Top Reasons Why Small Businesses FailShuchita Gupta
As a CFO and a consultant CFO to many startups and small businesses, I can speak from my experience that starting a business (even with a million-dollar idea) is never easy and especially in a time when the number of failures are going up and only a few percentage is making it to the unicorn club.
Now when you start a business, you may think of “how to get funds”, but you may not always be prepared for effective utilisation of the same. Without a proper plan, the math may not always work.
Your business can also fail if you exhibit poor management skills. You will struggle as a leader if you think you are bigger than the company and lose your vision in the process on how to lead your organization.
Every now and then a business startup grows much faster than it can keep up with. Your business will fail if you don’t pay attention to out of control growth.
The financial crisis of 2008 has shown that the companies that were facing legal issues or have shut down permanently has practiced poor accounts and finance, poor due diligence, poor audit, or the founders didn’t listen to their financial advisors. While starting up, you may have conflicting views on whether your company needs a financial consultant and seeing these debacles with multinational companies, I feel financial advisor is important and nobody should ignore them outright. An experienced financial consultant can help you create a budget that will help you control your finances and highlight where you can make improvements. With industry knowledge, they can work towards introducing new concepts and ideas that will help improve your financial performance. An experienced consultant will also help you in setting up the processes, get all registration done – compliances related to income tax, related to registration, labour law, environment law so that you don’t lose out on money and most importantly investors’ money for lack of legal knowledge.