There are over 30 million small businesses in the U.S., currently employing almost half of all private sector workers. While a variety of factors can compel innovative, driven people to start their own businesses, studies show that some of the most frequently cited reasons for starting a business over the last few years include the desire to:
· Make more money
· Pursue a passion
· Become one’s own boss
· Get out of a dead-end job with no growth opportunity
Many people also cite being inspired by friends or family members who have started successful businesses. Since small businesses already make up a huge part of the American business landscape, it is not difficult for people to find examples all around of successful businesses that began from small foundations.
Unfortunately, the failure rate of new businesses in the first two years remains high and is a factor that a budding entrepreneur or solopreneur must consider when starting out. Since starting a business is a heavy undertaking, making it successful against the odds requires planning, research, and choosing the right people to work with. Online services can offer affordable tools to help budding business owners overcome the most common reasons small businesses fail.
The biggest reason small businesses fail in the first few years often comes down to money. If too little money is raised early on, if too few investors are attracted, or if the cash flow is poorly managed, the money will run out quickly. A good budget with accurate forecasts and projections of revenue and expenses is essential to keeping the business financially afloat. Online financial services have come a long way in providing affordable assistance to businesses of any size that need help with the financial planning and management. Automated accounting and bookkeeping services can help small business owners and solopreneurs track expenses, record incoming payments, reconcile accounts, and issue payments as needed. While these services used to require a costly investment in an accountant, many of them are now available online for DIY bookkeepers at a much lower price. And since many online financial programs now integrate with one another, business owners can select and combine only the financial features they actually need without being required to buy and maintain an expensive suite of software.
Another reason small businesses and start-ups fail has to do with the market—and the business owner’s research of that market early on. While you may have a passion for a product or service that you hope to launch on a larger scale, some questions to consider before embarking: Is there a market need for this product/service? Who is the target audience for this product/service? Who are the competitors? How much room is there in the market for this new product in this particular region, or is the field too crowded? What are the best ways to reach the target audience for this product in light of all the competition? The research you conduct early on should guide your subsequent decisions about how to develop and then market your product so that it reaches the right demographics.
Even the best ideas for new products can fail if the wrong business model is used or if the internal dynamics of the business are contentious. The wrong team members or friction among team members can be a huge drag on a business just starting out, so new business owners need to make sure that they are engaging the right people to work for them and with them: professionals with areas of expertise that serve to complement each other and not work at cross purposes.
One of the oldest (and cheapest) forms of product marketing is through word-of-mouth; satisfied customers tell friends and family members about an exceptional product or experience, and those referrals can continue to grow exponentially. The reverse is true, too, though, and unsatisfied clients who leave bad reviews of a flawed product will create a negative view of your brand and make it impossible for your business to grow. Making sure the product is high quality, functional, and priced appropriately reduces the return rate, as well as the negative feedback.
Innovative individuals embarking on a new business idea need to be high-energy people, as new businesses are demanding and you have to do almost everything yourself in the beginning. It is not uncommon for aspiring entrepreneurs to take on more than they can handle and end up feeling burned out after only a few years (or even months). While a young business may not have the capital to make a lot of in-house hires, online services offer affordable solutions for filling a lot of gaps. Automated tools not only free up a tremendous amount of time that business owners typically have to spend on administrative and financial tasks, but they improve accuracy, streamline processes, and provide a level of professional expertise in challenging areas like bookkeeping and tax preparation. Good time management from the beginning reduces the likelihood of burnout, and services that lighten the administrative office burdens go a long way in allowing business owners to use their working time most productively so that they can still enjoy a work/life balance.