Business failure among small-scale entrepreneurs - page 14.

gantez

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Mismanagement of Funds
Some small businesses fail because the owners mismanaged the business funds and there was no accountability.

Funds are the problem that business go through may be mismanagement will course it to close up or it is in shortage of fund. Small business owners most times lack professional knowledge to run them and don't have fund to higher good workers that will help to move the business into another level. They can't secure loan from bank to finance the business and gradually it go down when the owner is late.

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Quote from: ethereumhunter on September 29, 2022, 12:29:25 AM

Perhaps of the many young entrepreneurs, only a few can really successfully run their businesses. They are the ones who can learn from anywhere to gain more knowledge and also often try trial and error in business so they can find the right formula for them. Each entrepreneur must have their own formula so that their business can run well and if they get a formula from someone else on how to run their business, they have to adapt it to their circumstances. It will be better because they can find what works for them and help them achieve success.

Its not undeniable that those who stay for long in the business whether it’s small scale or big time businesses have their own formula or strategy that makes them successful. That’s one thing that make them overcome all their struggles because they have a working strategy or formula that sustain the business profits. Otherwise, if they keep on failing, then it’s hard to see entrepreneurs last long in the business industry.

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Quote from: Bitstar_coin on October 03, 2022, 12:41:34 AM

The competition is high and there is a huge monopoly that prevents new startups to succeed. Only when the government move to end this monopoly (particularly in Africa) will startups able to survive.
The cost of production as a startup is very high because of limited capital, unlike the big businesses who can get same materials at a huge discount from buying in bulk.
Then there is government policies which are too stiff for startups to meet and at the end 90% will not be able to survive.
The government has a big role to play for the survival of small scale business otherwise the story will remain the same.

You know what that competition causes? The lack of profits and only the aim of growing their worth. Because these days companies do not want to aim at making a profit, they aim at being worth a lot. If you have zero profits, in fact if you are making bigger and bigger debts and growing your losses bigger, but if your companies networth grows bigger than your debt? That's fine.

So, let's assume you have a company worth 10 million dollars but have a debt of 5 million, that's fine, and if you grow and have 20 million networth but 10 million debt that's fine and you could keep growing like that. "Exit strategy" is a term that grew too big, and that causes them to fail.

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Quote from: Bitstar_coin on October 03, 2022, 12:41:34 AM

The competition is high and there is a huge monopoly that prevents new startups to succeed. Only when the government move to end this monopoly (particularly in Africa) will startups able to survive.
The cost of production as a startup is very high because of limited capital, unlike the big businesses who can get same materials at a huge discount from buying in bulk.
Then there is government policies which are too stiff for startups to meet and at the end 90% will not be able to survive.
The government has a big role to play for the survival of small scale business otherwise the story will remain the same.

You are bringing an important point, when it comes to tech companies there are huge monopolies that governments simply do not touch out of convenience as they are working hand in hand to obtain information from their citizens that way, and as such new projects have almost no chance of competing against them, and even if they could those monopolies end up buying them anyway, so until something is done about this it is going to be very difficult for small startups succeed.

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The competition is high and there is a huge monopoly that prevents new startups to succeed. Only when the government move to end this monopoly (particularly in Africa) will startups able to survive.
The cost of production as a startup is very high because of limited capital, unlike the big businesses who can get same materials at a huge discount from buying in bulk.
Then there is government policies which are too stiff for startups to meet and at the end 90% will not be able to survive.
The government has a big role to play for the survival of small scale business otherwise the story will remain the same.

Gallar

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I'm sure the companies you mentioned above also must have planned and designed a good plan and must have been careful,
but in the end they closed or went bankrupt, why?

I explain, there are also two types of bankruptcy

- due to financial failure
- due to economic failure

financial failure
caused by the company lack of cash or capital funds for operational activities. To prevent this financial failure, the company can use some of the asset liability management.

economic failure
This is because the company loses revenue so that it is unable to finance its operational costs, meaning that the company's profit level is much less than the cost of capital or the value of the company's cash flow is smaller than liabilities.

and that triggered the failure above that
caused by
- Wrong financial management
- lack of innovation
- Lack of capitalization of funds
- Putting trust in the wrong people
- the company has too much debt
- the point is less thorough and careful in every action.

