The 5 chief reasons small factories fail

factory-1386216_640By Henry Brown

So much is put into building a manufacturing business that the failure of one can be heartbreaking. The solution, of course, is to do your best to make sure it doesn’t happen! Let’s take a look at some of the most common reasons that factories fail. Is there anything you can correct in your business?

Too much supply, not enough demand

Sorry to start things off with what is, admittedly, a very common reason for any business failure! But this problem takes on extra weight when you’re running a factory. After all, building and supplying is your entire business! If you’re producing too much, then you need to make sure you’re aware of it before you start losing serious money. At that point, you’ll need to slow down production. Most business owners will be tempted to try to keep things consistent from here. But you might want to look into stoking the sales fire again!

Lack of maintenance

So many equipment errors in manufacturing can be avoided. People tend to think of them as something that is inevitable. Breakdowns, inefficiency, and even obsolescence are all unavoidable, right? Actually, no. The problem that most business owners have here is that they fail to maintain their equipment correctly. You need to inspect, tweak, and improve your machines on a regular basis. Let’s say you have problems with friction or misalignment. Over time, these can cause catastrophic equipment failure. But something as simple as installing spherical bearings can prevent such problems.

Failing compliance

Governments – and increasingly consumers – are very concerned about the manufacturing industry. It’s an amazing industry, to be sure. But there have been way too many cases in recent history in which business owners were found to have been breaking the law. And I’m talking human rights abuse law breaking! When you’re in this line of work, you have to make sure you’re compliant with the law. If you’re not, you’re may have to shut down operations until the issue is sorted. That in itself will lose you business, but you’ve also got to remember that this will affect your reputation. Failing social compliance can be devastating for your company.

Not enough capital

Many factories simply can’t last very long because they didn’t get enough funding when they started. Manufacturing is extremely expensive, and there’s not much you can do to change that. It’s important that you ensure you have enough capital to see you through your formative years. Getting capital isn’t always as hard as people make it out to be. But getting the right amount is definitely a trickier business than people claim.


“Neo-what?” I hear you say. This refers to modern people who don’t want too much technology in their factory. The name refers to the Luddites of the 19th century who fought against advancing automated technology in factories. (There was more to it than that, but that’s the general idea.) There are a lot of factory owners who simply don’t want to introduce more technology to the workplace. What you need to understand is that not all the new industrial technology is automation. It has more to do with data mining. Without taking advantage of the valuable information you can learn through this technology, you will fall behind competitors who making use of data mining.


Henry Brown is an online marketing executive. When he isn’t talking shop he’s roaming the streets of London, uncovering the extra-ordinary in the ordinary.


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