Guest Post – This is Why Your Small Business is Failing
Small businesses already have the odds stacked against them—few even survive past the first year. Only 50% of businesses with employees make it to their five year mark, while only 1/3 make it to a 10 year mark. With so many businesses doomed to fail, how do you make sure your small business beats the odds?
The best way for a small business to stave off failure is to analyze the telltale signs that failed businesses have already experienced. Knowing the common pitfalls to avoid can help your business make it through to the other side of success. Here are a few of the top reasons small businesses don’t survive:
Oftentimes, small businesses begin on a hope and a prayer. Unfortunately, in order to ensure that a business is successful, entrepreneurs need a sufficient amount of capital to get things going. 37 percent of millennial entrepreneurs in the United States fund their businesses with credit cards. Without the proper capital, many entrepreneurs end up in debt and have to close their businesses or file for bankruptcy.
Additionally, with a new business, it takes a while to obtain consistent cash flow. Many entrepreneurs fail to realize that clients often take several days to a few weeks to pay an invoice. This requires businesses to operate with barely any revenue coming in. A majority of new businesses do fail because they are never able to generate enough capital to get out of debt or to sustain themselves.
Businesses that want to get a handle on their revenue should utilize automation software to ensure invoices are sent on time, every time. By using electronic billing, regular invoices are sent automatically and will eventually allow a business to build up a steady stream of income.
Many entrepreneurs start their businesses based on a dream without any actual business background or real plan to ensure their business succeeds. A proper business plan will help entrepreneurs make budgets, analyze the competition, address workforce needs, and the like.
Taking the time to conduct research and fully flesh out a proper business plan is absolutely necessary if any entrepreneur hopes to have their small business achieve success. This also includes planning for anything disastrous that might happen to you or your business. Consider using a disaster recovery tool that will keep all of your information safe, and allow your employees know the next move if you’re out of work for some time.
Poor Leadership and Management
For entrepreneurs that aren’t business savvy, starting a company may mean jumping out of one’s comfort zone and finding someone to fill the necessary leadership roles. If you can’t afford to hire additional employees, consider using project management software instead. This will help you manage your team and keep employees more organized. For business owners that are determined to successfully lead their own company, it is imperative to take the time to put into the necessary effort and research to make the learning curve.
Expanding Too Soon
Many small businesses that are enjoying a fair amount of success think that the next step is to expand their company. While this can be true for many businesses, for others it can mean bankruptcy.
Expansion is nothing to be taken lightly as it requires extensive forethought, planning, research, and budgeting. Entrepreneurs that are overeager about expansion can easily overreach, forcing their companies to grow too far, too fast. Unfortunately, a failed expansion can also mean a failed business entirely.
Failing to Advertise or Market Properly
Advertising and marketing are an aspect of running a business that companies cannot do without. When failing to do either, businesses are already ensuring their business’ demise.
In today’s world of self-promotion and DIY marketing, many entrepreneurs avoid actually taking the time to seek out a professional to help develop a thorough marketing strategy. However, making it a point to properly advertise and market your business is one of the best ways to give your company a better chance at success.
Lack of Presence on Social Media
No presence on social media has the same damaging effect as inconsistency does. When companies fail to regularly interact with followers through social media, they are actively communicating that they are not in touch with their consumers. Small businesses can especially benefit from staying on top of their social media marketing.
Oftentimes, the bulk of modern small businesses’ audiences are on the Internet. Of all the many companies that are started each year, few actually have a brick and mortar address—most exist solely through the Internet. Social media is the lifeline that these companies use to survive. If your business is lacking in the way of social media, it is important to develop a strategy to revamp your social media platforms. With consistent interactions, consumers should hear from businesses on a daily basis, allowing their audience the opportunity to truly see what the company is about.
Running a small business is as exciting as it is nerve-wracking. However, in order to make sure your business makes it through the entrepreneurial stage that fledgling companies succumb to, it is incredibly important for new businesses to heed these warnings. Taking the opportunity to learn from the mistakes of failed businesses and accepting your own mistakes–could be what saves your company from certain disaster.