5 Common Reasons Small Businesses Fail The First Year And How To Avoid Them
The United States economy is built
on small businesses, however 8 out of 10 new small businesses fail within the
first 18 months according to Forbes research. There are countries with similar
statistics like Canada, Australia, the UAE, and India. The reasons for these
failures is common among all locations. The clues these failures leave behind
can help you avoid succumbing to the same fate.
1.
Lack of Market
Research Before Launch
With so many small businesses
launching all the time, having a good idea simply isn’t enough to make sure
your company will be successful. It is exciting to come up with a product or
skill people can purchase but it does you no good if people aren’t interested
in what you are selling or the market is flooded making it hard to stand out.
Before starting your business, do market research. Clearly outline the problem
your product solves, who needs it and who your competitors will be. Is there a
way for you to offer something unique or build a recognizable brand before
launching? Identify your strengths, weaknesses, opportunities and threats (also
called a SWOT analysis).
2.
Unprofitable
Business Model
If you were taking a trip to some
place you’d never been, you would consult a map or GPS, plan a route and follow
it. It seems like common sense and yet so many small businesses launch without
a clear or written business plan. A well researched business plan will help you
find your market, identify your customers, price your goods or services in a
profitable manor and help you build predictable income with a clear path for
growth.
3.
Poor Financial
Management
Before you launch, before you take
payment and before you hire any employees, make sure you consult with and
employ an accountant. You need to know what type of business to set up, how
to pay your taxes, the rules surrounding
paying employees and much more. Don’t assume you know this information or that
you can learn as you go, that is a fatal error as many businesses fail their
first year due to cash flow issues or tax mistakes.
4.
Leadership
Failure
Make sure you invest in your own
growth as a leader. The leader sets the tone for the whole company and the way
you run your business, train and treat your employees and the decisions you
make will all greatly impact the success or failure of your business. Know
yourself, hire the right team and lead them effectively.
5.
Rapid Growth or
Expansion
This one might surprise you.
Sometimes a small business idea comes around that is very powerful and
impactful right away. Their spark quickly becomes a flame and then a roaring
fire they are unable to control. If you haven’t paid attention to reasons 1 - 4
above, then rapid growth could end up being your downfall. Without plans,
systems and best processes in place you won’t be able to handle the growth.
Over expansion kills just as many companies as non-interest. Careful planning
at every level of operation is a must-have for any small business to succeed.
About Us:
Bizzalley is a dedicated mobile
application for small businesses. It makes communicating with existing
and new customers very easy. Businesses can download the free app from
playstore or app store.
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