When businesses fail, people lose their jobs, taxes decrease, the economy goes down, crime rate goes high and the citizens of the country suffer. But what factors that cause business failures in Ghana?
As a leading business management software provider to Ghanaian businesses, we at Multisoft Solutions Limited want to discuss what we consider to be the 10 factors that cause business failures in Ghana!
Well, before we look at the top 10 causes, let us look at what is meant by business failure.
According to the thelawdistionary.org, a company has failed if it is unable to make profit or to bring in enough revenue to cover its expenses.
Now, let us look at the top 10 factors that cause business failures in Ghana.
#1: Starting Business for the Wrong Reasons
The core mission for a business must be to solve a problem or meet a need for a target group of people! When your business meets your customer’s needs and meets them well, then your business will flourish and be successful!
Building a business is hard and you need a higher purpose and passion to drive you and keep you going when the going gets tough. Starting a business solely because you have excess cash or because others are doing same is a wrong reason to start a business.
There is a higher chance of success when you develop your business around your interest or what comes naturally to you.
#2: Having No Driving Core Values or Concrete Mission Statement
The core values of a business are the guiding principles and fundamental beliefs that drive the operation of the business. The core values and the mission tell exactly why the business exists and what it exists to do. The core value of the business also spells out the business ethics that governs all business dealings.
It is amazing how some businesses in Ghana just do factors without any clear guiding principle and still expect to do well!
#3:Lack of Planning
Deriving from the quote “failure to plan is planning to fail”, the entrepreneur’s inability to develop both short term and long term plans for the business is one of the top 10 causes of business failures. There must be a clear strategic plan governing the operation of the business!
Failure to set SMART (specific, measurable, attainable, realistic and time bound) goals and objectives for all areas of the business and holding people including yourself accountable for these goals. Without this focus, factors will be done unsystematically with no specific way of measuring results leading to business failures.
#4: Leadership Failure
Businesses fail because of poor leadership. John C. Maxwell, the leadership expert said, “Everything rises and falls on leadership!” Business leadership is very important!
To thrive, the leadership or management of the business must constantly make the right operational, financial and marketing decisions.
#5: No Differentiation or Competitive Advantage
It is not enough to have a great product; you must have a great competitive advantage!, These are the unique value propositions that sets your business apart from the competition.
It is also important to understand the competition so you can know what to do to get the upper hand! Failure to understand the competition will lead to business failure.
#6: Neglecting Customer’s Needs
Every business owner will tell you that the customer is #1 but it is only a small percentage that act that way. Businesses that fail are those that lose touch with their customers.
Get to your customers and find out if they love your products or services, get to know their likes and dislikes and solicit their recommendations. All these will help you to deliver the best and give you a competitive advantage in your field!
#7: Inability to recover from our mistakes.
It is true that mistakes are usually painful and can lead to losses. Yet, you will scarcely do business without making mistakes. So the key is for you to learn from your mistakes and keep moving forward!
However, businesses that fail, do so because they fail to recover from their business mistakes. The cumulative mistake results in excessive burden ultimately leading to business failure.!
#8: Poor Record Management
Records management is the organization, storage and archiving of documents, both electronic and paper. Record management systems especially accounting records are not always the core functions of businesses and organizations, yet these systems are crucial to the proper running of a company. Poor records management has very negative effects, both legally and financially.
Management decisions are made with reference to company records. This means that without the proper records, an organization risks making unfounded decisions resulting in losses, corruption and mismanagement and ultimately business failure. Good records are directly linked to increased transparency and effective corporate governance.
Considering a good accounting software for your business? Try SageOne Accounting software.
#9: Poor Location
The location of a business is very important to the progress and growth of the business. In this era, a business is disadvantaged if it has only a physical location and even more disadvantaged if it’s physical location is far from its customers.
Take advantage of the internet system and locate your business on it. In this way you will be globally located and thus accessible by the whole world.
#10: No Profit & Personal Use of Business Funds
Profit allows growth! A business is doomed to failure if there is little to no profits and yet high expenses. Aside this, your business is not your personal bank account. Failure to separate your personal account from your business account and manage your business finances well through proper accounting practices will lead to the end of your business.
Here you are with the top 10 factors that cause business failures in Ghana. Kindly share your comments below!
It is the goal of Multisoft Solutions Limited to enhance and ensure the growth of small-to-medium enterprises in Ghana and abroad whilst partnering the larger corporates to achieve the desired business objectives. Thus we provide the best business management, accounting, payroll, taxation and various kinds of business software to ensure business success.