$1.$ Why businesses fail in the start$-$up phase

$$The reasons for start$-$up failure aren$$t a mystery,$$ says Robert Buys, senior manager in Seda$$s Enterprise Development

Division. $$It usually comes down to one of four factors: starting for the wrong reasons, not enough research, lack of

knowledge or skills and insufficient access to networks and mentorship. Insufficient capital, bad management, wrong

location, poor marketing etc. are all just symptoms of these. Good management and marketing are essential when

starting up$.$

Starting for the wrong reasons

According to Buys, if you start a business for the wrong reasons, it is likely to fail. Starting out simply to make money,

gain spare time to spend with family or answer to no one but yourself, is dangerous. $$You need to have a passion for the

industry that you are going into to sustain you through the tough times, so don$$t go into business for the wrong reasons,$$

explains Buys.

Simply copying somebody else$$s idea also doesn$$t work, even if it worked for them. In many cases, the owner is the

business. Moreover, without his personality or skill set there is little chance that you will be able to emulate his success.

Businesses started by desperate people who have lost their jobs and need to make money fast, are also at risk of failure.

It will take time to gain some return on your efforts, so you need to be committed for the long$-$term and have $$heart$$ to

succeed.

Not enough research

Many small businesses fail because of fundamental shortcomings in their planning. To be successful, you need to have a

sound idea, a purpose $($your product or service must fulfil a real need in the marketplace$),$ and a plan that outlines where

you are going and how you are going to get there. Thorough research is crucial to ensure that you have all the

ingredients for success.

A business plan is crucial, even if not required by the financial institutions. Writing a business plan forces you to consider

and investigate every aspect of your idea, purpose and plan. The plan must be realistic and based on accurate, up$-$todate

information and educated projections for the future. The following components should be included:

$$ Description of the business, vision, goals, and keys to success

$$ Work force needs

$$ Potential problems and solutions

$$ Financial: capital equipment and supply list, balance sheet, income statement and cash flow analysis, sales and

expense forecast

$$ Analysis of competition

$$ Marketing, advertising and promotional activities

$$ Budgeting and managing company growth

Be realistic about your strengths and weaknesses in order to work out what kind of support you will need.

The wrong skill set and lack of knowledge

$$Illiteracy in business is another reason for small businesses failure,$$ says Buys. You may have a good idea for a

business but in all the excitement of starting up$,$ you don$$t stop to ask if you will really be able to do it$.$ You need passion

and energy, but you also need the right skills and product knowledge if you are going to deliver a professional service or

sell a quality product.

Before starting up$,$ think about your unique selling point. The differentiator could be superior skills or service or better or

cheaper products, but there must be something that makes you special. Without this, you will surely fail.

If your product is not up to standard, clients won$$t come back. You must also learn how and where to market your

products and services in order to attract the right clientele.

A lack of information can also contribute or lead to failure. Reading business books, magazines, website articles and

blogs and talking to other business owners is something that everybody can do to gain knowledge and improve their

skills.

Mentorship through organisations such as Seda also offers much$-$needed support and a source of sector and industry

knowledge.

No access to networks

Access to networks is important as they can provide support, inspiration, motivation and a platform to market your

business and gain new customers.

$$South African business owners don$$t have a culture of working together, but would rather suffer in silence,$$ says Buys.

$$They should aspire to work together as business owners do in Kenya, Italy, Brazil and the UK$.$ Networks could include

any formal and informal groups. The point is to get your name out there and market your business and services to

potential customers, while being supported by fellow entrepreneurs. What are some strategies mentioned in the article to counter potential problems during both the startup and

growth phases?