In recent time, it’s no secret that many small business owners fail. Success in business is never automatic. It isn’t rigorously based on luck-although a little never hurts. It depends primarily on the owner’s foresight and organization. Even then, of course, there are no guarantees. No small business owner wants to be out of business, yet many of them do. According to the SBA Office of Advocacy, about two-thirds of small business owners with employees survive at least two years, but only 50 percent make it to the five-year mark, and just one-third celebrate their 10-year anniversary. Why do some succeed yet others fail? In reality, some common errors kill many small business owners before they ever get off the ground.
Starting a business without adequate operating capital is a death-knell. Not only that but many small business owners underestimate the perils of riding the cash flow roller coaster. Improper management of cash flow is what causes a small business owner to lose your business. Protecting your capital before you start your business gives you a good buffer for the ebbs and flow in your business. By getting the right liability insurance before you start the first step for a better cash flow management. It is imperative to ascertain how much money you’ll need before starting a business; this will help you cover startup costs and to keep the business running for the first year or two. There is need to get ready for unforeseen increases in the costs of things like materials, utilities, and labor. Ensure you keep enough reserve cash to carry you through seasonal slowdowns and the tough times.
LEADERSHIP AND MANAGEMENT FAILURE
Leadership skills and effective management are essential to business-building success, and a lack of either can lead to confusion and reduced productivity. Small business owners struggle as leaders because they don’t have enough experience to make management decisions, supervising staff or the vision to lead their organization. When problems requiring strong leadership occur, they often feel reluctant to take charge and resolve the issues while their business continues to slip toward failure.
FAILURE TO ADVERTISE AND MARKET
There is need to have an advertising plan when the business is good and even when business is bad. Many small businesses fizzle out purely because the owner failed to promote and market. Majority of small business owners have the mentality of “if you build it, they’ll come.” But they forgot it does not work in an age when consumers can choose from a multiplicity of options. There is need to get your message seen and heard. One of the best ways to market your business is with a personal website and social media, though traditional methods of advertising are still useful. By creating your business website using and promoting it on various social media platforms, you put yourself ahead of many of your competitors. Furthermore, there is a need to use various social networks where your customers gather. Also, start an email newsletter and advertise on Google and Facebook — both of which are inexpensive ways to build a presence online.
HIRING THE WRONG PEOPLE
Your business will never prosper if you employ the wrong people — that is, employees who lack the willingness to work hard and who exhibit poor customer-service skills. Hiring good people is yet another time-consuming element of keeping a business afloat, but in the long run, it takes less time, effort, and money than hiring the first people who walk through your door.
UNPROFITABLE BUSINESS MODEL
In most cases, having only a business idea doesn’t produce any result. This is the point where conducting proper market research, and seeking the advice of another professional can be a lifesaver. Also, it’s imperative to ask yourself the following questions:
- What will it take to bring your business to the targeted customers and at what cost?
- Is there a customer base for the service or product you want to introduce?
- Is there an existing revenue model?
Most business owners don’t know what they don’t know. Get assistance by hiring non-biased professionals who help you realign with your vision, create plans and financial scorecards to monitor your business. Look for someone who can suggest resources to help you and your business grow. Someone who’s been in your shoes and succeeded. Start looking at how having a partner – a business consultant, coach, counselor, strategist, organizer or planner – can help you grow your business.
You may also consider taking an online business course such as the B School by Marie Forleo to help give you the tools you need to succeed in business.