10 Reasons Why Some Black Owned Businesses Fail
10 Reasons Why Some Black Owned Businesses Fail. Owning a business can be liberating. The sad part is that many businesses more especially black owned, never stand the end of time. The following points are just some of the reasons why.
1. Access To Finance
Many start-ups rely on financial support from family and friends. However, as many business owners have not planned correctly, they often find that the money they need to start and subsidise the business is not enough. Costly trial and error in the use of capital often results in business failure.
2. Insufficient Funds
You can gather enough funds to start a business but not enough to keep business regulating. In order to stay in business, your start up capital should cover your business for at least 12-18 months after opening. The No. 1 reason people fail is because they run out of money.
3. Inadequate Management
Another common reason black businesses fail involves the lack of business acumen held by a management team or business owner. In some instances, a business owner is the only senior level personnel within a company. Without a dedicated management team, a business owner has greater potential to mismanage certain aspects of the business, whether it is finances, hiring, or marketing
4. Poor Planning
Many potential entrepreneurs have no formal business training, and tend to ignore the vital step of developing a business plan. As a result they do not have a realistic grasp on the costs, responsibilities and medium- to long-term requirements of a business. If there is no concrete vision or plan, the consumer won’t understand what you are trying to sell. Be prepared for the long haul.
5. Mixing Company and Personal Accounts
Using the company account as a personal account leads to confusion regarding the true costs and profitability of the business. This is further complicated by poor record keeping.
6. Marketing Mishaps
Sometimes black business owners often fail to prepare for the marketing needs of a company in terms of capital required, prospect reach, and accurate conversion ratio projections. When companies underestimate the total cost of early marketing campaigns, it is often difficult to secure financing or redirect capital from other business departments to make up for the shortfall.
7. Failure To Market Online
Just about every business or company needs to market online. The ability to reach a large target audience and potential customers all over the world are all reasons why black owned businesses should market online more. Businesses can customize their marketing to those specific audiences to attract those cultures. Failure to do this will ultimately lead in your company failing.
8. Lack of Experience
Try and start a company revolved around something you have experience in. Someone who spent their whole life painting shouldn’t start a tech-consulting firm. Stay within your scope of interest when starting a company. Starting a business is by no means an easy task. There will be loads of obstacles along the way, and if you have no idea of what you are doing it is almost certain that you won’t have a successful outcome
9. Employing Family
Blood is not always thicker than water when it comes to doing business. Even with the best of intentions and aspirations, what starts out as a seemingly “safe” mutually beneficial project or interaction can turn into anything from a minor embarrassment to a major nightmare. Blacks tend to lean towards family and friends for staffing. Even sometimes it works out fine, but majority of the time it doesn’t.
10. Bad Customer Service
Good customer service leads to referrals, which leads to more business. Bad customer service leaves consumers uneasy and reluctant to patronize these establishments. It would be unfair to say that black businesses are the only entities that has less than desirable services. However, the major difference is blacks are the poster child for the negative stereotype unlike our lighter counterparts.
