South Africa has one of the highest business failure rates in the world, with five out of seven of these businesses failing within the first year of operation. This is worth looking into if you are considering starting a business or have a new startup who wants in for a long haul. Read on…
For a country with such a high rate of unemployment, this is very concerning. SMMEs play a crucial role in counteracting the major challenge of unemployment. What’s the gap between SMMEs and acquiring talent/skills from the qualified?
As said by the specialist advisory service, access to finance is a major stumbling block, with only 6% of SMMEs report to have received government support. Although there are government programmes and initiatives, some still find it relatively difficult to get funding due to criterion and/ or requirements.
Although there are many different reasons why start ups fail, we can’t narrow it down to 1 thing. This is worth looking into. In this blog, we will look at only 3 reasons why…
3️⃣ common reasons why South African startups fail:
In finance and economics, liquidation refers to the closing of a business when liabilities exceed assets and it can be resolved by voluntary action or by an order of the court. “216 companies were liquidated in March 2021, compared to the 178 the month before – a 21% jump. Voluntary liquidations increased by 61 cases and compulsory liquidations increased by 10 cases. This is 49% higher than the total liquidations registered in March 2020.”
Source – www.businesstech.co.za/news
2️⃣ Lack of skills and knowledge
They say “illiteracy in business is another reason for small business failure.although it is worth noting that finding skills/talent is not limited to finding a good cashier for example, but finding the skills + right attitude. This means finding a person with people skills (attitude towards customers), and functional skills (e.g., planning, organizing, leading and controlling). Find a team with both technical skills and people skills to keep customers coming back.
3️⃣ Poor sales and marketing
Sales is the heart of a business and marketing keeps it alive. Nothing’s more important than brand awareness. No matter how great your product/service might be, your business will take a dip if no one knows about it. Sometimes you don’t need a 20 page business plan, you need proper marketing!
It is by far more costly to to win a new market than to preserve an existing one. It takes time to raise brand awareness, build up sales, build a new team, etc. If you can, save your small business.