According to research, only 50% of businesses survive at the five-year mark of starting out. At the ten-year mark, only a third of those businesses remain open. Scary? Absolutely, especially if you are an entrepreneur looking to begin a small business any time soon. The figure is bleak, although hope isn’t lost. There is some comfort if you’re a glass-half-full type of person in knowing that your business still has an opportunity to survive (if you’re in the successful 50% after five years) and that success is still possible if you begin to understand why some businesses fail, and why others succeed.
In this article, we will consider some of the reasons why many businesses fail, but will also give you some tips on how to take action to prevent the same happening to your business. With good planning and effective management, there is hope for you, regardless of the shocking statistics that cause many a business owner worry.
Business Failure #1: Poor financial management
Your business will fail if you don’t have control over your income and expenditure. Trying to grow your business too fast, paying over the odds on technology and other business equipment, and poor pricing strategies, are just some of the reasons why you may get into financial difficulty. Many businesses run at a loss in their first year of business, so steps need to be taken and you must only pay for essentials like HR software from Cezanne. Don’t run before you can walk is a useful motto, so it pays to be steady in the way you move your business forward. Growth will come later; in the first few years, you need to find ways to survive financially. Cost-cutting is key, as is only purchasing items that are essential for the everyday running of your business. Hiring an accountant is one expense that could be considered necessary, as is making use of accountancy tools that can be downloaded onto your computer or smartphone. Planning is key, so using the resources that are available to you, find better ways to budget and manage your finances to ensure you don’t run out too soon.
Business Failure #2: Failing to match the competition
Your business is one of many, and you not only have to match the little guys in your industry, but there are also the business giants online and off that are threatening your time in the business world. While it’s difficult to have a completely unique USP, you still need to find ways to be different to those other businesses around you, as well as maintaining a professional image to ensure clients, customers and investors take you seriously as a business owner. So, in terms of differences, remember to create your brand identity to help you stand out from other businesses at the outset. Then find ways to beat the competition, perhaps by offering a better level of customer service, offering better pricing policies, and delivering a superior product or service.
Look for ways to appear professional, even if you’re only a small business entrepreneur operating from your bedroom. Having a professionally produced website is a start, so outsource this to a web development company if your skills aren’t up to scratch. And then consider a virtual business address, which is far more professional than having your home address as your contact details. To answer the question, how do I get a virtual business address for my company, follow the link for one low-cost example. By matching (or beating) the competition, and by maintaining a professional image, you will stand a greater chance of success. Read more about developing a professional brand here.
Business Failure #3: Failing to market effectively
When starting out in business, there is no place for the wallflower. You need to shout your arrival from the rooftops, ensuring consumers are alerted to your existence in the business world. By considering every marketing tool at your disposal, you need to promote your worth, telling future customers why they need to consider your business over those that operate a similar service to you. Of course, as a fledgling small business, money is a key. You may spend your money on a marketing campaign at the beginning, and have very little to spend later on. Thankfully, there are low-cost ways to market your businesses, without you having to run the risk of financial ruin within the first few months of opening your doors. You should then make an effort to commit to marketing throughout the course of your business, never resting on your laurels after one campaign, as your business rivals are always set on snatching your customers away from you.
Finally
Is your business doomed to fail? Will your business face bankruptcy? We hope not. You should be applauded for opening up in business anyway, despite the risks. To ensure your survivability, heed our advice, and commit to research in all facets of the industry you are involved in, ensuring you stay relevant for many years to come. We wish you every success.
