By Henry Brown
It’s no secret that up to 90 percent of new businesses fail. There are myriad reasons why a startup may not survive, but many fail for the same reasons. Here are three of the most common causes of failure, and steps to help you avoid them.
Underestimating the scale of the job
Running a business is different from any other kind of job. When you’re employed, you answer to somebody in authority, and you usually have a daily routine mapped out for you. Going it alone is a different ball game. You don’t just need skills to offer services to customers. You also need business acumen and an understanding of how the world of business works. You may have a brilliant idea for a product, or you might be the best electrician, plumber, tutor, hairdresser, graphic designer, or writer in the area, but if you don’t have the insight to turn your ideas into a business model, you’re going to struggle. It’s essential to be aware of the challenges involved with launching and managing a business.
[amazon_link asins=’1936236168′ template=’ProductAd’ store=’succeedingi0d-20′ marketplace=’US’ link_id=’dae0fc59-8c2b-11e8-8c4f-671b5f6d5a80′]Failing to gauge the market
For any business to be a success, there needs to be a market. If there’s no demand for a product or service, it’s going to be impossible to generate an income. There’s always an element of risk involved with flying solo, but doing extensive research can help you determine whether or not your company is likely to be successful.
To reduce risks, some budding entrepreneurs choose to investigate the best franchises to own, as this involves buying into a model that is already proven to work. Whether you like the idea of a franchise, you’re keen to set up your own small business, or you want to purchase and try to grow an existing firm, it pays to be informed. Conduct research, keep an eye on the market and respond to trends. If you’ve got a product and it flies off the shelves and then stops being popular, work out what people are going to want next.
[amazon_link asins=’0998051802′ template=’ProductAd’ store=’succeedingi0d-20′ marketplace=’US’ link_id=’e8c0ed38-8c2b-11e8-908a-0f519f109b07′]Cash-flow issues
Running a business costs money. If you haven’t got sufficient funding, there’s a risk that you could go under. Plan ahead whenever possible, and make sure your accounts are in order. If you don’t have the time or the skills to manage your finances, outsource this task. It’s vital to ensure that you’ve got a steady flow of cash. It’s particularly important to maintain a tight grip on the books if you have a seasonal business. This will help you stay afloat during quieter periods.
The statistics related to fledgling small and medium-sized businesses don’t make for easy reading, but this doesn’t mean you can’t be successful. If you’re a solopreneur or you’re thinking about taking the next step with your small business, it’s wise to be aware of potential pitfalls and problems. Take calculated risks, plan every move in advance, keep an eye on your cash flow, and gather as much information as possible about the market.
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Henry Brown is an online marketing executive. When he isn’t talking shop he’s roaming the streets of London, uncovering the extra-ordinary in the ordinary.
