As a small business owner, you might be worried when you find out how frequently small businesses fail. Especially when you read that according to the Small Business Administration, only about half of all businesses survive past the first five years.
Statistics like that can be troubling, but you shouldn’t let it deter you from your dream to start your own business. A wide range of factors can come into play when a business fails, and there is a lot you can do to protect your business. One thing every small business owner should do is to find out the different causes of small business failure so they can learn how to avoid them.
1. Inability to Adapt
It can be easy for small business owners to get set in their ways. Maybe you get stuck on an idea that you really believe in or maybe you had success for a while doing things a certain way. Regardless of the reason, a refusal to accept a need for change can be the beginning of the end for a small business.
As a small business owner, you need to be willing to change with the market. Even if you have had success in the past or you just really believe in the way you are doing things, you have to be able to identify when it is time to make adjustments. Follow the trends in your industry closely and keep an eye on the competition. See what works and what doesn’t and do what you can to position your business for success.
2. Trying to do Everything
While some businesses can succeed with the efforts of just one individual, most of us are going to need some help to get our businesses where we need them to go. As a business owner, you have to be able to recognize your strengths and weaknesses and accept that there is only so much one person can do in a day.
For many business owners, this is going to require them to hire some employees. You may also want to consider working with different professionals to take on some of the more specialized tasks that come with running a business. As another option, you should consider streamlining and automating some aspects of running your business by using different types of business software.
3. Incomplete Business Plan
Having a great idea is a good start, but it is not a business plan. Even the best of ideas can fail if it does not have the nuts and bolts of a business plan to back it up. If you want to avoid failure, you need to create a roadmap for turning your idea into a successful business.
One of the first things you are going to need to do is figure out how you are going to fund your business as you get it off the ground. You should also have a plan for how you are going to get your product or service to consumers and how you are going to make them aware of your business. You may even need to do research to figure out who your ideal customer is.
4. Getting Ahead of Your Growth
Growing your operation is important, but you have to do it at a pace your business can handle. If you expand too quickly or before you are ready, it could lead to you overextending your business financially or it could result in a drop in quality as you rush to meet the demands of growth you were not ready for.
To avoid this, you need to take your time to ensure that your business is on stable footing before you try to expand. Make sure your business is financially secure and that you are not taking on more debt than you can handle. You also want to take the time to build up a team that can help you as your business grows.
5. Forgetting the Customer
Your customer should always be at the heart of what you are doing. You might like to do things a certain way, but if it is not meeting the expectations of your customers, it is not going to be a success. You need to be aware of what your customers want and be willing to listen when they give you feedback.
Fortunately, it is easier than ever to know what your customers are thinking. You can check your social media mentions to see what customers think. You also have review sites that can provide insights into the expectations of customers. Beyond that, you could ask your customers for reviews and feedback whenever they purchase from your company.
Quick Note: This article is provided for informational purposes only, and is not legal, financial, accounting, or tax advice. You should consult appropriate professionals for advice on your specific situation. inDinero assumes no liability for actions taken in reliance upon the information contained herein.