Reasons Why Businesses Fail To Succeed In Ghana
According to statistics, a greater percentage of businesses are established yearly in Ghana. Research reveals that 90% of these businesses turn to burn out or lose relevance within one year and three years time frame. The million dollar question is what could possibly be the reasons why businesses fail? It’s quite sad to close down a business that took you decades to establish, a business that costs you huge sums of cedis, only for it to collapse in no time. So many business owners lost millions of Ghanaian cedis to business failure whiles others are being chased by banks and imagine the depression others will go through. If you have started a business be it small and medium enterprise or large scale business, perhaps you are just about to start your own business in Ghana, this post could be a guide to avoid repeating same mistakes.
When businesses perform well, individual finances increase, taxes increase and improves the overall wellbeing of the economy. The case is different when businesses fail! It’s advisable for business owners and potential business owners to consider the sustainability of their businesses.
Reasons Why Businesses Fail In Ghana
New or existing business fail in Ghana possibly because of the following reasons.
1. Poor or No Market Research
Most businesses that fail in Ghana are those that fail to conduct proper market research before landing on a potential business. People will jump into businesses just because of it profit making nature without a thorough research of it. Market research factors market value, risk involved, profitability, business location and cost of sustainability. Failed or failing business owners overlook this aspect, hence the business hits on a rocky ground.
2. Business For Passion And Not For Profit
Businesses are established for profit but one of the unrecognized reasons why businesses fail in Ghana is, most business owners either do it for fame or passion and not for profit. We have heard motivational speakers told us to do what we love but what i know is business is done for profit. If you establish a business based on your passion you are likely to fail hands down. You do it for passion so even when you gain no profit, you don’t care. It doesn’t push you to contact the technical-know-how’s to modify the business because you feel you can do it yourself. This is not to mean it’s not good to do the business you love but the focus shouldn’t be the passion aspect but the profit making aspect of course!
3. High Rate Of Taxes
Tax is the best way to a country’s development but high tax rate on businesses turn to burn out “mushroom businesses” I mean the startups. Mostly, there are no lower tax rates or tax reduction for start-up businesses and they end up Bowing out of the system due to the heavy tax embedded on them . The issue of tax and businesses in Ghana is a headache, it looks as if it only favours well established firms in the country.
4. Lack Of Technical-Know-How
You would hear about a profitable business and the next minute you are in it without due experience. Businesses tend to fail because most business owners lack the technical know-how and experience on the business. Business owners fail to adapt to the do’s and don’ts, how’s and when’s of businesses, experience is the best way to properly manage and sustain a business.
5. Poor or No Accountability
Poor or no accountability is one of the reasons why businesses fail in this country. Most businesses especially the startups fail to be accountable which is the number one haunting weapon to collapse a business. Monthly business stock taking are overlooked by businesses which means to suffocate the business purse. By not taking business monthly stock, you are blindly running the business with no knowledge of the profit and loss of the business or it’s health status.
6. Poor Management Skills
Most business owners and entrepreneurs do not posses proper managerial skills or hire poor staffs. Employing unskilled staffs based on family and friends could seriously damage the health status of your business. Business owners tend to employ friends and family members with little or no experience to manage their businesses which leads to poor business management and finally collapsing the business.
7. Lack of Commitment And Sustainability
“Where your wealth is, that’s where your heart is” but most business owners tend to overlook it. Commitment in business yields good results, in either case, lack of commitment to your business will lead to poor returns that might not be able to sustain the business. Lack of business stability on the side of business owners, doing different businesses at the same time, you may not succeed in all of them. Focus on few!
8. Lack of Sustainable Funds
Another major reasons why businesses fail in Ghana is lack of funds to sustain the business. You could have a business idea, brought it out to reality by establishing it but the cost of sustaining the business is a great nut to crack. The cost of electricity, taxes, paying staff workers, cost of maintenance and other business expenses makes it very difficult to sustain a business if proper managerial skills are not exhibited.
9. Low Value Stocking
Businesses collapse when it doesn’t get enough customers to patronize the goods and services. Due to lack of proper market research as stated earlier, business owners and entrepreneurs tend to stock low value goods or services not because it’s inferior but because it’s not needed by people in that particular business location. This could raise business location as an important factor which business owners don’t consider. The business will eventually collapse if no customers do patronize.
Reasons Why Businesses Fail In Ghana : Key Considerations For Business Owners
✔ conduct proper market research to determine the market value of the business, business location and patronage.
✔ Business owners should consider doing the right stocking of goods and services in their businesses.
✔ Work hand in hand with banks for reliable business loans to sustain the business.
✔ Entrepreneurs should be committed and stable with their businesses for a sustainable business.
✔ Employ technical-know-how’s and experienced staff workers.
✔ Business owners must learn to take monthly stock of their businesses to determine profit and loss.
✔ They should adopt proper business management skills or employ a certified business manager.
✔ They should write to apply for tax reduction tariffs for business startups.
✔ Adopt the profit-making definition of business instead of doing business for passion.