Reasons Businesses Fail Even After Being Funded

Businesses Fail, funding, businesses, Lack of funding, Reasons for Failure

Reasons Businesses Fail

Most people think that businesses fail due to lack of funds only. However, there is n-number of instances where you will see that several businesses have failed even after being funded.  That means there are lots of other reasons other than funding that leads a business to fail. It also means that when you look at a successful business there are many more businesses that it has left behind and come ahead.

Lack of funding is truly one of the biggest hurdles to overcome for a business to ensure success but the fact that a large number of entrepreneurs have failed even after receiving funding calls for serious concern and attention.

If you want to be successful in your business then one thing that you should first believe is that the world of entrepreneurship is just an enormous jungle. ‘Jungle’ is the right word because there is a lot of cut-throat competition in this arena where the jungle rule of ‘survival of the fittest’ is apt and most meaningful. Moreover, there is the likely chance to get lost just like you would in a jungle, especially if you have just started your business.

Add to that, the modern economy, fast pace of business, rising customer demand and need for exceptional customer service makes success for a business a very hard thing to come by. You will need to put in a lot of efforts in several other fields apart from looking for reliable sources for funding your business to make it successful.

Funding a business nowadays is not at all difficult because there are a lot of sources available that will fund small, medium size and large businesses and even startups. You can choose to approach a traditional bank or even visit sites of other online lending sources such as others that are equally reliable and helpful.

In short, it is the innumerable and unexpected challenges that affect the working of a business and in general, weakens it thereby reducing its chances of success.

Need for Simulation

Apart from the commitment to meet all the challenges, there is also a need for the modern business owners to have macro-level stimulation for their activity. This can be achieved by empowering the effects of BEE Supplier Development along with Enterprise Development legislation. Both of these will have a significant role to play in the funding process of small businesses.

Apart from funding, the legislation will also help the business in several other areas such as:

  • It will help the business to augment the market access opportunities
  • It will also strengthen the relationship between the SMEs and larger corporates
  • It will encourage the businesses to revise their winning strategies and
  • It will help in formalizing the strategies for businesses that never had any procurement plans.

Ideally, for many small businesses, there is a lot of room for new markets and that can be easily tapped with extreme innovations that will improve the methods of doing business that was previously not thought of.

The Economic Aspect

The effects that you see today regarding the success of businesses is not new. It was ever existent and the economic conditions and policy of the nation are to blame for that. In the past, there are a lot of instances that showed failures in Black Economic Empowerment. It also showed a notable imbalance in the color of the recipients of BEE.

In addition to that, the funding also created concerns. The consultants who preached various recipes for advancing entrepreneurship were found to be less effective. Many such consultants who are individuals lacked in comprehending the challenge faced by small businesses themselves. This acted as a drawback for them to provide proper consultation to the small businesses as to how they could run a business. These consultants were unable to read the psychology of the entrepreneurs and therefore could not makeup.

It was due to this reason along with the funding constraints that were the obvious concerns. Along with that the unavailability of easier solutions, social and personal capital are the primary reason for businesses failing in the past as well as in the present. Add to that, many have failed due to permanent bad credit against funders.

Other Reasons for Failure

A few other reasons for a business failing even when funding was made available include:

  • Lack of trade skills: There are several businesses that work on files in which they have little knowledge of and no exposure to any working skills. That means the distribution of products is hampered along with its pricing. There is no proper plan to undermine success. Therefore, their numbers do not stack up and businesses never see profitability right from the start to the end, which is early.
  • No opportunity: In most cases, it is seen that most of the failed businesses did not conceive the business it was initially but became what it is to be by default. This means they thought they will have pathfinding or a revolutionary business but in the end, found them to be a run of the mill type business without being able to make any exceptional proposition to the market.
  • Priority mismatch: Mismatch in priorities is another reason for failure as it is found that most of the funding programs in a legislated environment are not business centric. In addition to that, if there is a wrong implementation of partners there is a general tendency of confusion in the fields of business development, social responsibility, interventions and foresight regarding growth and sustainability.
  • Administration: Most of the businesses that failed are found to have left the business administration aspect to other people which is another reason for failure. The primary reason is that the persons vested with such responsibility whether it is for operations or accounts did not have any equity incentive to make the business soar high.

In addition to the above, wrong vocabulary and misunderstanding of entrepreneurship are also a few other reasons of business failure. The only solution to all these problems is to learn entrepreneurship early.

Author Bio: Kelly Wilson is an experienced and skilled Business Consultant and Financial advisor in the USA.  She helps clients both personal and professional in long-term wealth building plans. During her spare time, she loves to write on Business, Finance, Marketing, Social Media. She loves to share her knowledge and Experts tips with her readers.

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