Why Businesses Fail

By Michael Charles

There are a plethora of new businesses starting each month but at the same time there are numerous businesses closing. There are many reasons for this unfortunate demise of business failure, however one of the major factors is lack of proper business planning. Too often new businesses are started by people who may have a skill but lack business experience. As an example, someone may be a good hairstylist and as a result decides to open a salon. This individual may not have any marketing, accounting, sales, leadership, or administrative experience. This is okay if that individual also decides to find some way of gaining that knowledge or hiring someone with that knowledge to help and guide them until they are proficient in those skills. When someone chooses not to acquire these skills, it becomes easy for them to run into trouble. When this happens their lack of experience may render them incapable of finding an immediate solution and this could mean the end of their business. Nonetheless, despite a lack of business knowledge this individual may also be quite successful, but this would be due partly to luck rather than planning. Hence the use of having a well-thought-out business plan.

Well, what is a business plan? A business plan is a document or in other words a road map to increase the chances for a business to succeed. Let us say you decide to drive from Toronto to New York, you would not get in your car and start driving before you figured out which highways and roads to take to get you to your destination in New York. In a comparable way having a business plan is an effective way to determine whether you would achieve your business goals and in what time limit.

The purpose of a business plan is to help articulate a strategy for starting and running your business. It also provides insight into steps to be taken, resources required for achieving your business goals and a timeline of anticipated results.

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