It turns out that these are 5 reasons companies fail in the initial year

  • 3 min read
  • Jan 20, 2022

Lately, many new companies have been established and developed their businesses. However, in fact, not many of them were able to survive the initial year. This is actually caused by many things. Is your company also a new company? Do not panic. Understanding the causes of failure is an effective way to both avoid and prevent it from happening. Anything?

Starting a Business with Large Loans

The first reason companies fail in the early stages is starting a business with a large loan. Many small business owners make the mistake of borrowing large sums of money ; whether it’s from a bank, financial company, or even a loan from friends and family. If the business is started from a loan, the businessman will feel pressured to make a profit as soon as possible because of the debt that must be paid each month. The company’s income at the beginning of the month always runs out to pay off debts. As a result, the costs that can be used to develop a business are getting smaller.

No System Promotes Effectiveness and Efficiency

The absence of a system that encourages effectiveness and efficiency in the production process will be very time consuming. As a result, time is wasted and you don’t focus on more important things. The company was slow to develop and eventually slowly crumbled. Actually, this can be minimized by using SaaS. Implementing SaaS in business processes will help you complete time-consuming manual work. Not to mention the ability of SaaS to monitor your business development and predict the business strategy that best suits your company. One example is SaaS accounting and Human Resources (HR) which can help with accounting management and human resources in your company.

Overpending at the Beginning

There are still many business people who spend their capital buying things that are not important, for example buying office equipment and furniture or are too busy designing business cards. Not that it is not important, but if it is not necessary, why should it be? It’s best to limit your expenses in the early days of your business . Write down the things you need and make expenses based solely on this list. Besides that, don’t forget to do labor efficiency. There’s nothing wrong with using tools to support automated business processes .

Expanding Too Fast

It is normal to expand when the business begins to show signs of success. However, you have to do it in the same way as when you first built your business. Don’t be reckless and overconfident. Make sure you find the right market and area to explore. Moreover, if you are planning to develop a product. Do not let the product deviate from your business outline because you might get trapped and forced to form a new business.

Overlooked Marketing

Marketing can be the main reason companies fail in the early stages. This one mistake is usually most often made by business people in the technology field, especially startups. Employees who are dominated by HR in the IT field are also commonplace. Unfortunately, some business people seem to be too focused on this matter so that they forget about another, no less important aspect, namely marketing. In fact, this marketing is what is able to attract customers to buy their products. Marketing will carry out promotions that not only benefit consumers, but also companies. They will also develop target markets and find solutions to increase product sales.

These are some of the most common reasons companies fail in their first year. Don’t let these things happen to your company and destroy your company in the first steps of its growth. Simplify and simplify your business processes with the appropriate tools whenever possible.

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