Tuesday, 2 February 2016

8 Common Reasons Why Over 50% of Small Businesses Fail Within the First 3 Years

Over 50% of new small businesses fail within the first three years. Hearing this statistic can scare even the most well prepared entrepreneurs. Here is a list of the most common mistakes entrepreneurs make that leads to business failure.
1. Bad Location – Location is crucial to the success of your business. You should always perform thorough research on the surrounding demographics of your potential location.
A good location may help struggling businesses survive when times are tough. A bad location could ultimately mean the end to even the most well managed business.
2. Operating Capital (Cash flow) – When starting your business you need a clear plan as to how much capital it’s going to take. One of the most common mistakes made by business owners is not having enough money to start and sustain their business. It’s important to figure out how much money you’ll need. You must take all cost into consideration. Even those unforeseen expenses like equipment maintenance. It is also important not to have unrealistic income expectations. Be conservative, usually you never make the amount of money you expect when first starting out.
3. No Website – 7 out of 10 people use the internet in America alone. All businesses should have an online presence. Websites give potential customers the ability to find information about your products and services. You can also generate additional revenue by selling your products or services online. You must be visible in today’s online marketplace in order for your business to reach its pinnacle.
4. Expanding Too Fast – This is one of the major causes of business failure. Business owners get success mixed up with how fast they can expand. Growth that is steady and slow is most important. Create a solid customer base and a good cash flow system. One indication that you may need to start thinking about expanding is when you’re having trouble keeping up with customer and production demands in a timely fashion.
5. Lack Of Research – Before starting your new business you should always do tons of research. Researching things like competition, demand for the product or service you will provide, availability and initial start up cost is very important. Great Ideas plus tons of research are two key components to small business success. Take time to understand the market and weather there is room for you to succeed.
6. Bad Marketing – If your customers don’t know you exist your business will fail. You must promote and advertise your business in the most affective way possible…within your budget that is. Create a marketing plan with an intact budget. Always start with direct marketing first, for example direct mail, email and local ads. These are quick and easy ways to incorporate tools to measure your marketing effort. Companies like offer low cost text marketing for small businesses.
7. Terrible Management – Having a good business idea is one thing, managing that business is another. More times than not new business owners lack business management experience. They fail to recognize their weaknesses and how important it is to hire the right people to support them. They also have difficulty managing the meat and potatoes of the business; purchasing, marketing, and budgeting just to name a few. A good manager must have the ability to positively motivate workers make good decisions and lead the company in the right direction. He/She must also be a fast learner and pay close attention to the market.
8. Lack of Excitement (just trying to make a buck) – In order to maintain a level of success in your business venture it’s important to love what you do. Not having a strong desire to succeed or passion for what you are doing will lead to failure. Not only should you be excited about starting your own business, but more importantly you should be excited about the products or services you’re providing to your customers. There’s an old saying. If you love what you do, you won’t work a day in your life.


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