Collaborative post – may contain affiliate links
The reason for business failure can be down to many things, most commonly though it is often tied to the reason that the owner was ill-prepared when starting the business. When the average ‘joe’ hears ‘business’, they generally assume that the primary reason for starting your own business the desire to make a lot of money and that ‘business’ is always based on the circulation of money. They aren’t wrong, but they are also not right. Do you think that if you started your own successful business that you’d have more time with your children or family? Or maybe that being the boss, everything would be smooth sailing as wouldn’t have to answer to anyone else? While these are benefits that some successful entrepreneurs achieve, after years of hard work, they are not reasons to start up a business.
Here are some of the most common reasons start-ups and small businesses fail.
At the start of creating a business, there is a lot to do and consider getting done and more often than not, new business owners frequently lack relevant business and management knowledge or experience in areas such as finance, stock purchasing, marketing, production, and even hiring and managing their employees. If the business owner doesn’t recognize what they don’t do well and seek help if they don’t comprehend the issues, then the company may fail and go out of business. There are plenty of administrative and vocational courses, some free, some paid for, that small business owners can take advantage of to educate themselves on skills they lack, hire skilled employees, or outsource work to competent professionals.
Lack of Planning
If you have ever been in charge of planning a major event then you would know that you were not careful with methodically and strategically planning it, which includes a lot of team collaboration and hard work, then success may have not followed. The same could be said of any business success. Having a plan, or Business Plan / Model is critical for all businesses to be on par with the vision of the company. Though, many small businesses fail because of a lack of fundamental foundations in their business planning. It must be realistic and based on accurate and current information with pre-existing affairs with educated projections for the future.
Depending on the type of businesses one sets up, such as a removal company, restaurant or even a web hosting company, there will always be a common factor to think about: How much will you need to start being able to make more? Another common business mistake that can make a business fail is down to having insufficient investment funds.
Often, business owners who are totally new to running a business won’t fully grasp or understand cash flow and underestimate how much money they will need to get the business started. Unfortunately, as a result, many are forced to close before having had a fair chance to succeed. Another financial disaster that strikes new businesses is there also may have an unrealistic expectation of incoming revenues from sales.
No Website, No Social Media Presence, No Back Up
Today’s industries now heavily rely on having an online presence and having custom come through that business platform. An estimated number of American internet users – nearly 90% of the population, used web-based purchases and e-commerce sales in 2016 and continues to rise yearly.
Simply put, every business should strive to have a professional looking and well-presented website that allows users to easily find out about their business, products and services. If you don’t have a website and your competitors do, you’ll lose out. You may also need to have various social media profiles for the services that your clientele might use for the same reason. If a company didn’t do this then the chances are the company will won’t look professional amongst its peers and market competitors, and may even lose business to these competitors who do at least have profiles on popular social media sites.
If you have products that can be sold online, or you can take orders online, that’s an added benefit. But at the bare minimum, you need a website that lets customers know what you offer and how they benefit by doing business with you. Having a Web-Based service for your business will also need to be securely backed up with regular maintenance. Depending on the nature and spec of your application or framework, small business owners may want to consider utilizing services such as Backup and Business Continuity Solutions as part of keeping the business secure, protected at the forefront of your online presence.
When it comes to the success of any new business, the businesses owners and directors are the keys to its success. For many business owners, failure is not an option! Are you one of those determined business people? Let us know your thoughts in the comments below!