December 10, 2019Small businesses
You’ve got your idea; you’ve got your finances sorted and you’ve got your plan – you’re all ready to go. It seems everything is going your way, then out of nowhere, your small business begins to fail right before your eyes.
Why do start-ups tend to fail so early on in their creation and what can you do as a business owner to keep your small company thriving for decades, instead of just for Christmas?
The statistics of small businesses
‘The SBA states that…30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10’, which is a horrible statistic for business owners just starting out or are just about to open shop.
‘The SBA estimates that over half a million businesses opened in 2009, while 660,000 closed’ – but why are so many businesses destined to fail and close up shop?
Why do start-ups fail?
There are many reasons why start-ups may fail – poor management, a poor business model, marketing problems or financial issues.
‘What frequently goes wrong, and leads to a company running out of cash, and unable to raise more, is that management failed to achieve the next milestone before cash ran out’. If multiple issues arise, like money and bad managers, then a company is in serious trouble.
If you’re struggling to find out what’s wrong, then you’re going to have to start looking at your business model and ask yourself if it works – does it monetisecorrectly and can you get enough customers for what you’re offering so you profit, instead of losing money?
Also, bad products and services can lead to your downfall. Having confidence in your product is great, unless it’s a really bad item or service that no-one needs or wants to use. You need to be able to take a step back and evaluate its worth.
Equally, a bad team can contribute to your company’s demise as well as terrible leadership skills. If your hired managers cannot lead a team, then the business won’t work, and if the team do not want to be led, then your business’s journey is destined for failure.
How can your small business avoid failure?
Rethink your business, especially if you can’t find anything objectively wrong. Look at your product and service – do people need it? Appeal to a niche if necessary, find a gap in the market where your business can fall…in the right way.
Look at businesses in similar industries and sectors as your own and work out how they made it work. Look at their marketing online and offline and see how their audience is responding to it. Make sure you’re taking advantage of services that can be great asset to your marketing, like social media, a good website and brand ambassadors. People go to the internet to find answers about a business – so make sure you’re using it to spread awareness of your brand and to find the right people to advertise to.
To avoid a bad team, or terrible leadership, you need to hire people that share the same values and passion for your business as you do. To succeed, you and your team must have the same goals and all share the same vision for your company.