November 13, 2019

Top 5 Reasons why some Small Businesses fail in Pakistan

Naveen Shayan

LedgerMax specialist

Small business owners usually do not consider the possibilities of their business going down when they take the plunge. Though, according to reports approximately more than half of the new business ventures in Pakistan close down after 5 years of commencement. While you۪'re planning to start your new business, this percentage of failure should not hold you back. Instead just consider the following signposts before you dive in to become an entrepreneur.

1. Inadequate Funds

It is very important that your small business has sufficient capitals to stand the initial few years decently. It is the time when small businesses experience uncertainty and development. Thus, while you're starting your business, it is a must that you're practically sure of your capitalization sources and have already planned and worked on your funding needs at different phases of your business growth.

2. Lack of Experience

Take notes! If you're not proficient in your chosen field of business and have scarcity of experience, your business can be adversely impacted. As a small business owner, you have to wear so many hats a time; from finance to marketing and selling, there are many things you have to do on your own which cannot be done properly if you lack experience in your business field.

3. Inventory Trouble

Adequate inventory is indispensable for any business to run smoothly. Small business owners should be capable of managing their inventory effectually which means there shouldn't be a scarcity or excessiveness of inventory on hand. Poor inventory management can result in the decline of any business.

4. Poor Business Location

It is a fact that a business set on a poor location cannot reach its customers positively. If you�۪re located on a wrong place, it would be hard for your customers to find you and no customers denote no income. Moreover, the appearance of your building, population of the area where it is located, and proximity to business opponents also have a huge impact on your small business venture.

5. Bad Management

All of the above mentioned issues depend on the decision making abilities of the small business owner and his/her business management skills. Other than the problems discussed earlier, bad management in a small business can result in excessive use of funds, unnecessary investment in resources and not focusing on your niche etc.Thus, at times it is complicated to forecast each and every challenge a small business might come across. However, the problems discussed above can have a noteworthy impact on your small business and should be avoided to ensure success.


Our Featured Blog Posts

November 3, 2022
The significance of supply change management for a business is massive. It is a vastly comprehensive system that all organizations use in order to put up their products; starting from acquiring raw materials, processing them and finally delivering the end product to the consumer. Thus, an efficient supply chain is all about improving the functionality of operations and making them more well-organized and swift.
Read more
October 4, 2022
There isn’t any business that doesn’t need cash. As a small business owner, you must be aware of the significance of having an adequate amount of rupees in hand. Irrespective of the profits your business is making, if the cash is occupied in any way, be it pending receivables or excessive inventory, the money is worthless. In contrast, when you maintain a strong cash flow for your business, it lets you fulfill your financial duties effortlessly and the resilience it needs to rise with more opportunities. In short, you won’t have to think before saying YES to any new venture that comes in your way.
Read more
September 1, 2022
Also known as a delivery note, a GRN (Goods Received Note) is a significant document which is used by the accounts division to authenticate invoices prior to settling the payments. The accounts department relies on the GRN made by the stores division to scrutinize if all the ordered products are delivered by the supplier and then settle the supplier’s payments for the said goods.
Read more