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To be fair, owners of these startups have huge balls to begin their operation in industries that are either overly saturated or no business has even been yet. In school, we are taught that 90% or even 95% of these startups are doomed to fail, either because of mismanagement, tight competition, or both. Those who managed to break out of the norm gain some success, and it's still a very crucial point for them because they are expanding and they are using more resources than ever.

Quote from: Vaskiy on October 02, 2022, 05:58:07 PM

In my country a big number of startups got into existence as a result of some schemes initiated by the government. Later this turned to be mere schemes and the government failed to provide consistent support in all levels, particularly in finance. This have caused a big percentage of startups end and very few are sustaining. The governments have got big responsibility in the development of the people through entrepreneurship. Most of the time government work for the corporate that are once a strat-up.

The government would only love working for those big businesses because they bring in more money. Banks and governments can even bail these big businesses out if they needed to, because they needed that extra boost from those huge corporations. Startups are always left to fend for themselves but in a business and practical standpoint, it's better to throw money on something that already proved something and is still capable of profiting rather than throw money on something that is highly uncertain and hasn't proven anything yet.

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Winding down.

Quote from: el kaka22 on September 28, 2022, 03:24:40 PM

I agree that there is a good reason why we can't really understand what could happen for us to fail, but we need to realize one huge and important thing, which is debt. Most of the companies that you see end up working towards the fine line between bankrupting and success, because they spend everything they get to grow, and that causes companies to be always in trouble, one big mistake and you are done because you can't pay for that mistake without getting paid and if it's a mistake you can't get paid.

Even Tesla and Amazon had this, they had plenty of times when it looked like they would fail, and instead they ended up working out but it was very close for both of them at times.

When you started a business from a debt, its hard to expect initial success from it because all you will prioritize is to pay the debt first and after that, that's the time you can completely focus to make your business grow. Sad to say, even big entrepreneurs engaged in debt, some have managed to secure finances more than paying their debt while others end up in bankcruptcy due to unable to secure profits and unable to pay their debt.

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In my country a big number of startups got into existence as a result of some schemes initiated by the government. Later this turned to be mere schemes and the government failed to provide consistent support in all levels, particularly in finance. This have caused a big percentage of startups end and very few are sustaining. The governments have got big responsibility in the development of the people through entrepreneurship. Most of the time government work for the corporate that are once a strat-up.

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Quote from: ethereumhunter on September 29, 2022, 12:29:25 AM

Perhaps of the many young entrepreneurs, only a few can really successfully run their businesses. They are the ones who can learn from anywhere to gain more knowledge and also often try trial and error in business so they can find the right formula for them. Each entrepreneur must have their own formula so that their business can run well and if they get a formula from someone else on how to run their business, they have to adapt it to their circumstances. It will be better because they can find what works for them and help them achieve success.

These young entrepreneurs may not gain instant profits from their businesses for sure, they certainly have gained lot of losses at first. But business is business, if you can’t stand from your losses and you won’t be able to recover from it, your business will surely bound to fall. However, only few of them managed to overcome the trials and continue to experience business prosperity. The reason might be they have built good strategies throughout the years to run their business successfully and they were able to meet the demands of their regular and new customers.

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Quote from: Eternad on October 01, 2022, 10:47:57 AM

Quote from: kryptqnick on October 01, 2022, 07:52:56 AM

I don't know about other businesses, but I know OLX well. It's very much operational in Ukraine, and it's, like, probably the most popular marketplace we have. Maybe it failed in Nigeria, but it wasn't a Nigerian business. I googled, and Wikipedia says it's actually still operational in 30 countries. Since it's one of the most known websites that tons of people use in my country, I also wouldn't call it a small business or a startup.
As for reasons of businesses failing, I think reasons that are unrelated to the entrepreneurs should be added. A country can have a sudden political and/or economic destabilization, a global event (like the pandemic) can heavily affect some businesses, and some countries have terrible legislation and business climate that just makes it very hard to create and operate a business there.

It will depend on countries, OLX is no longer popular in my country but it used to be before Shopee and Lazada came. There is a need for a business to expand or develop when its competitors are.Sometimes they need to do more advancement in their features and not just stick on what they know like how Nokia lose its popularity over other cellphone companies now.

