And How To Make Yours Succeed!
A large number of business start ups are launched every day, yet so many of them fail for one reason or another. Research shows that around 80 % of new businesses fail within their first year. Here are 5 common reasons why most start-ups fail, and some tips on how you can really make yours succeed.
1. Poor Business Planning
A solid business plan is the very key to a business’ success and stability. Many new business owners get so caught up in their ‘idea’ that they fail to recognize the importance of a solid business plan. They just can’t wait to see their new business get up and running. For your business to be a success, you must create a well thought out business plan that includes important points such as financials, milestones, strategy and goals. It doesn’t have to be an essay – noting the key points and having foresight of your product or service is often the make or break when launching.
2. Lack of Funding
Not having enough funds is another reason most businesses fail. Many start ups overlook the need for keeping enough funds available to sustain the business in its early stages. A lack funds will hinder the growth and stability of your business. To avoid this, point out your business’ needs (and your personal) and estimate the funding required for everything including all future costs and expenses. You must seek professional advice if you’re not sure how to do it. Never guess, always map out your exact needs for at least the first 12 months, Although consulting a professional may seem an additional expense – it will most definitely pay off in the future.
3. Not Knowing “The Industry”
One of the reasons for failure of many small businesses is their owner’s lack of knowledge about the business industry. Many new entrepreneurs don’t feel it necessary to educate themselves about the industry in which they are about to start. They don’t have any practical experience or connections and think that with minimum investment and a get-quick-rich formula their dreams will turn into reality overnight. This is a common but dangerous approach. You must familiarize yourself with the basics of your industry or niche before you take the plunge! Make solid connections, attend networking events, workshops, conferences and immerse yourself in your subject before you begin!
4. Poor Marketing Strategy
Many small businesses fail to successfully market their products or services. They spend money on advertising their products but without any real plan or strategy in place. New start ups need marketing for a number of areas; identifying target markets, focusing attention towards the product and of course positioning and branding. Spending money on advertising here and there without a well-detailed and well-constructed advertising strategy will do little good. So identify your target market, design an advertising plan and wait for it to grab your customers’ attention.
5. Lack of Competent Employees
Many new businesses compromise on human resources due to their comparatively small size. Choosing the right people as your employees is essential to the success of your business. Having an incompetent team of employees means that they will waste your time and you will not be able to reach your desired goals in the time-frame that you have planned. Remember to choose the best people you can afford for the different tasks that need to be attended to. Try and find a little extra money if you can, as you will benefit far more from a job well done. Don’t save money in the short run only to lose it in the long run!
Gain up to date and fine tuned knowledge about the business you are going to start. Prepare a well laid-out plan and focus on your future goals. Estimate and arrange the funds you need for your business. Hire the best people available. Develop an effective marketing strategy and don’t wait for business success to land in your lap!