Hello friends Summarized! This time we will discuss the causes of entrepreneurial failure in running a business . Are you one of the entrepreneurs who have experienced failure? Or maybe you are planning to start your own business? If so, then you need to know what are the factors that can make your business not successful.
What Causes Entrepreneurs to Fail in Running a Business?
What is Entrepreneurship?
Before we get into the main topic, let’s first understand what entrepreneurship is. According to KBBI, an entrepreneur is a person who dares to take risks in managing a business with the aim of making a profit. Entrepreneurship can also be interpreted as a person’s ability to create and develop new businesses by taking advantage of existing opportunities and resources.
Entrepreneurs have an important role in a country’s economy, because they can create jobs, increase people’s income, and contribute to economic growth. However, being an entrepreneur is not easy. Many challenges and obstacles must be faced by entrepreneurs, both from internal and external factors.
Causes of Failed Entrepreneurs
Based on several sources that we have summarized, here are some common causes that make entrepreneurs fail in running a business:
1. Inadequate Planning
One of the keys to success in entrepreneurship is careful planning. Improper planning can cause entrepreneurs to not have a clear vision and mission, not to know the target market and competitors, not to determine an effective marketing and promotion strategy, not to calculate capital and operating costs correctly, and not to prepare a backup plan if something goes wrong. unwanted.
2. Lack of Managerial Ability
Managerial ability is the ability to manage human resources, finance, production, marketing, and business operations efficiently and effectively. Lack of managerial skills can cause entrepreneurs to be unable to recruit and motivate qualified employees, unable to manage cash flow and budgets properly, unable to optimize the quality of products or services offered, unable to reach and retain customers, and unable to adapt to changes in the business environment. .
3. Poor Financial Management
Financial management is the process of managing the incoming and outgoing funds of a business with the aim of achieving optimal profitability and liquidity. Poor financial management can cause entrepreneurs to not have neat and accurate financial records, not to have financial reports that can be used for analysis and evaluation of business performance, not to have strict cost control, not to have sufficient and stable sources of funding, and not to have protection. assets from financial risks.
4. Unable to Face Change
Change is something that is certain to happen in the business world. Changes can come from internal and external factors, such as changes in market demand, changes in technology, changes in regulations, changes in competition, and so on. Not being able to deal with change can cause entrepreneurs to be unable to identify and take advantage of new opportunities, unable to anticipate and overcome new threats, unable to innovate and increase the added value of products or services, and unable to compete and survive in business competition.
5. Too Rush
Too haste is an attitude that is impatient and wants to get results quickly without regard to process and quality. Being too hasty can cause entrepreneurs not to carry out in-depth market research, not to conduct product or service trials before they are launched, not to carry out regular evaluations and improvements, not to cooperate and partner with relevant parties, and not to carry out business development on an ongoing basis. gradually.
To better understand the causes of entrepreneurial failure, here we provide some examples of real cases that occurred in Indonesia:
PT KAI Commuter Jabodetabek (KCJ) is a company that operates electric trains (KRL) in the Greater Jakarta area. In 2014, KCJ launched the AC Economy KRL service with a fare of IDR 3,500 per trip. However, this service failed to attract passengers because it was considered uncomfortable, not timely, and did not meet the needs of the community. As a result, KCJ suffered losses of up to IDR 1.2 billion per day and finally stopped this service in 2015.
Bobobobo is an e-commerce platform that provides fashion, travel and lifestyle products. In 2016, Bobobobo launched the Bobobox service, which is a hotel capsule that offers a unique and economical stay experience. However, this service failed to compete with other hotels that offer lower prices and more complete facilities. As a result, Bobobox experienced a decrease in turnover of up to 90% and was finally closed in 2018.
Go-Jek is the largest online transportation company in Indonesia which provides various services such as Go-Ride, Go-Food, Go-Pay, and others. In 2017, Go-Jek launched the Go-Med service, which is a drug delivery service that works with nearby pharmacies. However, this service failed to live up to customer expectations due to frequent delivery delays, order errors, and limited drug availability. As a result, Go-Med experienced a decrease in transactions of up to 80% and was finally discontinued in 2019.
Conclusion
From the discussion above, we can conclude that there are many factors that can cause entrepreneurs to fail in running a business. Some of these factors include inadequate planning, lack of managerial skills, poor financial management, being unable to deal with change, and being too hasty. Therefore, entrepreneurs must learn from the experiences of these failures and try to improve the deficiencies that exist.
Thus this article about the causes of entrepreneurs experiencing failure in running a business . Hopefully this article is useful for those of you who are or want to be entrepreneurs. If you have questions or feedback about this article, please write in the comments column below. Thank you for reading to the end!
