Starting a business is never easy. It entails taking a lot of risks, including the possibility of failure. According to statistics reported by Forbes, 20% of small businesses fail in their first year, while a whopping 70% of small businesses fail to reach their 10th anniversary. While these are alarming stats, there are ways to avoid following in their footsteps, and it starts with understanding why they’ve failed in the first place. When you understand the mistakes of fellow entrepreneurs, the more you’re equipped to achieve business success. To find out the top reasons why small businesses fail, read on.
Lack of vision
First and foremost, your business must have a purpose. Starting a business just for the sake of raking in sales will inevitably fail. You’ll lose time and important resources trying to keep it afloat. Define a set of goals so you can move from where you are today to where you want your business to be tomorrow. With a clear vision and well-defined goals, your chances of reaching success are much higher.
Poor business planning
Running a business involves following an effective business plan. When you define your Unique Value Proposition—or UVP—you’re asking: “What makes me different from my competitors?”
Business planning requires hard work. It encompasses defining your business niche, understanding your target market, conceptualising marketing plans, studying financial projections, and determining the selling point of your products and services. If you can put in the effort to understand all of these elements, you’ll be in a much stronger position moving forward.
Weak understanding of customer behaviour
One of the major players in your business—if not the most important—is your customer base. Customers will always expect quality customer service, and when you fail to deliver, they aren’t afraid to voice out their opinions. Customers also have the power to impact your sales through word-of-mouth marketing. This is why understanding what they want and need are important—make sure you actively engage with your clients and listen to what they have to say about your service or product.
Look into your social media platforms, study customer surveys, and read Yelp or Google reviews to know how you can improve. Through a supportive network, you can solidify your online brand presence and help build a solid reputation.
A poorly managed inventory can greatly affect the success of your business. Inventory shortages or overages the can kill your cash flow. A great way to ensure your managing your inventory correctly is understating your sales patterns. Invest in an inventory management software that can provide detailed reports of your inventory. Which items are high in demand? Which stocks are you spending on, but aren’t selling fast? Through the help of modern tools, you can track your inventory accurately, and lessen the chances of tying yourself to excess stock, forcing you to sell at a deep discount.
Lack of sales
There’s no better way to hurt your business than when you fail to hit your sales targets. This can happen when your business fails to diversify, and this is why studying existing data is important. Gather as much information as you can to gain insight on the performance of your business, so you can make smart and data-driven decisions, and mold a suitable sales strategy that will rake in revenue.
Not following up
Not following up can be detrimental to your sales, as you can lose clients to the competition. The important rule is: show up and follow through. Whether that’s returning phone calls, responding to e-mails, or delivering products to the clients as promised, you have to make sure you respond to queries and concerns promptly. Following up solidifies your relationship, and it shows your company demonstrates a standard of excellence within the industry.
Underestimating administrative tasks
Business involves more than just a good product, marketing strategy, and steady flow of income. Getting to that stage requires a variety of administrative tasks, that include inventory, employee management, and bookkeeping, and accounting. The list of administrative responsibilities can easily eat up one’s day, so best prepare by asking for an extra hand. Hire the right people, and use technology to your advantage to save time and money.
The number one enemy of business success is a poor attitude and mindset. When you’re too set in your ways, don’t listen to your customers, micromanage your employees, and reject change, you put yourself in an unfavourable position. Complacency and resistance to change can wreak havoc to your business operations.
Cultivate positive habits to achieve business success
Through consistency, long-term commitment, and determination, your business can succeed. It takes time to build a successful business so commit to taking actions that will increase your company’s visibility and credibility. With Bartercard, you can build your online presence, introduce your business to thousands of other Bartercard members, and take control of slow-moving stock, as you barter in our immense online platform. Set your business up for success and become a member today!