Many new businesses fail. Why?

Date: 2015-10-07; view: 459.

TEXT 1

UNIT 2

Doing business together with a partner

TEXT 3

It's common knowledge that doing business has become very popular everywhere. At present it is a comparatively new and perspective tendency in modern life. So, not long ago I made up my mind to go into business. Following my lawyer's advice I chose small business in the field of services. It goes without saying that I weighed all pros and cons before making a decision. I understand that production of goods is very profitable, but provision of services is profitable too. After all, people do business for a profit.

At first I wanted to be a sole trader, but then I changed my mind and organised a partnership. I went into business with my friend Jean. She has a solid background in accounting; she is good at keeping the books and ordering stock. As for me, I enjoy selling and like talking to customers.

So far our business is going pretty well, and the shop is beginning to attract more customers. I won't be boasting if I say that we begin to make a good profit. By the way, we have a certain arrangement for distribution of profits and losses. They are equally shared. I hope to be in business for a long time. I've really become quite knowledgeable about business.

There are several reasons why many new businesses fail. First of all there has been general recession. Then there's the question of labour relations. What is officially called "industrial action", which actually means strikes, contributed to the rapid disappearance of many little enterprises. But it is more than likely that what really accounts for most of the failures is simply bad management.

Let's look at some of the ways in which a business may be badly managed. First, many new businesses are undercapitalised, that is there isn't enough money available to them to give them a real chance to succeed. Those enterprises which are undercapitalised are sure to be in trouble. Therefore, never attempt to start a new venture if you haven't got enough capital.

Second, many new businesses fail because they are in the wrong place or their premises are unsuitable; they operate inefficiently, because they haven't got enough room or appropriate facilities. So, don't hurry to settle on premises which turn out to be unsuitable.

Third, some ambitious new businesses spend too much of their capital on presenting a glossy image, expensive office furniture and fittings which don't contribute anything to meeting the expenses.

Fourth, far too many businesses fail because their managers don't carry out the necessary research of the market to make sure that their product is in demand and needed by the people. Therefore, always research the market before you decide to enter it.

There are a lot of other factors to be taken into account: installing the right equipment, hiring a suitable workforce, ensuring a supply of raw materials on term you can afford; controlling production, keeping a close check on prices and customer credit. Briefly speaking, plan every step of the way before you start your business. Weigh all pros and cons. Never make haste while making a decision. Remember: haste makes waste.