There's no exemption and this should really be applied in all business is that as an owner then you should really be mindful when it comes to non-stop innovation or changes so that your competition wont really be

able to overtake you when it comes to innovation and changes which could possibly overtake and replace your business when it comes to ranking.This is why it would really be that normal that you should really

be thinking for something new or changes which would retain up your users or do still create that interest and make them coming back into your service/platform, because if they
do find out these changes or new things on other places then expect on what would be the next.

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One thing all these startups have in common is that they are based in Africa. The government doesn’t do much to encourage tech startups, their rigid policies and systems tear down innovative business before they begin. In the end, they give room for foreign products to flourish in their country instead of patronizing their own. OLX was popular at some point, I think I had an account with them but I can’t remember using the service. Jiji and Jumia offer the same service and they are popular in Nigeria. I’m not sure what went wrong with OLX, they had good publicity at the beginning. The competition for the services they offer is high, I think they should focus on improving their customer base in South Africa before increasing their reach to other countries.

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Quote from: fullhdpixel on October 01, 2022, 12:29:03 PM

Quote from: Flexystar on September 28, 2022, 11:20:38 AM

Just wow for this post! I am very much impressed because there are some facts which are actually making the failures amongst startups. I have heard/read almost all of the examples given in the OP and yes I have seen them failing. OLX is closely related to me as I have used it multiple times. The website is working till date but it's presence is next to zero. It's like surviving on it's final breaths these days. However one thing is sure, there are bigger players in the market as compared to them with bigger budget to spend on management and marketing etc. It's beautifully written article and every startup must note down them to save themselves from failing.

Indeed that OLX is still breathing and it's also true that they lack of marketing because I didn't see them appear in the ads online other than those recent companies whose concepts are also similar to theirs (buying and selling). I think that is a sign that their company's budget is getting low but did you know that OLX is one of the biggest buy and sell site before? I remember they are being advertised left and right and they even have advertising on the local television. That's how successful they are but unfortunately, they ended up on this.

It's not that the saying is true that all good things has an end because there are also old companies which are still at the top up until today. Maybe they only got carried away of their fame and then they start doing things which are inappropriate. This is a common mistake of those who experience a success.

OLX in my area is now a little dim because it can't compete with other startups such as, for example, Shoppe, Tokopedia, Lazada, TikTok they have started well and can survive until now so there are many enthusiasts because of their extensive marketing and the features that are expressed are so good. that is felt by the community and this has become a lot of people's choices for buying and selling at the startup.

There is a friend of mine who uses OLX, he sell/buy used cars, but he said OLX is now not like it used to be that many enthusiasts are now left behind so that the buying and selling they trade there is no longer a buyer, it becomes quiet and it is difficult to sell there, but that's a little Complaints about failed businesses for small circles, any of them are still basically we ourselves can do several things so as not to fail.

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Quote from: Flexystar on September 28, 2022, 11:20:38 AM

Just wow for this post! I am very much impressed because there are some facts which are actually making the failures amongst startups. I have heard/read almost all of the examples given in the OP and yes I have seen them failing. OLX is closely related to me as I have used it multiple times. The website is working till date but it's presence is next to zero. It's like surviving on it's final breaths these days. However one thing is sure, there are bigger players in the market as compared to them with bigger budget to spend on management and marketing etc. It's beautifully written article and every startup must note down them to save themselves from failing.

Indeed that OLX is still breathing and it's also true that they lack of marketing because I didn't see them appear in the ads online other than those recent companies whose concepts are also similar to theirs (buying and selling). I think that is a sign that their company's budget is getting low but did you know that OLX is one of the biggest buy and sell site before? I remember they are being advertised left and right and they even have advertising on the local television. That's how successful they are but unfortunately, they ended up on this.

It's not that the saying is true that all good things has an end because there are also old companies which are still at the top up until today. Maybe they only got carried away of their fame and then they start doing things which are inappropriate. This is a common mistake of those who experience a success.

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Quote from: justdimin on September 30, 2022, 03:35:59 AM

One of the hardest parts that I learned while trying to be one was the fact that it takes so much of your time that you wouldn't even understand. I mean working is always hard of course, there isn't any jobs that is easy and entertaining so much that you would want to do it for free, all jobs are hard and that is why people pay you for it.

But having your own company means that you are going to work harder than anyone else, you are not going to just work at office and come home and forget about it, you would have to actually end up with something on your mind at all times. So, basically you are working 24 hours, even in your dreams, it’s really hard to live like that.

