Wondering why so many small businesses fail in India? Biz2Credit explores major reasons for Small Businesses failures and helps you tackle the challenges lying in the path of success.
2. 2
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 )
4. 4
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.
5. 5
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
6. 6
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
7. 7
Office Location
Not considering location factors such as:
• Customer base
• Presence/absence of competitors
• Accessibility, traffic, safety
• Incentive programs in that area
8. 8
Lack Of Planning
Lack 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.
9. 9
• 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
10. 10
• 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
11. 11
• Not testing the price in marketplace
• Failure to price the product in a manner to make profits
Poor Pricing Strategy
12. 12
• Lack of communication and collaboration amongst partners
• Not planning an exit strategy for any co-founder
Failing Partnerships
13. 13
Failing to Listen to Consumers
• Not having effective feedback methods for consumers.
• Failure to work on customer’s demands and complaints.