Over the next 10 posts, we will explore the top 10 reasons businesses fail. Please stick around if you want to understand them and avoid falling victim to them! Remember, in business, knowledge is power! According to the SBA, over 50% of businesses fail in the first 5 years. Why is that? And why do long term businesses (those over 5 years) fail?
Top 10 Reasons Businesses Fail: Number 10 – A declining market
Book stores, music stores, printing business and many others are dealing with changes in technology, consumer demand and competition from huge companies with more buying power and advertising dollars. This is one of the “environmental factors” that you cannot control. What you can do is be forward-looking and try to anticipate changes in your future marketplace. In 2000, Blockbuster had 60,000 employees and 9,000 retail locations. They had the opportunity to purchase a fledgling company called “Netflix” for $50 Million, but declined the offer. Netflix is projected to do $35 Billion in revenue in 2014, while Blockbuster filed bankruptcy in 2010. The signs were obvious that consumers were looking for convenience and that the web was becoming more and more powerful, but Blockbuster missed it.
Ask yourself, where will my company be in 5 years? Are there things happening now that will affect the product or service that I am providing? How will the 5 environmental factors (Social, Economic, Technological, Competitive, and Regulatory) affect your business? It’s easier and less expensive to anticipate changes and slowly transition to them, rather than waiting and trying to play catch up.
Written By Ameen Walker