Reasons Why Retail Businesses Fail: The Critical Failure Factors (CFFs)
Many retail businesses start off well but along the way, something goes wrong and they fail. As you are reading this, you probably know a few businesses who started so well as just fizzled out ! Well, this isn’t strange at all. Many businesses fail across different industries and sectors whether in the online ecommerce retail businesses or brick and mortar stores. A 2013 research by ABS, found that most retail businesses have an average lifespan of 4-5 years, after which most of them die off! The question to ask is why? Why would a business that took the owner so many years of savings, planning and “passioning” suddenly go burst all of a sudden? Several reasons are responsible for this. If these Critical Failure Factors (CFFs) are addressed early on and continuously too, they will affect any business regardless of its size!
From our research and experience with several retail businesses, the most important reasons why businesses fail (in their order of importance) are:
1. Inadequate Pre-investment Research before going into a chosen line of Business: Your pre-investment plan is your adventure map, the most important tool to help you navigate the exciting yet risky world of business! Not having a pre-investment plan or business plan and/or failing to work with every bit of its content (if you have one), is the number one reason why many retail businesses fail!
Your pre-investment plan will tell you what to invest in, where to invest in, how much is required in terms of cash, assets and employees, the risks involved in your chosen line of business and how you can overcome them. It will also show in near-real terms, your forecast Sales, Cash Flow Projections, forecast expenditures and projected Profit. Armed with this information, it will be difficult for you to fail since this document will enable you to know, ab initio, if your business will succeed or will struggle.
Writing your pre-investment research plan is something you can do yourself, if you have the time, experience and resources to do so. However, we recommend that you engage the services of a business consultant, who has the skill, knowledge and experience to produce for you, a document that is very close to reality as you journey into the business world. A poorly written pre-investment plan will be a waste of your resources and will negatively affect informed decision making.
Many people jump into businesses that others are investing in, without knowing the rudiments, challenges and secrets of such businesses. Please do not this if you value your hard earned money, health and well-being! If do not know all the rudiments of a business but want investing in it, engage a business consultant, experienced in the area of business you want to invest in, to produce a pre-investment plan for you. When looking to select the consultant, ask for references on verifiable projects or businesses that they had done successfully in the past. This will help you know your consultant’s level of experience and skill,in your area of business interest thereby safeguarding your investment as well.
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Steeple Global Services(www.steepleglobal.com.ng ) is a business consulting firm based in Uyo, Akwa Ibom State, Nigeria. We help to bring your business idea into reality, set up your new business for you and/or help to turn around your ailing or struggling business(s) into profit making ventures. We help businesses grow!!