I.

Introduction:

Starting a company is both fraught with great prospects, coupled with formidable obstacles. Most
businesspeople usually venture into it through feasibility studies which may consider variables
like competition, market demand, financial forecast, and operational needs. Feasibility studies
are basically major components of planning since information derived from them stipulates how
resources are allocated and decisions made. Understanding these, quite a sizeable number of
these new organizations still fold up within the first couple of years of operation. With this in
reality, it is in contrast to the supposed idea behind the feasibility study and real, unforeseen
challenges that new, starting companies face.

This essay shall look at six key factors that have been identified to make new ventures fail, even
though some groundwork is laid in preliminary feasibility studies. These include poor market
research, financial mismanagement, poor marketing, intense competition, lack of effective
management, and inability to adapt to the ever-changing environment. Both on this aspect, both
research and practical experiences complement each other in the limitation of feasibility studies
to the continuous evaluation and adaptation aspects of entrepreneurship.

II. Body:
1. Poor Market Research and Misjudging Demand

Most feasibility studies in general are designed towards market research, which allows the
entrepreneur to realize the need and preference of the prospective customers. However, serious
cases of failure due to either inadequate research or failure to rightly gauge the demand is not
uncommon. A very good example can be told about Juicero, a well-funded company selling
costly juicers. The company felt this convenient factor and smart technology would be enough
for people to pay more, but the company didn't keep in mind the price sensitivity of its target
market. That price was keeping the customers away, and hence Juicero finally failed to meet the
expectations of value proposition and cost of the customer.

This illustrates that it is only after the initial market research that some sort of grasp of things
such as consumer behavior, competitor pricing, and market saturation can be gauged. Indeed,
recent studies have indicated how, due to failure to adapt one's business model to the market in
constant evolution or drawing conclusions based on incomplete information, different start-ups
make uninformed choices about the market (Everett & Watson, 1998). Indeed, studies have
shown that market demand is normally dynamic, taking into consideration consumer trends and
preferences that may not be captured by a feasibility study. An entrepreneur must, therefore,
continually evaluate the market and be ready to alter his company's plans to conform to changing
consumer needs at any one time.

2. Financial Mismanagement

Poor financial management is another major cause of failure of the new ventures. Indeed, too
small cash flow can put into financial troubles even successful companies. A typical case is that
of the Australian fast-food restaurant franchise named Pie Face that sells savoury pies. Pie Face
had a rapid expansion, not having the capital to expand both domestically and internationally. As
such, cash flow challenges crippled the going concern concept and, as such, finally torpedoed the
business into insolvency. In this regard, management's Financial Management Practice assured
the demise of Pie Face despite promising revenue forecasts projected within its feasibility plan
(Knotts & Jones, 2003; Kusumaningtyas et al., 2021)

Financial mismanagement normally arises due to inadequate cash flow forecast, improper
budgeting, and operational expenses. This is so because, although feasibility studies might show
a venture to be profitable, usually they do not consider the short-run cash needs required to keep
the business running smoothly. In one of the studies on small business failures, strong emphasis
has been laid on establishing a sound financial system, which includes planning for
contingencies and cash flow management. Without such controls, businesses risk burning
through their capital reserves prior to stabilization. In fact, good financial management may grant
a company more robustness against unanticipated economic declines through comprehensive
budgeting, cash flow forecasting, and conservative growth strategies.

3. Ineffective Marketing and Customer Reach

Marketing is an essential element of business success since the participation of customers can be
acquired only through proper marketing. A well-structured product cannot work in the market if
it is unable to reach the targeted customers. The importance can be derived from the rebranding
of JCPenney in 2011. It has been viewed that the company tried to attract more young-based
customer segments by introducing a new pricing strategy where discounts were not provided.
But this radical move just lost its previous customers who had been addicted with promotional
pricing. Sales declined, and JCPenney lost big.

A study finds that many entrepreneurs are still not aware of the importance of digital marketing
in today's competition. Even though it has been found in studies that good brand awareness and
customer loyalty are only possible through increasing an online presence, new firms are still
reducing their marketing expenses (NIPUNA TOOKHAM, 2021). One study about the failure of
small enterprises says that, particularly in the field of digital platforms, poor marketing reduces
the amount of exposure and consumer reach a startup will have. Even when demand can be
found in a feasibility study, a new venture without correctly implemented marketing strategies
will make it hard to win over and retain customers. This means companies need to resort to a
marketing strategy which will amicably balance the cost of customer acquisition and the methods
for reaching and holding the attention of the target market.

