Venture Capital Funding
TIPS FOR AVOIDING BUSINESS FAILURE
Tips for Avoiding Business Failure
For failure there are some reasons common to most businesses. Knowing them you are much
less likely to commit the mistakes and fall victim to them. About seventy percent of startup
businesses are said to succeed and survive at least two years, and less than fifty percent
survive four years or more, whereas a significant percentage fail. Not knowing and avoiding
some failure key factors will surely weigh down your business. Here are some useful do’s and
1. Don’t start with insufficient operating funds
If you underestimate the amount of money you need, and some entrepreneurs do, you will be
forced to close before even seeing a glimpse of success. The costs of starting will not be the
only financial concern, there’s also a need for capital for the next rounds of your company’s
development. Do try to find the right investor if you don’t have enough funds, such as angel
investors or venture capital firms . They will provide you not only the necessary capital, but
also expertise and advice, as they have enough experience with similar companies in their
2. Don’t make a poor business plan
Strategic, methodical planning is like drawing your roadmap to success. And, just like a
roadmap, a good business plan includes more options that take into consideration future
possible changes. Therefore, there should be both a best and a worst case scenario. Moreover,
if your business plan is appreciated and you receive funds from the desired business investors,
don’t toss it in a drawer. It needs to be continuously updated and adjusted, as the market keeps
changing. Instead, do describe your goals, work force needs, sales and expenses forecast,
analyze your competition and potential problems and solutions.
3. Don’t hire inexperienced managers
If you are young and lack experience in managing a business, or if you hire a beginner for the
sole reason you don’t have to pay him well, it’s possible that poor management will be the
cause of your company’s downfall. You need expertise and regular study in finance, selling
and buying, production, hiring employees. If you want to hire a manager, make sure you
choose the right person, a skilled leader with strategic thinking, able to face risks and
challenges and to find solutions in times of crisis.
4. Don’t disregard the importance of location
If you don’t study your future location carefully your customers may not come as expected
and the chances of success will be lower. A bad location could negatively affect and even
spell disaster to your business, whereas a good one may help you thrive. Do some research to
find out where the target customers are, how accessible the place is (car parking, accessibility
for pedestrians, proper lighting), what the location of competitors is.
5. Don’t think marketing is a waste of money
As you will probably not be the only one in your sector, you will need to show your potential
customer the advantages of choosing your product or service. And even if you may be the
only one, future clients need to find out about your idea and the way it will fulfill their needs.
If you don’t use advertising constantly, you may be losing business to those they do. For the
beginning having at least a website that is well-designed and professional looking will
recommend you to your customers and help them discover the features and benefits of what
you sell them.
On its way to success your business should be clearly focused, understanding the
requirements of customers, the strategies of competitors and the employees’ needs, prepared
to handle any problems that may arise in the future.