5 Reasons I Believe Why Businesses Fail And Crashes

One of the most daring things that a person can do is to start a business. It is full of optimism, anticipation, and in some cases fear. In our case as Nigerians, a lot of us venture into business due to unemployment or to be financially independent. A business is an aspect that is meant to bring happiness and development and the sad thing is that we do see businesses going down after only a few years. Others even close down in the first year itself. I am highly convinced that businesses do not fail by chance, they fail due to some causes. Based on what I have witnessed in my surroundings and also went through, I will tell you five reasons why I believe many businesses fail and crash. The former is due to poor planning. The basis of any successful business is planning. In its absence the business is similar to a house constructed on sand--it will not stand. Many of them venture into business simply because they see that someone else is doing so, without taking the time to pose the appropriate questions. Who are my customers? Where will I sell? What are the risks? How much would I have to maintain it? Most business owners do not even prepare a simple business plan. The risk is that the business owner gets lost without planning when things go wrong. Decision making is done through planning, which assists in resource management and gives the business a focus.  [Image Source](https://pixabay.com/photos/woman-smile-model-fashion-female-7895953/) The second is due to poor money management. The blood of a business is money. However, a lot of business owners in Nigeria do not distinguish between business and personal money. In this case, when they generate profit, they do not plow it back into the business but spend it on personal expenditure. Others go to an extent of borrowing without a repayment scheme. Unless money is well managed, a good idea has a short lifespan. Owners of the business must know how to record, save profits, and budget. One of the best foundations of an enduring business is financial discipline. The third factor that leads to failure of businesses is a lack of consistency and patience. The modern generation desires fast results. Most entrepreneurs feel that as soon as they venture into business, they will be successful in a few weeks or months. When this fails to occur, they get discouraged and close down. However the reality is that no great business occurs in a day. This requires patience, consistency and hard work. Most of the businesses fail because their owners give up. There are cases when it can take two to five years before a business can start to generate actual profit. The persistent, disciplined and perseverant tend to win eventually. The other reason is failure to study the customers and market. A business is created with the aim of serving people yet most business owners forget that. They sell what they prefer rather than what the customers require. A luxury restaurant in a low-income neighborhood will not be successful as the local people cannot have it as a frequent regular.  [Image Source](https://pixabay.com/photos/action-collaborate-collaboration-2277292/) Conversely, the sale of cheaper and daily food there will be a success. Companies fail because they fail to take time to research their market and consumers. Having a product is not sufficient; you need to know who will use it and where as well as understand how much money he/she can afford. Being able to listen to customers and adapt to their needs is quite crucial. Absence of innovation and adaptation is the fifth cause. Business is a constantly changing thing. The market is continuously in motion, customers are changing their taste, and technology is changing. Any business that is not willing to go with the times will soon be outdated. To illustrate this, many businesses that quickly switched to online stores survived the COVID-19 lockdown and those that had only used physical stores collapsed. Innovation is not necessarily about something brand new, it can be as simple as making your service better or more effective, or engaging social media as a means to communicate to more people. When a business fails to adapt, it starts to die. Other than these five major reasons why projects fail, other causes such as ineffective leadership, unskilled labor and even dishonesty, are also present. Not all business owners can be open with customers or partners so this kills trust. Others do not train themselves and thus continue to make the same error. All these together can destabilize a business till it ultimately collapses. Finally, I am of the opinion that lack of planning, bad management of money, impatience, not knowing the customer, and inability to innovate are the main reasons why businesses fail and crash. These are some of the errors which most business owners in Nigeria commit either out of ignorance or out of obstinacy. The news is that they are correctable. Any entrepreneur needs to know that life in business is not only about passion, but also about discipline, wisdom, and strategy. Since I am a Nigerian woman and I am writing this, I too would like to encourage all young entrepreneurs and especially women not to be demotivated by such a high rate of business failure that surrounds us. We should do better when we take the time to plan, spend money wisely, be consistent, research our market and be innovative. I know the long way to work through but with patience and persistence we will have a good business that can be sustained and grow to be something we can have permanently. What we have to bear in mind is that success does not happen overnight, it is an accomplished step after step, one has to believe in it, one has to work hard and one has to have the guts not to give up.