That’s going to be a problem up until a point, but then you come at a crossroad that you have to decide yourself. I know a friend’s father who started that way, back in the 80's he worked insanely, and then during 90's he worked quite a lot as well, but after 2004 he retired while keeping the company, he just hired a CEO or general manager or whatever you want to call it and gave him both a salary and also bonus depending on the company profits and ever since 2004 that dude has been retired on an island with my friends mom, and husband and wife they end up just relaxing all day every day.

That’s not impossible neither but you can't just hire someone straight off, you need to build the company to a good level before you can afford that.

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Quote from: kryptqnick on October 01, 2022, 07:52:56 AM

I don't know about other businesses, but I know OLX well. It's very much operational in Ukraine, and it's, like, probably the most popular marketplace we have. Maybe it failed in Nigeria, but it wasn't a Nigerian business. I googled, and Wikipedia says it's actually still operational in 30 countries. Since it's one of the most known websites that tons of people use in my country, I also wouldn't call it a small business or a startup.
As for reasons of businesses failing, I think reasons that are unrelated to the entrepreneurs should be added. A country can have a sudden political and/or economic destabilization, a global event (like the pandemic) can heavily affect some businesses, and some countries have terrible legislation and business climate that just makes it very hard to create and operate a business there.

It will depend on countries, OLX is no longer popular in my country but it used to be before Shopee and Lazada came. There is a need for a business to expand or develop when its competitors are.Sometimes they need to do more advancement in their features and not just stick on what they know like how Nokia lose its popularity over other cellphone companies now.

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Mismanagement of funds and poor management are the major challenge in a business. For a business to succeed, first you don't think of using business funds for basic needs or for pleasure. Secondly you should always have a good customer relationship, so that if your product is reducing in quality, they will be the one to let you know by complaining with this your product will be competitive in the market.

Thirdly, motivation of employees helps a lot,let them know they are the best workers you have ever work with,and give them bonuses for work well done. Fourthly, you should know the risk in the business so that you can learn the risk management.Using borrowed funds is also a big challenge

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I don't know about other businesses, but I know OLX well. It's very much operational in Ukraine, and it's, like, probably the most popular marketplace we have. Maybe it failed in Nigeria, but it wasn't a Nigerian business. I googled, and Wikipedia says it's actually still operational in 30 countries. Since it's one of the most known websites that tons of people use in my country, I also wouldn't call it a small business or a startup.
As for reasons of businesses failing, I think reasons that are unrelated to the entrepreneurs should be added. A country can have a sudden political and/or economic destabilization, a global event (like the pandemic) can heavily affect some businesses, and some countries have terrible legislation and business climate that just makes it very hard to create and operate a business there.

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To be honest, at the beginning of their business, there must be ups and downs in their business and that's when we can judge which entrepreneurs have big souls during the crisis they experience and which business people have weak strength to get back up. Well, we often encounter principles like this in our environment where small business owners must be able to manage management as well as possible in managing the business they are involved in such as balancing expenses and income in order to align the business so that it remains.

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Quote from: Fesatmas on September 29, 2022, 09:55:59 AM

Quote from: lovesmayfamilis on September 29, 2022, 02:09:33 AM

Quote from: ?? on ??

Nice article with lot of meaningful lessons.. The biggest losers are those who don't try anything for fear of losing.. Every loss is a lesson learnt.

I want to argue. It is better to weigh everything and understand that a person is not yet ready for entrepreneurship than to take risks, implying a loss in advance. What are their failures if they have not lost anything? Another thing is when a person is dominated by excessive self-confidence, without a clear understanding of all the risks.
It's not scary to be confident, but it's scary when people are overconfident.

Distinguish between not ready and never want to try. When someone is not ready to take the risk then he still has the opportunity in the future to try. Whereas "never want to try" means that he has indeed buried his own hopes. I catch from what the OP said that someone who doesn't try anything is a loser. I think that's true, because no one can be successful without trying. How can you know the result is just trying never?

The OP mentioned that the biggest losers are those who don’t try anything for fear of losing.
I beg to differ. The biggest losers are those who put in investments and lost out entirely while those who were wise not to, still had their capital intact.

Excessive self confidence could very well make an individual turn a blind eye to the risks involved and not everyone learns a lesson from a loss.

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