From a small business selling handmade jewelry to a large corporate retailer, no business is ever safe from the unforgiving corporate world and only a small percentage of these businesses thrive. According to investopedia, 20% of small businesses failed in the first year, 50% failed after 5 years and 65% of small businesses failed after 10 years.
Business failure is when a business ceases operations after it no longer returns a profit. There are several factors that lead to a business’s demise such as, having a lack of funding, having targeted the wrong market, a lack of research, bad marketing and a lack of business knowledge. To ensure that you avoid a business failure, you should always seek research before launching a product and always feel free to seek guidance from an expert.
Alongside this, there are different types of business failures such as preventable failures, unavoidable failures and intelligent failures. To begin, preventable failures, as the name suggests, could’ve been anticipated and prevented, but were not due to a lack of expertise, whereas unavoidable failures are failures where it is difficult to pinpoint where the problem is as it has never occurred before. Finally, intelligent failures are when a company fails on purpose in order to gain a better understanding of the market at a low cost.
An example of a business that failed is Target Canada which was a preventable failure. Though Target is a retail corporation that thrives in the U.S., it simply did not have the same effect on their northern neighbor, Canada. There were several reasons why Target had failed in Canada, mainly being a lack of research (supply chain, laws, etc) and not understanding the Canadian market (cultural differences).
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Sources & References:
https://www.cnbc.com/2022/09/22/why-target-canada-could-not-beat-walmart-costco-and-giant-tiger.html
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