by Todd Pheifer

Created on: May 22, 2009

Smart people with solid business plans create new ventures all the time and they end up failing miserably. At the same, time some other individuals may find their businesses flourishing, despite a missing business plan and a general lack of entrepreneurial skill. The reality is that businesses management is a complex set of factors and situational contingencies. Sometimes failure makes sense, while other times there is no particular reason for the demise of a business. Here are a few thoughts on why a business may fail.

Lack of planning

Some businesses fail because people are not able to think in a linear fashion and put together an effective organizational strategy. In many cases this is understandable because despite others models and examples that may be present, people are unable to predict the future. They cannot anticipate market trends, problem employees, production problems, and consumer moods. Of course, the person who does not do any research may struggle with all of these factors to a much greater degree. A plan won't guarantee success, but it will certainly help people avoid certain pitfalls.

Timing

Sometimes the business plan is solid but the timing is just wrong. For example, when the economy starts to struggle, people will be more cognizant of their expenditures. Therefore, they may have freely purchased something last year, but this year they make a conscious decision to hold off. In addition, there may be particular publicity that surfaces in such a way that a business is impacted negatively. The business may not have done anything in particular to cause bad publicity, but sometimes establishments end up being guilty by association and suffer the consequences of someone else's actions.

Competition

Other companies that produce similar products are always a concern for the business. While organizations try to innovate and provide a unique product or service, there are many situations where a number of companies do essentially the same thing. A business may do their homework and decide that they can fill a particular "niche" or exploit a geographic area, but sometimes this is easier said than done. If there are other businesses that offer similar products, there is always the possibility that consumers will choose to go with others, even if the business in question produces a quality product.

Combination platter

Finally, there is the issue of combined factors. In most situations, there isn't one particular thing that sinks a business. The economy may combine with competition to pressure a business into failure. Again, sometimes factors can be anticipated and the business may have time to adjust. Unfortunately, many businesses operate with a small margin of error. Despite people's best efforts, a well-planned and properly executed business can still fail in a relatively short period of time.

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