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Limited knowledge, poor market analysis, and overconfidence: Some of the reasons that lead businesses to shut down irreversibly

Starting a business or a project is one of the serious decisions in a person’s life, because aside from investing money, it requires time and energy, requiring you to be sacrificial.

It’s not the first time you’ve heard of someone starting a business and after a short or long period, it shuts down completely, leaving others questioning what went wrong.

There are some reasons that can lead the business you started to fail, whether they come from within or outside, especially there are mistakes you can make before starting operations that lead to permanent shutdown.

Alphonse Nsengiyuma is one of those entrepreneurs who undertake various projects. Even though he has achieved certain milestones, some of his endeavors didn’t turn out well.

In 2008 he had an idea of starting a restaurant, he had a burning desire to do business, but he didn’t plan in a way that would have kept his operations afloat.

Nsengiyumva said that in the review he conducted, after two years of operations and eventual closure, he found mistakes he made before starting his business.

He said, “In the review I did, I found that some of the reasons that led to my closure were the limited knowledge I had at the time, in relation to maintaining a business and also the lack of enough time to monitor it daily.”

Even though he started a business that eventually closed, he managed to start another one that has led him to progress.

He says that one of the things that helped him to successfully operate a business was the lessons he learned from the first one.

He said, “First, when you start a business, avoid starting something big without having enough knowledge. Start slowly, as you understand your market and its needs, you should gradually increase. Avoid doing things beyond your ability or imitating others.”

He took time to advise everyone planning to start a business, to first study the market well and expand their knowledge.

He advised, “Someone planning to start a business, I advise them to first look carefully at what is required in the market, look at what knowledge and abilities they have and then do it.”

“Another thing is to look at the capital they have which helps them know how to start. It would be good to start slowly as I mentioned before, you keep rising as you understand your business and the market more.”

Statistics show that these reasons lead to at least 20% of new businesses dying within the first two years, while between 45%-50% die within the first five years. In a span of 10 years, 65% of businesses fail, reaching 15 years in business only about 25% remain.

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