Main reasons for the failure of an entrepreneur of in his business are given below:
(1) Wrong Selection of Business:
Choosing a business without adequate knowledge, training and expertise, without planning and having a clear picture of prospects in that business can lead to failure.
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(2) Wrong or Faulty Planning:
If planning is based on misleading or wrong estimates, the business has every chances of failure.
(3) Improper Choice of Location:
If an entrepreneur is not fore- sighted and choose a location for the plant which is in a remote place, where there is lack of adequate facilities like electricity, transportation, postal and banking facilities etc. it may lead him to failure.
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(4) Shortage of Finance:
Lack of money may also result in financial crisis and thus delay in production and losses. And finally and enterprise may have to be closed down.
(5) Lack of Raw Materials:
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For efficient working raw material is a must. If there is no input of raw material, there will be not output.
An efficient entrepreneur generally considers this aspect also and plans his production schedules in such a manner that if ever shortage of raw material takes place, it is come over easily.
(6) Wrong Selection of Employees:
For specialised jobs, qualified technical persons are needed but if these are not engaged work may suffer, leading to failure.
An enterprising and intelligent entrepreneur arranges professionally qualified persons.
(7) Inefficient Management:
An entrepreneur, who is unable to manage his business efficiently, runs the risk of failure of business.
(8) High Production Cost:
Economical purchases and other production cost are very necessary to produce and sell goods at competitive rates. High production costs are also a cause of failure.
(9) Out Dated Technology:
An entrepreneur who employs outdated technology instead of modern and latest one and produces things for which there is little demand, there are chances of his failure.
(10) Other Reasons:
In addition there may be a number of factors which lead to failure of an entrepreneur and his business.
Some of these are related with the marketing side. These can briefly be summed up as under.
(a) Ignorance about the Market:
This happens when no market survey is conducted and business operations are not planned accordingly.
(b) Wrong Pricing Policy:
Very low or very high price of the goods is indication of wrong pricing policy which can lower sales, unless there are very genuine reasons for doing so.
(c) Lack of Publicity:
Without adequate publicity these days’ things are hard to sell. An efficient entrepreneur keeps this in mind and ensures publicity.
(d) Absence of Marketing Network:
If arrangement for selling goods locally as well as out of station is not adequate, this affects the business severely.