may end up causing grave effects on the newly founded business.
1)Failure to delegate-Tight budgets may compel you, the entrepreneur to handle all tasks single-handedly. However, this is not sustainable. You need expert advice and expert services in some business aspects. Invest in human resources, and hire the right people to help you scale your business to the next level.
2)Lack of capital or funding-How to raise capital is a very pertinent question to every entrepreneur. You need to factor in the initial costs of starting and leave room for operational costs in case the money you anticipated does not come through immediately.
3)Lacking a clear plan and course of action-set SMART goals. Have a particular direction of where the enterprise is headed. Plan a five-year strategic plan. However, the plan should have room for adaptability. Unforeseen changes can sometimes appear. The plan needs to factor in room for change. You should have a marketing plan, a financial plan, and a solid business plan.
4)Failure to research and plan adequately while starting a business, research on the proper location, competitors, profit margin, ideal marketing strategies, and barriers to entry. This includes identifying the right target audience and their purchasing tendencies.
Arm yourself with all the critical information you will need to thrive in the business.
5)Ignoring laws and regulations about the business- ignorance of the law is not defense. As a start-up ensure you are complying with all government policies regarding your trade. Hire a lawyer to handle the paperwork, draft contracts and give insights into the legalities of your business. Ensure that you have all requisite registration such as VAT, NSSF
6)Improper finance management-you should separate personal finance and business finance. This includes filing account records ad filing taxes on time to avoid hefty fines. Good financial management will help your business to maximally utilize available resources, fulfill financial obligations to stakeholders and set a good base for financial stability.