Starting up a business is one thing, and running it is another. Entrepreneurs face a lot of challenges as they run the operations of the firm. Some of them struggle until they can conquer all obstacles.
However, others find it hard to put everything together and be successful.It has happened to so many firms. Thus, it is not unusual. Others will start up another one and even become more successful than the previous one.
In contrast, others try something else aside from business. Some reasons make entrepreneurs consider shutting down the business no matter how attached they are to it.
Here are some of those reasons.
1. Stiff Competition
There are so many people starting up businesses these days. Even on online platforms, entrepreneurs can buy YouTube subscribers to be ahead of their rivals. There are so many registered companies in the economy selling the same or similar products.
This challenge is mainly faced by small businesses trying to get into an already existing market with more established buyers. It becomes more challenging when a small business tries to get into a monopolistic market with limited resources.
In such a situation, the company will be spending more money compared to the returns. Thus, in the long run, they consider shutting down the business.
2. Financial Instability
Running a business without finances is very challenging. Thus, the company can use the limited amount of money they have to buy only limited stock. However, it becomes difficult when no one or few people are buying the products.
The company may also have started with a borrowed capital from the bank or financial agencies. If the business does not make enough money to pay for the loan, it will be auctioned by the respective bank.
In such a situation, the firm has no other choice than to shut down its operations.
3. Medical Pandemic and Personal Health Condition
Sometimes entrepreneurs have to be more concerned about their health compared to their businesses. Without a good medical condition, you will not conduct your business well.
In some cases, the medical pandemic such as COVID 19, the government gives strict guidelines.Your busses may be involved in activities that are against the stated instructions.
In that case, you have no other choice than to close it. The entrepreneur can re-open it after the pandemic. However, some firms switch to other operations and end up closing the firm for good.
Also, if the entrepreneur is going through a severe medical condition that limits them from working, they may consider closing it. It happens if the entrepreneur does not entrust the business to any other person.
Alternatively, they can sell it and use the money to pay medical bills and buy medicine.
4. Retirement Period
There is always the main boss in every business. If the entrepreneurs face retirement and have no other person to take over, they will have to close the firm. Also, the person in charge may feel insecure, leaving the business in someone else’s hands. They can consider selling it and saving the money as retirement benefits.
5. Unstable Mental Condition
It is best if you have a stable mind to help you think and make a tough decision. You cannot run a business when you are mentally unwell. It is even worse if the company had only one boss making all the final decisions.
In this case, the boss may not be mentally in a stable condition to hand over the firm to someone else. The business needs a steady mind to run the daily operations and to make sound decisions. With time, things will start falling out of hand and end up being closed.
6. Death of Entrepreneur
Some firms rely on the entrepreneur. Thus, if the person dies, the business’s operations will also stop. It becomes more challenging if the person did not leave behind an official will with the inheritance details. The company can end up in the wrong hands of an irresponsible person.
It becomes even worse if they have no experience running a business and have not been working in the firm. They will not make good decisions and will use the business resources without following the correct procedures.
7. Poor Planning and Mismanagement of Business Resources
Starting up a business is a risk because you are not sure about the outcome. There is no assurance on whether the company is going to make profits or losses. If you do not organize your resources, you will make losses, and so many other things will be at stake.
Some of the affected factors include reputation, business operations, strategy, finances, and compliance with the law. If you did not create a proper plan including a business plan to guide you, the firm will face the risk of closure. When the entrepreneur doesn’t take it seriously, they will end up shutting down the business.
Having a business is a good feeling, and you get to be your own boss. However, entrepreneurs face so many challenges before the firm is stable enough to conquer the struggles it may face. If the operations are not run well and so many other factors, the business will end up being closed.