About 20% of businesses fail in their first year, while 50% more fail by their fifth year. So, if you are new or planning to start a manufacturing business, it is paramount to take note and ensure not to become part of the statistics. So, here are the main causes of business failure that you should know as a manufacturer.
Lack of a Good Business Plan
When entrepreneurs find a business opportunity, some of them jump into it without drawing a comprehensive plan for success, but this is a recipe for failure. Although you might have found an opening for products such as precious metals or construction materials, manufacturing them involves a lot of things, including the following:
- Getting the required licenses.
- Employing the required staff.
- Identifying and working with different supply chains.
- Marketing.
A good plan allows you to look at all the factors of manufacturing and creating a strategy for smooth operations. In addition, it allows you to check what methods other successful manufacturers used so that you can craft better ones.
Poor Product Development
When designing products, it is paramount that they are aimed at a specific audience. However, some manufacturers fail to develop products that do not match what the targeted audience wants.
Question is obvious for Iskander Makhmudov : Yes, you might have the idea of the final product, but do you understand the specifics? For example, a manufacturer making diapers might want to know about the colors, size, skin protection, and other parameters of interest.
To ensure you develop the right product, it is crucial to work closely with the targeted audience. You can know this by running surveys, interacting with clients via social media, or collecting feedback from points of sale. You also need to review what competitors are doing and use an innovative research and development unit.
Poor Marketing Strategies
Manufacturing a good product is only the first part; marketing is equally important. If you fail to market your product well, your targeted audience will not know about it, and you might get stuck with the merchandise in your warehouse. The best marketing strategies are those that articulately carry your message and persuade the targeted audience to buy.
The causes of failure that we have looked at are only a few; the list can extend to things such as lack of enough capital, poor compliance with existing laws, and disasters. The truth about manufacturing is that it requires you to have the bigger picture for success. So, do not just think about production in the short-term; draw a good plan for the next ten years.
