Four Ways to Avoid Failing at Your Business
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According to Brian Head, Economist with the SBA Office of Advocacy, “As a general rule of thumb, new employer businesses have a 50/50 chance of surviving for five years or more.”
In order for business owners to avoid failing at running a small business they need to be aware of certain key factors that can ruin their chances for success. These factors include starting a business for the wrong reasons, having poor management skills, having a lack of money to start out with as well as not having enough to maintain the business, and choosing an inappropriate location.
No one starts a small business with the intent of failing. Business owners start out with lots of energy and optimism but sadly, a great deal do fail. Not everyone agrees on what it takes to keep a new business afloat, or keep it thriving in today’s touch financial times. A number of studies have been conducted over the past 30 years to figure out why so many small businesses fail, but the results have been vague, contradictory, and not very illuminating.
Source: Business Know-How
Key Factors
Experts say there are a few key factors that play a paramount role in whether a business will do well or not. If you can manage to avoid these factors then you are one step closer to making your business a success.
1. Do not start a business for the wrong reasons.
Do not start a business so you can make lots of money right away. Do not start a business so you can be your own boss and take lots of time off. Do not start a business so you will have more quality time with your family then you did when you worked nine to five. You are doomed to failure if you start a business for any of the above reasons.
Start a business because you have passion for the work and have faith in your products. Start a business because you have drive, determination, patience, lots of physical and mental stamina and a positive attitude. Starting a business is not for the faint at heart- you need to be able to withstand the slow and unproductive, not to mention, unprofitable times and you need to know how to cope well with stress, because there will be plenty of it.
2. Poor management will do you in.
Many new entrepreneurs do not have the proper skills to manage a business properly, in terms of finance, purchasing, production, selling, as well as hiring and managing staff. It is important to identify your areas of weakness and seek assistance in those areas because poor management skills can sink the best intentions for a business very quickly. This also goes for neglecting the important aspects of a business. Make sure you do your research, plan, organize and control everything that needs to be done.
3. Lack of money can be a fatal flaw.
You need a certain amount of capital to start a business and to keep it running smoothly. Without sufficient funds you are in real danger of going into the red. Many business owners have unrealistic expectations of how much money it will take them to run a business. It is better to overestimate your costs then to underestimate them. Keep in mind that most business take at least a year or two (or in some cases more) to start turning a profit. That means you will have to cover all costs associated with your business on your own until you start making money.
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The National Federation of Independent Business’ (NFIB) estimates that over the lifetime of a business, 39% are profitable, 30% break even, and 30% lose money, with 1% falling in the “unable to determine” category. |
4. Location is of extreme importance.
Never underestimate the value of where you locate your business. This can make or break you. If your business is struggling to begin with, a good location could help improve the situation. On the other hand, even if you are doing everything else right, a bad location can cause your business to go from bad to worse in no time flat. Take into consideration where the bulk of customers are coming from as well as the flow of traffic; availability of parking; whether or not you are on a bus route; accessibility in general and lighting. Is the building you are in safe and in good condition? Where have your competitors set up shop? Be mindful of the history of the location you are looking at as well as the community’s receptiveness to your business.
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Disclaimer: Ideawala.com does not recommend or endorse the products or services mentioned by the authors. We have not verified authors' credentials. We do not guarantee the accuracy of the information in the article or the earnings claims. Nothing in this article should be construed as business, legal or tax advice. Please consult a professional business advisor, an attorney or an account for specific advice in your situation.
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