Though failure rates vary by industry, the general consensus is that nine out of ten small businesses will fail. What does that one out of ten have that the others don’t? Listed below are some of the most common reasons for business failure.
- No Plan
Most small business owners do not have a written plan that encompasses their vision, their mission and their exit strategy. All have an idea of what they want to accomplish floating around in their heads. But, it is critical to have a thoroughly though out, written plan and the strategies to achieve the plan. As things change some of the concepts of the plan must also change. A written plan of action is a must for a small business to succeed.
- No Clear Customer base
A lot of small businesses get started because the owner has a brilliant idea. They fail to see if there is a market for their idea. Just because it’s something they like, doesn’t mean there are enough people willing to pay for it. It is usually best to find a problem a large group of people have, then finding a solutions for that problem to base your business around.
- Lack of Management
Your chances for success are greatly improved if you have policies and procedures in place. By having clearly defined systems in place your employees and your customers gain confidence in your ability to deliver. A system is a process you follow. It’s repeatable and makes it easier for someone else to step in and take over tasks for you. Having systems in place gives you and your employees an organized, simplified structure in which to work. A systemized business will free you, the business owner, to have more time to devote to strategy, innovation, and creativity.
- Cash Management
Too many people see money in their checking account and then spend it. They don’t stop to consider the bills that are due next week. Next week rolls around and there is no cash. Set-up a cash flow system helps to insure that payroll can be met and bills can be paid. Managing your cash lets you know if you need outside financing, can afford that uptown office, need to up your sales efforts and a school of other decision making issues.
Before you embark on the wonderful road to business ownership, make sure that you have considered these points. By addressing these issues before you start, you increase your odds of success.