Reasons behind Failure of any Business

There is a common belief that out of hundred startups, only handful amount of them can survive in the market. Though at the very beginning stage, they appeared to be extremely promising, but most of them could not survive even a year. This is not a very surprising scenario in the world of business, as it is not possible for a human being to foresee each and every aspect of the market, and formulate strategies in accordance with that. There are few common reasons, due to which a very promising business can fail within a very short duration.

• Any business in the world is solely dependent on the consumer base. Devoid of a strong reputation among the minds of consumers, it is not possible for a business to survive. Many times it happens that any new product or service is launched in the market without really knowing the demand or expectations of the consumers. In this case, it is very much possible that the newly launched product or service may not be acceptable to the consumers. Lack of proper market research can lead to this kind of situation.
• While analyzing the existing products and services in the market, an entrepreneur tries to look for the area, where substantial amount of differentiation can be applied. Now, seemingly substantial to one may not seem to be substantial for all. The incorporated differentiation may not be perceived by the end users or consumers. In that case, the new product or service will appear not so different to the major segment of consumers, and it will lose its relevance in due time.
• In many cases, it may also be possible that the value proposition of the differentiated product or service is not communicated to the consumers. This case may arise due to the lack of effectiveness in the promotional strategies. In this case, all the efforts being put forth for market research and product or service development will be wasted, as the product or service will not be accepted to the end users and consumers.
• Lack of effectiveness in the design of the revenue stream and business model may result in failure of the business. If all the scopes, from where the money can be made, are not exploited, then the business may fail in due course.

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