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Many factors come into play:
- Market: Is there a large enough group of people who are interested in buying the good or service?
- Industry: Are the economics of the particular good or service that are being offered good enough to create a sustained return either due to price / cost issues or the competitive landscape?
- Capital: Does the company have adequate financial resources to sustain itself?
- Environment: Does the social, political, economic, and legal environment in the country of operation help or hinder development?
- Team: Can the team execute to the needs of the market and better than other competitive players?
- Structure: Does the corporate structure of the company allow the company to achieve its objectives?
A no answer to the any of the above can result in the failure of the company. Given the complexity of getting all these things right, it is a wonder any company survives. Yet through planning, persistence, ingenuity, and often times a great deal of luck, many do!
1. Cashflow
2. Cashflow
3. Cashflow
Actually, lack of cashflow is almost the only reason why any business fails.
This is a great question.
Small business fail due to a number of reasons :
- insufficient capital
- lack of trained / experienced manpower
- poor management (inadequate experience in managing a business )
- unclear objectives
in short, it's due to a shortage in resources and poor management practices.
unclear knowledge of the target, and/or not believing in the idea
incomplete analysis of the requirements
not targeting the right segments (part of analysing the requirements)
lack of awareness of the competitors (very important)
Lack of maintaining the status of his business and targeting urged amount without awareness of his little requirement so is part of fail his business because any small center most aware how much did I spend nd what's my gain.
All the departments in a company contribute to the failure or success of a company.
Analysing lots of the data about startups tells us that, in most of the startup companies, high cash burn rate is the main cause of the failure of a startup company.
When we drill down into the various factors that make up the high cash burn rate we can see that it is made up of,
- Inefficiencies in terms of marketing strategy, spending too much on marketing targeting the wrong customers and using the wrong platforms to reach the market.
- Inefficiencies in terms of product development, creating a full fledged product in the old way instead of taking advantage of the current platform and create a minimum viable product.
- Inefficient sales team, having a sales person who does not believe in the product or the company and the values.
- Inefficient hiring decisions, growing the start-up company head count too soon.
- Not moving to the next level in terms of funding, at the right time.
- Inflexible management, not moving to plan-b when it is deemed necessary.
And not hiring A-players is the worst mistake of them all. This mistake is repeated again and again by many start-ups due to various reasons.
