Why small business fail

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57%increase in number of sick SMEs

(FY 2012-13 to 2014-15)

F A C T !

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Surprising Stats

As per the graph:

•FY 2012-13 to 2013-14 witnessed 53% rise in sick firms. Though there was a drastic change in the next FY which witnessed just 9% growth.

•Rs. 33,378 cr as debt outstanding by these firms (as calculated in 2014-15).

(Source: http://pib.nic.in/newsite/PrintRelease.aspx )

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But Why The Number Of Small Business Are Declining???

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Poor Management• 4% industries in SSI sector categorised as sick due to poor management• Many small business owners lack relevant business and management experience in areas such as purchasing, finance, account, hiring talent etc.• Not keeping updated on latest market trends.• Lacking regular studying, planning, organizing, planning and controlling day to day activities.

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Non- Availability of Raw Materials• 12% Sick units in SSI sector due to non-availability of raw materials• Imports are difficult coupled with high import duties• Poor Inventory Management• Lack of proper equipment and machinery contributes to 11% sick MSME units

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Lack of Demand• A lack of demand contributes of 66% of sick units in SSI sector• Entering a relatively unknown market without proper research and demand analysis• Limited local market• Not testing the price in marketplace• Failure to price the product in a manner to make profits

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Office LocationNot considering location factors such as:

• Customer base• Presence/absence of competitors• Accessibility, traffic, safety• Incentive programs in that area

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Lack Of PlanningLack of a well-defined business plan that includes:

• Business’s vision, goals.• Budget and financial projections.• Potential threats and solutions.• Marketing and promotion efforts.• Competition and customer analysis.

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• Biggest mistake in an age where 243,198,922 of users are online.• No digital presence means losing to competition in the growing digital age.

Little / No Digital Presence

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• Absence of sufficient operating funds• Unrealistic expectations of incoming revenues, cost of running business and operations• Long Gestation Period also impacts the small scale units

Lack Of Funds

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• Not testing the price in marketplace• Failure to price the product in a manner to make profits

Poor Pricing Strategy

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• Lack of communication and collaboration amongst partners• Not planning an exit strategy for any co-founder

Failing Partnerships

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Failing to Listen to Consumers

• Not having effective feedback methods for consumers.• Failure to work on customer’s demands and complaints.

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So What Can You Do?

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Test Your Business Plan

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Stay updated on the latest industry trends and learn to adapt them

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Focus yourself on the target and ways to achieve it

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Pay attention to your mistakes and learn from them

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Always keep a crisis management plan in reserve

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And Remember...You can always bounce back!

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2015

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