10 Small business failure factors in Uganda. Most small businesses fail to succeed today and most of them end up shutting down and stopping all operations.
According to fundera, there is 20% of small businesses fail in the first year, 30% of small businesses fail in the second year, 50% of small businesses fail in five years and 70% of small businesses fail in their 10 years in business.
Let us look at the major factors that lead to small business failure in Uganda today.
Poor business management
Most small businesses have failed to make it due to poor management. Businesses just like any other body need good planners and executors.
Small businesses have continued to crumble due to the misuse of the business’s money.
Business owners do not separate business money from their money. They consume everything that enters the business without re-investing in the business.
The business is then left with no capital to run and succumbs to the ground.
Lack of Uniqueness
Small businesses continue to fail today due to a lack of a trademark or an identity.
Many small businesses start but have no clear identity that separates them from other businesses selling products and services like them.
This is fatal because if customers can not differentiate you from your competitors, you will struggle to build your brand or name.
Building a non-profitable business
Not all businesses that make money are profitable. Some businesses get no profits from the money they make.
They find they have got the capital they invested in stocking products but with no profits. Profits help to grow the business.
Some other small businesses lose their money altogether. They do not even get back the money invested in their products and services.
Building a non-profitable business can cause a small business to fail rapidly.
Over Expansion
Small businesses go out of business due to the rush of business managers to grow big too soon.
Over scaling out the small business on a strain. The business may not be making as much as what is being taken out of it.
This leads to business failure or running bankrupt. The best way is to do calculated scaling.
Expand your business slowly and in a calculated way.
Lack of a strong vision
All successful businesses have visions and plans that guide them.
The managers and directors of successful businesses always build their businesses to achieve a target and the target is their vision.
Lacking a vision for our business is like piloting a ship without radar. The business becomes directionless.
A directionless business has no other destination but failure. So start to make a vision for your business today.
If you achieve a given vision of your business, set another target to keep yourself and your workers motivated.
Bad inventory management
No customer goes to a shop that lacks what to sell. Small businesses have continued to lose their customers to their competitors due to a lack of products to sell.
Low inventory stocking has led to the majority of small business failures.
The other bad inventory management is stocking products that have no market. This holds your money in your business and may eventually lead to business failure.
Overstocking also leads to less or low profitability as compared to stocking what is enough.
Lack of market research
Building a business just for making money without first researching to see if there are customers ready to buy your products or services leads to instant business failure.
Most entrepreneurs are so in their heads when it comes to starting up their businesses that they do not give a thought about who their customers are and where they are located.
This has led to many entrepreneurs starting businesses in the wrong locations compared to where their customers are found.
A business without customers is not a business.
Bad Customer care
No business does not need customers. So why do you treat your customers harshly and poorly?
Some entrepreneurs are boastful and full of pride. They value their customers less and they do not even care to make sure their customer’s needs are met.
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If you don’t treat a customer like a boss, your business will fall behind period.
Customers love being treated like kings and queens and the earlier you put that into action, the better.
Lack of skills
Last but not least of the 10 small business failure factors in Uganda is lack of skills.
Many entrepreneurs have seen their businesses succumb to failure because of untrained and low-skilled employees.
It is true that anyone can do anything, but only after getting training and mentorship.
Most entrepreneurs have seen their businesses collapse simply because of employing their untrained friends, children and family members.
Running a business successfully needs training and commitment. It is not a walk in the park!
Other factors
Other external factors may lead to 10 small business failure factors in Uganda. These include inflation, catastrophes like floods, theft, and accidents.
The entrepreneur normally has little or no control whatsoever over these external forces of destruction.
However, that is where insurance comes into play. As a serious entrepreneur, it is advisable to ensure your business and all your assets.
Insurance policies normally cover you for all these calamities.