Common Causes of Business Failure

First, make sure you have a business that can make a profit. A lot of activity doesn’t mean you have a profitable business. Second, price your product or service correctly. Define your pricing strategy. You can’t be both the cheapest and the best. Third, have adequate cash or working capital to carry the business. Cash reserves must be adequate, which means, anticipating cash flow needs. Fourth, don’t try to be everything to everybody. Over generalization spreads you too thin and reduces quality. Do what you do best and charge for it appropriately. Fifth, diversify your client base. Depending on a single client places you at their mercy. If you lose that customer, you might have to close the doors. Finally, don’t try to do everything yourself. Entrepreneurs like to be hand on, but you can’t make all of the decisions. Concentrate on the most important ones and give other people responsibility and authority.