Bou wanted to start a business but held back thinking of it might fail. Why businesses fail after all? Causes of business failure are many, however the most common is poor leadership choices. As a businessman you need to learn how to steer your ship appropriately to ensure success. Listed below are some of the main causes of business failure as a result of poor leadership decisions.

The inexperienced business owner

Most people venturing into business choose the more expensive option of learning from experience. A good example are the many unfinished buildings, that have been in this condition for decades just because the proprietors refuse to follow advice but instead go with their gut feeling. The owner who doesn’t understand detailed operations is unable to distinguish the critical from the apparently urgent tasks. He or she is also unable to properly delegate responsibilities and monitor work progress. Here, one will find staff milling around bored in one section while others are dangerously overworked in another section where the owner rarely ventures.

Wrong staffing policy

Staffing is another area where business people fail a lot, and this is because many hire staff according to the relationships they have with these people, and not their ability to perform. Such a basis greatly reduces the capacity for general production by the organization.

This applies mainly with family based businesses. The ownership falls under pressure to employ their children and relatives in disregard of need. Businesses then develop a policy of “ethnic balancing” for which every member of staff engaged by the husband or wife must be balanced with another from the other side to ensure parity. There is little or no consideration for skill or ability to do the work. A family venture in which the lazy and incompetent are comfortable is the result, since not much is needed to be done while the highly skilled staff flee from overwork.

The lack of effective controls

One often wonders about business owners who never leave their premises unattended, trying to do everything from the opening of padlocks on the doors to the measurement of cloth to the disposal of trash. The owner whose till is his personal current account, and he withdraws from regularly and may or may not account for. He treats the work place as he would his house.

While keeping an eye on all aspects of your business is a good idea, one needs to learn to delegate. The challenges with a control system which demand that the business owner be physically present are two-fold. The first is, one individual cannot be in more than one place at the same time, meaning that operations cannot grow. In the event that an emergency arise then the business stalls as no one else has the skills to run the show.

The second, is even more debilitating since this does not protect the venture from its most potentially damaging predator; the owner who is unable to distinguish business cash from personal resources, using them interchangeably. The business suffers when the owners withdraw resources for personal use and fails to properly account for it.

Entrepreneurial Learning

It is alright to have a fear a business failure. Ensure that your money is safe and secure and there is nothing to worry about. Look at your business. Where ever you find lack of focus, consider it important and fill the space. If earning money was a easy job, everyone can become a entrepreneur or CEO.

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