Common Causes of Small Business Failures
Starting a small business is risky and the last thing you want to want to experience is closure.
Every year, we see several small businesses come and go. According to statistics, only 7 out of 10 businesses will survive for the first two years and only half of them will make it longer than 5 years. (Source: Source: Bureau of Labor Statistics data U.S. Dept. of Commerce, Census Bureau, Business Dynamics Statistics)
What is the reason why so many small businesses fail? Is it because these entrepreneurs do not have enough skills to run their businesses? This is not true for most entrepreneurs, who are highly skilled and talented in their own industries.
So, if that’s the case why do they still struggle?
It’s important that business owners recognize the most common mistakes and learn to avoid them. By understanding these mistakes, you can avoid these potentially crippling problems and traps that small businesses usually face.
Mistake 1: Doing Everything Alone
You have the passion, energy, skills and motivation. You also believe that you can do everything yourself. You think that you can handle all the aspects of running your business. Unfortunately, you’re making a mistake. With the number of tasks to look after within your business, chances are you still need assistance. Seek out help, suggestions, ideas and other resources from your family, friends, mentors, network and other well-experienced people. Realize that there will always be business aspects you can’t handle by yourself.
Mistake 2: No Business Plan or Goals
Why would you run a business without any plans? What goals do you want to achieve?
Your business plan lays the groundwork for your success. You’re bound to end up on a road to nowhere when you start a business without a clear and solid plan. This business plan helps you see where you’re going, what strategies you need to accomplish your goals, how you’ll market your products or services and how you’ll manage your business. Your business plan does not have to be 30 pages long and detailed, starting out with a one page plan can give you an idea of the direction you need to go.
Mistake 3: No Target Market Information
When starting your business, you need to define who your target market is. It is important to gather as much information as you can about their habits and behaviors. You need to discover their media channels, income levels, buying behaviors and a lot more. The more you research and analyze your market and the people you are targeting as clients, the more effective your marketing plan will be.
Now, spend time doing your research so you can determine how to brand and sell your products and services to others.
Mistake 4: Lack of Marketing Strategies
Never assume that the product will sell by itself. No matter how superior your product is or how great your service, you will not sell anything if you have no idea how to market effectively.
Be the best marketer to get customers and clients. Remember that you need to make yourself known and standout from the competitors. You need a comprehensive marketing plan and strategy to make customers aware of your products and services. Make marketing part of your daily activities and promote it actively. It is your most important business tool.
Mistake 5: No Online Presence
Don’t make it hard for people to find you online. Most companies and businesses nowadays have an online presence. Establish your social media pages, email or your own website. Remember that most people love to search company contact information, see your products and shop online. Don’t be left behind. No matter how small your business is, customers and potential clients want to start looking for you on the web.
Mistake 6: Sacrificing Personal Relationship
Always keep in mind that you need to spend time with your family and friends no matter how busy you are. Sure, every entrepreneurial business requires a lot of your time and energy, but do not neglect your life and put strains on people who mean a lot to you. Do not sacrifice your relationships. What you need to do is to learn to balance everything in order to maximize the time you put into your business.
Business failure is something that you can prevent. There are even more business experiences from small business owners and entrepreneurs that are not on our list, so be on the lookout and learn from other people’s mistakes. The important thing here is to build a strong foundation for your business. If ever you fall, getting up will be easier.
Looking for strategies on how to prevent these common small business mistakes? The Business Maximizer can assist you. Schedule your complimentary Business Breakthrough Strategy Session today!
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