September 24, 2019

4 Reasons Why Small Businesses Fail - And How To Avoid Them!

Why do small businesses fail? That is the million-dollar question. Running a business is not for the faint of heart, and there are incalculable statistics out there about survival rate of new startup businesses. It is necessary to understand what can lead to business failure and how each obstacle can be managed or avoided altogether to safeguard your business from falling into the failed businesses category.

Here are 4 reasons why small businesses fail:

1. No Business Plan or Poor Planning

A business plan ensures you characterize and identify your Unique Value Proposition (UVP) – which separates your business venture from your competitors. Maintaining a sustainable business model requires setting yourself apart from competitors. How will yours stand out? How will they buy your product or service – instore, online or both? How will customers find about your business? What are your cash flow projections? What is your start up capital? Preparing responses to these sorts of questions while in your business idea is still in the planning stages will enable you to bolster the probability of your business turning to into triumph.

2. Poor Management

Numerous reports on business failures state poor management and or cite lack of leadership as the number one reason for business failure. While a business owner may have the skills necessary to make and sell their product or service, he/she is often lacking the attributes with regards to the qualities of a solid supervisor and the time required to effectively oversee different employees.

Successful business owner is also a good leader who creates a working environment that encourages productivity. He/she has a skill at hiring and outsourcing the tasks they do not perform well or have little time to efficiently carry out.

3. Insufficient Capital

Owners of failing businesses are less in tune with how much revenue is generated by sales of products or services. This disconnect leads to funding shortfalls that quickly put a small business out of operation.

It is vital to be fully aware of how much money your business will require. You need to know not only the costs of starting your business but the costs of staying in business. As the business grows and flourishes it its important to research and secure financing options from multiple outlets before funding is necessary.

4. Poor Marketing

Marketing is a crucial part of any business. It’s imperative for companies to establish a realistic budget for current and future marketing needs. It also important to identify the target audience and realistic projects for sales. Social media platforms (Facebook, Twitter, Instagram, etc. …) and a professional looking well-designed website that enables the customer to easily find out about the business and the products and services they provide are crucial to the success of your business.