It may seem discouragingly pessimistic to start the new year thinking about business failure.
However, being aware of potential pitfalls help you avoid them in future.
Areas where businesses seem to most often experience problems:
1. A bad idea from the start
Introducing a product or service for which there is neither need nor demand is the surest route to failure. A good idea must be commercially viable in order to succeed.
2. Unchartered waters
So many small business owners launch into their ventures without a plan or clearly defined goals. It is like starting a journey through unchartered territory, without a map or even a destination. How will you know when you are there?
3. Forgetting to budget
Very few small businesses yield a large profit from day one. You need to budget so that you don’t run out of money just before you make it big. Start-up costs often turn out to be much higher than expected.
Money is the life-blood of your business. A cash-flow squeeze is the single most common cause of small business failure.
Sentiment can compound the problem. Small business owners are often reluctant to charge people (especially family and friends) for the real worth of their products or services.
4. The human factor
Personalities play a crucial part in the success of failure of a small business. Business partnerships are comparable to marriages: tough times, long hours and constant contact can bring out the worst in the relationship.
Small business owners often cannot bring themselves to hire people to do the things they can’t or don’t have time for, or even to ask for help. Others make the mistake of hiring someone just because his/her labour is cheap. It is better to have someone who is competent working two hours a week than a full-time incompetent soul.
You are the driving force behind your business: progress will depend on how much energy and enthusiasm you put into it. If you’re prepared to do whatever it takes to succeed, you will succeed.
5. Falling off the rails
So many small businesses fail because their owners underestimate the importance of keeping up-to-date with simple day-to-day matters, picking up problems only when they have reached serious, even irremediable proportions.
One serious mistake can take you years to recover from.
Expanding too quickly when you don’t have the infrastructure to handle it can prove fatal.
Failure to keep up with what is happening in the marketplace can lead to major setbacks as you lose touch with customer requirements, new trends, and what your competitors are up to.
6. Marketing mishaps
Many small business owners assume that their wonderful product or service will sell itself – and they learn better, too late.
However, there is no surer way to learn a lesson than through your mistakes.
Staying a step ahead
Just because you are achieving what you set out to do doesn’t mean that you can sit back and relax. Some guiding points:
- Retain your focus and stick with your original, researched concept. At all costs maintain your planned path, and stay with your market.
- Be meticulous about keeping up to date with your financial management and accounting systems. Maintain stringent controls and don’t take too much money out of the business. Outsource this to a reliable VA if you don’t have the time to spend on it.
- Customer service is paramount. Develop personal relationships with your clients. Extra special service is something people are prepared to pay even more for. Poor service is the quickest and most effective way of shedding customers and a good reputation.
- Keep up to date: ensure that you are constantly aware of trends and take time out to establish what your competitors are doing.
- Continuous marketing is a vital ingredient of growth. Never sit back and expect business to keep on flowing your way, even if things are going really well. Think constantly of new ways to improve your marketing strategy.
- Take time often to reassess your goals, your direction and your strategies.
May this year be the year that you exceed your dreams for your small business!