In the most recent official survey conducted by the Department of Trade and Industry, there are over 783,065 businesses registered in the Philippines.  However, studies show that 8 out of 10 businesses admit to not bothering with their company’s financial statements and 9 out of 10 businesses fail within its first year of operations.

Similarly, among small businesses in the US, 50% close down within 5 years of initial operation, according to the US Small Business Administration. Is this solely caused by the global economic recession? External factors cannot be done away with, but sometimes the main reason for failure in business undertakings lies within the business strategy itself. Business blogger Fitz Villafuerte writes a few of the most common internal reasons of why businesses fail.

~ Under-capitalization. Never start a business without enough capital – which means having enough funds to survive at least a few months without profit.

~ A bad business location. You discovered a cheap commercial space for your business? Before you pay that deposit, do your research first and see if it’s really as good as it looks.

~ Ineffective marketing campaigns. Failure to get new customers stagnates your income. And the only way to get a steady stream of new clients is to have a continuous and well-thought of marketing plan. Design and implement cost-effective, creative and consistent promotions.

~ Employee incompetence. Learn how to hire the best people. Clearly define their responsibilities and set work standards they must meet. More importantly, find ways to motivate and inspire them to work for the good of the company. Inculcate in them the mission, vision and values of your business.

~ Ignoring competition. Other businesses are out there to get your customers. So always be aware what they’re up to. Furthermore, always strive to deliver great customer service.

~ Poor accounting and financial management. Prevent the excessive acquisition of fixed assets. Control your debts and the credit you extend to customers. And always have reserve funds to cover unexpected and uncontrollable expenses such as raw material price hikes, increased utility costs and natural disasters. Moreover, I believe that all business owners should have basic accounting skills.

Worried that your business might be showing warning signs caused by the same weaknesses? In today’s highly competitive business environment, knowing how to analyze business situations and make tough decisions based on sound financial principles is a must-have career skill. Our Financial Analysis Tools and Techniques Seminar will help you become an effective decision-maker. In just one intensive day of training, you’ll become fully versed in the financial analysis tools and techniques you need to properly assess business risks and opportunities. Never again will you be intimidated by financial spreadsheets and reports! Click here to read more and to sign up.