Are you considering forming a small business or growing an existing venture into something bigger? If so, pay attention to the following key reasons why so many small businesses fail
Small businesses are the heart of the domestic economy but with nearly 80% failing in the first 18 months, there has to be a reason for this statistical lack of success. Small business owners are generally a motivated group and most business don’t fail due to a lack of effort or too little determination to succeed. Rather, small businesses that fail tend to suffer from common mistakes that may seem innocuous on the surface, but eventually take their toll. Here are ten reasons why small businesses fail:
#1 Poor accounting
Business owners must minimize unproductive debt and trim expenses. Fail to understand your business financials and you’ll have no idea where the business is headed.
#2 Not understanding your business cycle
Learn the nuances of your business cycle to conserve as much cash as possible to overcome slow periods in the calendar year. Seasonal businesses or those that are tied to other industries (recreational activities, sports, etc.) must plan for those slow times of the year.
#3 Failing to adapt
While the core mission of your business should be built upon a solid foundation, you must remain flexible to the demands of your market. Fail to adapt and you’ll go the way of the Blackberry. Watch for industry trends and listen to client feedback.
#4 Underestimating competition
While you can’t spend all day analyzing what’s happening on the other side of the fence, it is important to watch your competitors and attempt to outpace them at all times. Stay innovative and earn customer loyalty by predicting market needs before your competitors do.
#5 Poor marketing
For a business to be successful it needs to be visible. Failing to adequately market your business will result in lost revenues and a lower likelihood of success down the road. From social media marketing to more tangible promotional items like custom table covers, banners and more, you’ll help your business to succeed when you market it effectively.
#6 Inefficient customer service
Customers don’t simply want good “customer service” these days. Instead, smart business owners focus on delivering the highest possible customer experience, which refers to an overall experience that is inviting, helpful, supportive and valuable to the customer.
#7 Poor location
Keep in mind that the old real estate adage of “location, location, location,” is absolutely true in business. This means that the physical positioning of your retail or wholesale site must be convenient and visible, while your online presence must also be viable. Enhance your physical location with banners or other promotional materials to spotlight your business.
#8 Lack of business plan for future growth
You may have amazing knowledge and insight of the product or service you provide, but how are your business planning skills? Ensure that you have a plan that will support future growth. Consider a mentor who has industry experience to help you plan for potential expansion.
#9 Failure to execute
Businesses often fail not because they are a bad idea at the wrong time, but often because the leaders of the business fail to execute appropriately. Define the objectives and related activities, delegate when necessary, create actionable items and deadlines and execute!
Though nearly 8 out of every 10 small businesses fail in the first 18 months, you don’t have to be a part of this statistic. Focus on the 10 items above and you’ll position yourself for success regardless of your industry.
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