However, we know that 80% – 90% of new businesses fail in the first two to four years due to a variety of factors. As we discussed, the primary reason for business failure is incompetence of some kind on the part of the person or persons starting the business. This incompetence is usually manifested in an inability to sell the product or service in sufficient quantities, or inability to control the costs of producing and selling the product.
Another major reason for business failure is offering the wrong product at the wrong price to the wrong market at the wrong time, or a combination of these. If your product or service is wrong for today‘s market, even the best marketing efforts and cost controls will not help you to be successful.
Ford Motor Company‘s introduction of the Edsel in the 1950s is a perfect example of the wrong product at the wrong time and place. After spending $250 million dollars in development and research, Ford brought the car to the market only to discover that there was no market for a car of that kind at that price.
Many of the dot.com companies like Webvan.com, offering groceries and Pets.com, offering pet food and supplies, went broke and took down hundreds of millions of dollars of investor‘s capital with them. It turned out that there was not a sufficient market for groceries and pet supplies ordered by Internet and delivered by mail or personal courier.
Many small businesspeople often make the same mistake, but on a smaller scale. They invest an enormous amount of time and money bringing a product to market without ever determining, in advance, if there is sufficient demand at that price.
Tags: business, business tips, improvement, mind, money, success, success tips