Ø Leadership Failure
Ø Lacking Uniqueness and Value
Ø Not in Touch with Customer Needs
Ø Unprofitable Business Model
Ø Poor Financial Management
According to Small Business Administration research, only half of new businesses survive for the first five years and only one-third of new businesses are able to survive for 10 years. The inverse is compelling as we can conclude that if only 50% of new businesses survive for the first five years, then the other 50% fail in the first five years. We can also conclude that about 65% of new businesses don’t make it to the ten-year mark.
There can be a lot of reasons, which can vary according to business type and owners willingness. Financial planning and getting those numbers, in reality, is not an easy job.
Let’s begin with this, reasons for financial plans failure:
1- Not having accurate marketing analyses– To grow a small business, they do marketing, but inaccurate data or analyses leads them to waste their marketing budget. Which eventually disturbed their entire budget.
2- Not able to save running cost– Every business should have a balance of running cost of their company for at least 3 months. So you can handle any downfall in business and to keep more focus on revenue generation rather than cost-cutting.
3- Not giving priority to business– Many young entrepreneurs lose their long term focus, and starts buying expensive cars or bikes rather than investing in business to grow.
4- Lack of investment skills– Investment can be of any type, like investing in shares market, hiring a new employee, buying new equipment or continue with the lease option, etc. to grow business, having of knowledge of investment is a crucial part of any business’s success.
5- Assuming bad thing not happen– For example, not having sufficient emergency cash funds in the event of low sales or market crash or personal emergency. Don’t assume these events won’t occur.
6- Ignorance– Continue learning push you towards new opportunities and set you apart from the crowd and helps in making a clear path to financial goals. Being ignorant push you in a state where do not anything better than the rest.
7- Aimless approach– Spending unconsciously without thinking about long term results.
8- Lacking in investment skills- One of the most important where you need to possess your investment skills. Knowing about the right time to invest is the key to get success.
From the above list, we can say that these are your mental blocks, and only you have the power to overcome. Many entrepreneurs don’t have enough accounting skills to handle their accounts on their own. Wrong calculations and forecasting start the downfall of the business. An accountant is a backbone for any growing business, to get all the account reconcile, accurate tax preparation, P&L statements and accurate financial forecasting.