Starts an enterprise. Many people starts. Some of them gets succeed. And some gets fail… That will sad, but have you know about the causes of entrepreneurial failure? Why you get fail? Here are some factors that are responsible for the failure of an enterprise:
- Management Factors: There are some management factors, which may cause for the failure. Sometimes, due to lack of management, inexperience of management, may failed you.
Some management factors are –
- Incompetency – When the management have lack of ability to hold the work at enterprise and doesn’t act with the legal problems.
- Inexperienced – When the entrepreneur or management of enterprise is new to the business line. No experience of enterprise you start and lack of experience in managing an enterprise.
- Production Factors: Sometimes, enterprise may failed due to production factors. There are various production factors, you have to know about these factors –
- Poor raw materials & Quality – When you get poor raw materials, which may affect your product quality and leads to loss and failure.
- Lack of production planning and control – Got a new order, requires more production and current, and you have no control and no proper planning for the production, and failed to fulfill the order and with this it leads to entrepreneurial failure.
- Frequent power and mechanical breakdown – Frequent power cuts and mechanical breakdown in machines may reduce the production and affect your business.
- Labour problems – Labour, which we can say core of your business as all the work is depend on them from production to marketing. They can be a cause for your failure because Labour union will stop the work and may demands more.
- Wastage in material – Sometimes, there is much more wastage in material after finished product and this waste material is useless and may affect your input and output.
- Marketing problems: Marketing, a factor which build your business on top and may drop you on floor and you will fail. You will get much heavy competition from larger and already well-established enterprises in same line. They will market their product much more effectively than you and they have well establish market for their product. During marketing, consumers may find that your finished goods are of not so good quality as compared to others.
- Financial problems: When you start an enterprise and do the business, your enterprise may fail due to financial problems. When you sale your products in market on credit, this will leads to shortage of capital. Sometimes you use your funds for investing in assets which are no link with production. Due to this you may face financial crunch and gets failed.
- Investments: Confused!! How investments a cause for failure? Yes, investment can be an enterprise failure. You do high investments on land and building a factory by taking loans from market at high interest. Other investments and expenditure like for machinery and administration. This huge investment and interest all you have to paid. If you can’t able to pay, you will be bankrupt.
- Beside of above reasons, an enterprise may also fails due to any natural disaster, fraud and neglect of 0usiness etc.