why businesses fail

why businesses fail

This is one of the many questions in the heart of a lot of business owners, why do businesses fail? There are quite a number of reasons why businesses fail. I am going to list a few and also proffer solutions as we go along. You can drop your questions and await a response from us.

Lack of planning

This shouldn’t come as a surprise, if you fail too plan you plan to fail. So what are the plans you should put in place? For the purpose of this we are going to be using a case study of a restaurant business owner, let’s call the business Foodies. I love food. Foodies has been in business for two years. It has had its fair share of ups and downs but it was gradually dying, staff were been laid off and the likes. I am sure you get the picture.

Foodies’ friend advised that she go back to the drawing board. This is what she noticed when she went to the drawing board, she has not stuck to the original plan. When the business started out she had a plan and a system she has put down to run her business but soon as she started she went with the flow and forgot the plan.  At this point you can say, but she had a plan. Yes she did but having something is one thing and using it is another. Apply what you’ve got. Plan and use your plan.


Inability to learn from failure

Foodies realized she didn’t follow through with her plan right? If she stuck to her guns and said “but the competition is doing things like this na” she would fail terribly. Learning from failure is the best way to get ahead after you fall. So take a pause, be unbiased- we often tend to be biased because our business is personal so we can have a hazy view or perspective about things; and review your progress and failures.


Your customers are at the heart of your business, you need to understand what your customers want and things that can make them more involved with your business. Foodies’ customers were mostly cooperate individuals who come by for lunch and after work drinks while waiting for traffic to ease off. Foodies thought of a plan to make her business more pronounced with her customers and introduced a referral bonus for her loyal customers, so if a customer spends upto a certain amount she would have a free meal the next day.  This made more people come by the restaurant it was a hit. She didn’t stop there, for evenings she introduced karaoke and music bands for certain days and it blew up her customer base.

Poor management

For Foodies to excel, proper management has to be put in place. Previously there were no consistent managers who understood the business, hence Foodies sent all her staff for managerial training as it relates to their department so that they can be more productive and in return boost the business. Proper management reflects the organizational structure that is in place.

I have just noted a few things that result in business failure if not done properly. So here is the thing, keep at your business apply the right principle, DO NOT PRESSURE YOURSELF. Always keep your customers at the heart of the business, your business is for them not you.


About the author

Sandra Chinedu

Chinedu Sandra is an Entrepreneur within the I.C.T space and loves blogging. She is on the Honour list of GEM, a World Bank Project for start-ups in Africa.

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