Failure: it’s the last thing you’d want to call attention to when you’re just starting your small business. According to a survey conducted by the Small Business Administration (SBA), seven out of ten small business startups survive at least two years and over 50 percent endure at least five years.
Don’t fret, however. If you identify the cause of failure forthright, you’ll less likely to be a victim of it.
We list down 7 reasons why new business ventures have little or no success.
Starting a business for the wrong reasons
What is your business objective? Are you doing this to rake in profits or is your business your passion? What are your long-term goals? Do you think having your own small business entitles you flexible time and more hours to spend with family? Or do you like the idea that you’re your own boss?
If you have a passion for what you’re doing and strongly think that your product or service would fulfill a positive, productive role in the marketplace, then you’re on the right track.
Keep in mind that to thrive in this business, you need to be physically and mentally fit to endure possible obstacles that may come your way. You also have to deal with and interact with various types of individuals (this means your customers) so having a pleasant character is important.
However, don’t be afraid to try and experiment. If you do fail, use the lessons learned from the experience to succeed on your next business venture.
Having insufficient funds
Let’s face it: usually, most small business owners have insufficient operating capital.
Never underestimate how much money you need or you’re going to be forced to close even before you have a fair chance of succeeding. Don’t have unrealistic expectations of your profits, either.
It is vital to establish a business budget to save you on the starting and staying costs. Take into account that most businesses take at least two years to really move forward, meaning that you’ll require adequate funds to cover costs associated with your business until incoming revenue can pay for them.
Being poorly located
Every entrepreneur know that having a strategic location for your business is crucial for its success. Good locations can enable fledgling businesses to pull through and thrive, whereas poor locations can mean disaster to even the most business-savvy entrepreneur.
Factors to consider in obtaining a good location include:
- Customer accessibility, light traffic, parking and lighting
- Safety and current condition of the office building
- Community receptiveness and history
- Incentive programs for new small businesses
- Competitor location
Lack of planning and poor management
To achieve success, business owners know that strategic planning and hard work go hand in hand. It is important to have a detailed business plan first before starting a business. Many small businesses fail due to frailty business planning. Such plans should be realistic, accurate, and updated with future projections about the business.
Additionally, businesses fail because of poor management. New business owners usually lack management and business expertise. Unless they identify what they lack and seek assistance, their businesses might go downhill.
Successful business managers are good leaders who build a work environment that encourages productivity, skilled at hiring competent worker, and strategic thinkers.
Lacking an online presence
If you have a business, you should have a website. Most potential customers search for you, your product or service online since Internet users account for most of your clients these days, anyway.
Well-designed, clean and user-friendly websites are ideal. Also, you could set up social media accounts to track potential customers (outreach to a certain demographic), drive traffic to your website, increase sales, and obtain customer feedback. Facebook, Twitter and LinkedIn are some of the social media outlets you can start off by promoting your business brand.