If you are a small business owner, you have probably been made aware of the unsettling statistics around the success rate of newly created companies. Only 20 percent of new businesses survive their first year and only half continue past five years. This might be a discouraging thought, but fortunately there are identifiable reasons for businesses going under (and solutions to match). If you are at the start of your entrepreneurial journey, take a look at some of the most common reasons why many small businesses don’t survive and how to avoid these pitfalls.
Problem: No Direction or Structure
Without a detailed and strong business plan, a business will most likely fall off the tracks sooner or later. If there is no guiding force to influence the direction in which the business should be going, it will end up going nowhere.
Solution: Write a Thorough Business Plan
Research how to create your own business plan and make sure to take time working out the finer details, as these are most likely to trip you up if you fail to address them early on.
Problem: Failure to Stand Out from the Crowd
The world is packed with small businesses. When a new one emerges on the scene, it can be hard for it to make itself heard above the noise. Your business must fill a unique niche within its industry, otherwise it will be ignored by your target market.
Solution: Build an Attractive and Effective Brand
Generating and increasing brand awareness will help you and your new business to get a strong foothold in the industry niche you’ve chosen. It’s vital that you communicate clearly what your business can offer and what it stands for so you attract the customers who are most likely to engage.
Problem: Misunderstanding Your Target Market
A small business that fails to do its homework when it comes to understanding their target market and the people they want to interact with is doomed to fail. Whether you intend to focus on B2B or B2C, you can’t afford to neglect gaining knowledge about your audience and what they want from you.
Solution: Collect and Evaluate Market Information
To overcome the problem of misunderstanding your target market, take the time to continuously research and collect information about your audience so you can better cater to their needs. Use the services of GSA Business Development for more expert help.
Problem: Misguided Spending
Many small businesses don’t pay enough attention to their spending after the initial costs are over. The temptation to spend and spend in order to improve the business can often lead to it collapsing.
Solution: Create and Stick to a Realistic Budget
Along with your business plan, you should create a detailed and realistic budget for your business so you can measure your progress and stay on track. Get into the habit of keeping a close eye on outgoings and incomings as this will help you to adjust your aims and meet your goals.
Hopefully now, you can avoid some of the most common reasons that small businesses fail and lead your business into a bright and successful future.