Top Ten Reasons Why Small Businesses Fail
About half of all small businesses fail within the first four years — a statistic that generates a shudder of fear in even the most dauntless entrepreneur. Most of these failures, however, resemble one another in crucial ways. And once you identify these harbingers of failure, you can increase your own chance of success.
When you own a small business, you will find that tasks and paperwork pile up like snowdrifts on your desk. Putting them off is like piling up debt; eventually they could overwhelm you.
2. Ignoring The Competition
Consumer loyalty has declined sharply in recent years. Today, customers go where they can find the best products and services, even if that means breaking off long-term business relationships. Monitor your competitors, and don’t be ashamed to copy their best ideas (assuming that doesn’t mean violating patent law). Better yet, devote some time each week or month to devising new methods, products or services for your firm.
3. Sloppy Or Ineffective Marketing
Contrary to the popular cliche, few products or services "sell themselves". If you don’t have time to market your product effectively, hire an experienced person to do it for you. Marketing keeps your products selling and money flowing into your business. It’s crucial that you do it well.
4. Ignoring Customers´ Needs
Once you attract customers, you’ll have to work hard to keep them. Customer service should be a key aspect of your business. If you don’t follow through with your customers, they’ll find someone who will.
5. Incompetent Employees
Hire only workers who are essential to your operation. When you do hire employees, make sure they’re well trained and able to complete the tasks expected of them. And remember that happy employees make good workers — try to create a work environment that keeps your staff happy and motivated.
6. Lack Of Versatility
You may be great at making hats or painting houses or fixing computers, but that’s not enough to make your millinery shop or house painting business or computer consulting successful. Successful business owners tend to be adept at a number of tasks, from accounting to marketing to hiring.
7. Poor Location
Even the best restaurant or retail store will fail if it’s in the wrong place. When you’re scouting a location for your firm, consider factors such as traffic (how many potential customers pass your firm during the course of an afternoon or evening?) and convenience (how hard is it for your regular customers to get to your location on a regular basis?).
8. Cash Flow Problems
You need to know how to track the money coming into and out of your business — even a profitable venture will flounder if it runs short of cash. In addition, you must learn to make cash flow projections that will help you decide how much money you can afford to spend and warn you of impending trouble.
9. A Closed Mind
Everyone goes into business with some preconceptions — don’t be surprised if you find that many of yours are wrong. Look for mentors who can give you advice and run your ideas by them before you make important financial commitments. Read books and magazines about small business; visit business-related websites and network with your peers in the business community.
10. Inadequate Planning
Start with realistic but precise goals for your firm, including deadlines. For example, don’t just say that you want to increase sales; instead, decide that you want sales to reach $100,000 by next holiday season. Then write down the steps you can take to meet those goals on time, and set deadlines for completing those steps. Consult your goal list every day, and make sure you are doing what you need to do to meet your objectives.