Why do businesses fail to grow?

Many of you are starting businesses or already running them that’s why the interest in increasing your chances of success becomes your priority. It makes sense to study what others did wrong.

There are many reasons some small companies grow and others hit a wall. There are external factors like market size, competition and demand. … In every industry, there are companies that grow and dominate, while others stagnate or shrink and ultimately fail.


Some companies will sell products that they didn’t invest enough in marketing and also offer a crapy service due to arrogant and lazy staff this will lead to a business failing and not making enough profit.

Most start-ups businesses produce the same products as their competitors at the same cost price and still get surprised when their business can’t make a profit.

As a person owner, you need to understand that competitive advantage is the leverage a business has over its competitors. A competitive advantage distinguishes a company from its competitors.

Because it contributes to higher prices, more customers and brand loyalty, establishing such an advantage is one of the most important goals for any company.

How can a business gain a competitive advantage?

For a business to gain a competitive advantage, it should focus on improving or marketing some aspects of your company, for instance, you could lower your prices, spend more time training staff, offer a certain niche of products and provide a faster service.


A lack of working capital may jeopardize a company’s ability to finance its day-to-day operations and it also makes it difficult for a company to prepare for emergencies.

No business can survive for a significant amount of time without making a profit, though measuring a company’s profitability, both current and future, is critical in evaluating the company. Although a company can use finance to sustain itself financially for a time, it is ultimately a liability, not an asset.
How can a lack of capital affect a business?

1. Hard to attract investors.

A business that lacks sufficient working capital may find it difficult to attract investors and lenders because a working capital shows investors and creditors that a company possesses the ability to pay back its loan or can earn a sufficient profit that allows investors to earn their return of investment.

2. Day-to-day operations.

Day-to-day operations in a small business typically include salaries, inventory purchases, and equipment needs. A lack of working capital also makes it difficult for a company to prepare for emergencies. For example, if a company loses a majority of its inventory to unforeseen circumstances, a lack of working capital makes it difficult to replace the inventory to operate.

3. Difficult to grow business.

When a company desires to grow or is trying to meet customer demands, it often purchases additional assets needed to manufacture products or offer services at a quicker pace and on a larger scale.

TIP: To have a successful partnership between friends or family, maintain a separation between business and personal relationships.

A lack of working capital hinders a company from acquiring what it needs to expand. If a company continues to experience problems with growth, it may find itself losing customers to competitors.


Making the decision to go into business with someone is not a decision to take lightly. It has been likened to getting married. Business partnerships have many advantages as they allow entrepreneurs to pool complementary skill sets and share startup costs and risks with one another.

Why do business partnerships fail?

1. Mixing personal relationships with business.

Any successful business partnership should be based on the complementary strengths, talents, personalities, and experiences of the prospective partners. A relative or friend needs to bring much more to a potential business partnership than just their personal relationship with you.

2. Unequal commitment among partners.

As any businessperson will tell you that starting a business takes a huge financial and personal commitment.

In a partnership, you are dependent on the contributions of other partners, and if they are unable or unwilling to make the same level of personal or financial sacrifices, it will likely result in resentment and conflict.

3. Lack of success.
Lack of business and/or periods of declining revenue can take a psychological toll on business partners and eventually lead to conflict, particularly if the business becomes a heavy drain on the personal finances of the people involved.
Building a business takes patience and perseverance and for a business to be successful the owners must be prepared to make a long-term commitment.
4. Differing Values.
Many partnerships do not succeed because the partners are not in alignment with the values and/or goals of the organization. As the business evolves the differences can become an increasing source of friction.
5. Personality Clashes.
Sharing risk and having complementary skill sets are some of the great advantages of business partnerships, but if the personalities of the partners do not sufficiently mesh, the business may be headed for trouble.

6. Trust Issues.

An honest and open relationship between partners is the foundation of any successful business partnership, so nothing breaks down a partnership faster than a lack of trust.


Some companies are so bad at hiring because they do not monitor the effectiveness of hiring because they find it hard to measure employee performance.

Bringing the wrong person in the company does not only waste money and time but it creates negativity that impacts employees and the business.

The reasons why companies hire the wrong people/candidates:

Firstly, the ignore what matters most. Every employee has to follow company rules and guidelines, whether formal or unwritten.

Smart companies decide to accept the total package and all that comes with it. If they desperately need engineering skills they could decide to live with a proven engineering superstar’s diva behavior.

Secondly, they hire for skills and totally ignore their attitude.

Skills and knowledge are worthless when they aren’t put to use. Experience, no matter how vast, is useless when it is not shared with others.

Think of it this way: The smaller your business the more likely you are to be an expert in your field; transferring those skills to others is relatively easy. But you can’t train enthusiasm, a solid work ethic, and great interpersonal skills — and those traits can matter a lot more than any skills a candidate brings.

Thirdly, they automatically hire their friends and family. Some employees will naturally overstate a family member’s qualifications when they make a recommendation.

The employee’s heart may be in the right place, but their desire to help out a family member doesn’t always align with a company’s need to hire great employees.

Lastly, they take the wrong chance.

There are two kinds of chances you can take on a potential employee.

There are the good chances: taking a shot on a candidate you feel has more potential than her previous employer let her show; taking a shot on a candidate who has few of the skills but all of the attitude; taking a chance on a candidate you feel certain brings the enthusiasm, drive, and spirit your team desperately needs — those are good chances to take.

Then there are the bad chances: the candidate with a history of attendance problems who you hope will suddenly develop a strong work ethic; the candidate who left each of his last three jobs within weeks because “all my bosses were jerks;” the candidate who has no experience in your industry and only wants to talk about how quickly and often she can get promoted.


Knowing and understanding customer needs is at center of every successful business, whether it sells directly to individuals or other businesses.

Once you have this knowledge, you can use it to persuade potential and existing customers that buying from you is in their best interests.
 Many businesses fail due to poor understanding of the market needs so it important to understand your market and competitors.
Once you have this knowledge, you can use it to persuade potential and existing customers that buying from you is in their best interests.


Having a vision provides a sense of purpose and direction for the business as it helps businessmen to plan their short-term and long-term goals.

What is a vision in a business?

A vision is a vivid mental image of what you want your business to be at some point in the future, based on your goals and aspirations. Having a vision will give your business a clear focus, and can stop you heading in the wrong direction.

Any business whether small or big that doesn’t have vision won’t be able to create plans, objective and making decisions and the business won’t be able to coordinate and evaluate the p work of any projects either large or small.

It means that the business doesn’t have a purpose it can close down anytime, it will be very impossible for the business to move with times since they never planned anything ahead.

Without a clear, you’re in danger of drifting with no direction. People start businesses to pursue their passions or to become financially independent.

From this article, you will learn that if you own a business you need to have the right reason for opening it. Firstly you need to have a passion and love for what you’ll be doing and strongly believe that your product will meet the needs of the target market.

Keep in mind that failures don’t defeat you, you learn from mistakes and you use these lessons as business tips to help you succeed the next time around.


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