Business failure isn't something that you want to think about when starting a business. If you want to succeed, you need to understand what can cause you to fail and how to avoid it. Below are the top 5 reasons that small businesses tend to fail within the first five years and how to avoid them. Patience is key when growing your business, but there will always be obstacles that, if prepared, you can overcome.
No Website or Social Media Presence
The Problem: The old school way of thinking is that word of mouth is all you need. If you have a business today, then you need a website that draws people in and a social media presence.
The Fix: A well designed website will draw potential clients and provide useful information right away. If you serve local customers, your products, business address, and a phone number should be listed there as well as on Google My Business. Being readily accessible online to potential new customers is highly important because if you don't, they will look elsewhere.
Lack Of Planning
The Problem: "Fail to plan, you plan to fail." Planning is an integral part of your new business. With plans in place, you can see if you are going the right way, where to adjust and how to adjust. Without a plan, a business will not have a good foundation to stand on.
The Fix: Planning is critical for a successful business. Not all businesses are the same, and a business plan can force small business owners to dig deeper into their business ideas and recognize things that they would've missed if they wouldn't have created a business plan in the first place. Market research, potential problems and solutions, finances including capital needed, revenue projections, and budgeting to name a few. Many banks require business plans if you are looking to secure additional capital.
Poor Business Management
The Problem: Poor management leads to high employee turnover. High turnover can lead to business failures. New business owners frequently lack management and hiring experience. They tend to take on too many roles and miss out on opportunities for business growth because they are scared to let go and have someone else do the work.
The Fix: Learn what your skills are and try to learn those skills that you lack as long as they don't take away from running your business productively. Outsource the functions that you don't know how to do and build on the ones that you do. A successful manager is accountable to those around him and creates a productive environment that encourages growth and creativity.
You Started Your Business For The Wrong Reasons
The Problem: You start your business for the wrong reasons. Either your want fast cash, or you're in a difficult work situation and think you can do it better. Not having a real reason to start a business doesn't provide you with the drive and determination to see your business through when it gets tough.
The Fix: Figure out your reasons behind starting your new business venture. You have a passion and love for what you do, and you strongly believe in your product or service then your reasons are correct. Don't let failure defeat you, you can learn from your mistakes and be more successful the next time around.
Little to No Market
The Problem: You have a great idea, but the market isn't ready yet or there isn't much information about the type of service that you offer to make a lasting impact.
The Fix: Research to make sure that there is a market for your great idea. You must determine if your product or service is of use and if it can be profitable. You don't want to put in so much work and effort only to learn that the market has shifted and there isn't a market at all.
Know your business. Know what you can handle and what you should outsource. Don't try to be a jack-of-all-trades type of business owner. Let the experts handle what you don't know and focus on what you do know. Grow your skills and don't rush the hiring process. The success of your business depends on you.