4. Competition and Market Saturation

Another major reason for the failure of a new company in highly saturated sectors is intense
competition. Most such businesses cannot leave their mark once they face stiff competition from
better-known firms with a loyal customer base, as well as much larger access to capital. A good
example can be the recent fate of Sprig, the healthy meal delivery service. Yet again, despite that
promising start, food delivery services were dominated by strong competition in the forms of
Grubhub and UberEats, so it wouldn't allow Sprig to make any profits and eventually shut down
operation. (Dias & Teixeira, 2017)

While feasibility studies may highlight the need for a product or service, they normally do not
take into account the extent of competition. In fact, it has been proved that for firms in congested
markets, there is a need for them to offer some unique value proposition for them to attract and
retain customers (Everett & Watson, 1998). Differentiation and innovation are what will enable a
start-up to gain a foothold in congested markets and to compete favorably. In fact, the ability of
any company to constantly change its products and strategies of marketing in response to
competitors' moves is often the difference between success and failure. A well-conducted
feasibility study will not promise or guarantee success in the face of ruthless competition without
sustainable competitive advantage, but it will provide worthwhile information nonetheless.
 5. Poor Leadership and Management

In fact, effective management and leadership are what guide any organization towards meeting
its goals. Poor management only serves to detrimentally affect an organization's growth or
development; this is evidenced by the failure of Blackberry in the smartphone market. As the
leading factor in the market at one point, Blackberry failed to adapt to the introduction of
touchscreen phones. While competitors like Apple and Samsung gained more sales, its leadership
had dramatically reduced their market share because of its flawed decision regarding customer
demand for touch-screen interfaces (Knotts & Jones, 2003).

Poor leadership is defined as a failure in strategic vision, inept decision making, or the inability
to recognize and adjust to changes in the marketplaces. Besides, effective leadership has emerged
from research as a particularly significant determinant of start-up success because leadership
advances innovation, encourages employee motivation, and provides strategic enterprise
direction (NIPUNA TOOKHAM, 2021). Studies prove that the ability of an enterprise to respond
to uncertainties and seize opportunities depends largely upon the experience, flexibility, and
forward-looking attitude of the executives. Feasibility studies normally cover financial viability
and the state of the market but do not look at leadership quality, obviously a very important
success factor. The leadership of a firm has to be proactive to meet the changing market
conditions, flexible, and willing to change.

6. Adaptability and Response to Change

The flexibility of an enterprise marks the difference between whether it will be able to survive or
not, mainly for companies operating in very dynamic sectors. One of the most popular examples
of a company that was not able to adapt was Blockbuster. While the digital streaming was
becoming more and more part of the mainstream, Blockbuster remained with the model of
renting. Netflix made their move into digital streaming and thereafter managed to take down
Blockbuster. The above example illustrates the importance of flexibility in developing the
structure of a rapidly changing company environment (NIPUNA TOOKHAM, 2021).

Adaptability involves a tendency to innovate as well as a willingness to adopt new business

models and technology. Researchers indicate that where feasibility studies can only provide an
instant view of the market environment, it cannot anticipate what changes might take place in the
 future owing to consumer preference or discovery of technology. According to a study on
business adaptability, organizations need to maintain their flexibility in order to take advantage
of new possibilities and react to market shocks (Everett & Watson, 1998). Maintaining relevance
and attaining sustained development in a dynamic corporate environment requires the capacity to
pivot and adapt. That means new ventures have to understand that their flexibility is the key to
long-term success, and feasibility studies are introductory recommendations, not written in stone.

III. Conclusion:

In conclusion, feasibility studies are not really indicative that dictates whether the venture will
make it or not, even though it may be a study of insight into the possibility of a new firm. Even
with perfect planning, new firms could fail for whatever reasons, just like how Juicero, Pie Face,
JCPenney, Sprig, Blackberry, and Blockbuster firms did. These fail due to weak leadership
combined with inflexibility, serious competition, mismanagement in terms of finance, poor
research of the marketplace, and inefficiency in marketing. All these practical problems are very
often ignored while conducting feasibility studies. This again is an indication that flexibility in
strategy is necessary, as well as proactive management and continuous market monitoring.

Successful businesses require much more than the findings of any feasibility study. For any
business to become successful, the feasibility study requires an approach comprising strategic
leadership, financial management, flexibility, and marketing among others. Feasibility studies are
a must-have ingredient; the entrepreneur must, however, appreciate that this is not the gateway to
success. Companies will then have more chances to survive and grow, provided that they can
maintain flexibility and be responsive toward the real market conditions and thus set a stage to
succeed in a modern, complex, and competitive marketplace.

IV. References:

Dias, A., & Teixeira, A. A. C. (2017). The anatomy of business failure: A qualitative
account of its implications for future business success. European Journal of
Management and Business Economics, 26(1), 2–20. https://doi.org/10.1108/EJMBE-
07-2017-001

Everett, J., & Watson, J. (1998). Small Business Failure and External Risk Factors. Small Business
Economics, 11(4), 371–390. https://doi.org/10.1023/A:1008065527282
Knotts, T. L., & Jones, S. (2003). Small Business Failure: The Role of Management Practices and
Product Characteristics. https://www.researchgate.net/publication/320107792

Kusumaningtyas, A., Bolo, E., Chua, S., Wiratama, M., & Lathifah Tirdasari, N. (2021). Why Start-
ups Fail: Cases, Challenges, and Solutions. https://doi.org/10.2991/aebmr.k.211207.024

NIPUNA TOOKHAM. (2021). A STUDY OF FACTORS INFLUENCING ON START-UP BUSINESS:

FAILURE AND SUCCESS MR. NIPUNA TOOKHAM ID: 6217190046 SUBMITTED AS A
PARTIAL FULFILLMENT REQUIRED FOR THE MASTER OF BUSINESS ADMINISTRATION
DEGREE INTERNATIONAL PROGRAM, GRADUATE SCHOOL OF BUSINESS. https://e-
research.siam.edu/kb/a-study-of-factors-influencing-on-start-up-business/