Improving Chances for Entrepreneurial Success
Thousands of people start their own companies every year, and while all of them hope to find quick financial success, many do not. Labor statistics have shown that 20% of small businesses fail in the first two years, and the majority of new businesses fold within ten years. A lot of energy has been put into studying the main reasons startups and small businesses fail and how budding entrepreneurs can improve their chances for business success. Knowing some of the biggest pitfalls that other entrepreneurs have encountered can help you plan better so as to avoid them when beginning your own entrepreneurial journey.
The list of reasons businesses can fail early on is a long one. Burnout among the founders, lack of passion, a misunderstanding of market demand, poor research, and flawed financial planning are some of the factors that contribute most heavily to small business failure. Consider some common problems new businesses face and how you can plan to avoid them:
Flawed product
Nothing can really compensate for a product that is poorly designed, doesn’t work, or no one wants. While sales and marketing are key for bringing in customers and driving up revenue, a poor product will eventually reveal itself (and all its flaws) to users, who then are likely to spread the word and drive down sales. Taking the time to research what customers want—and what is already out there—will help you design the specific features of your own product or service so that it is relevant, desired, highly competitive, and satisfying to consumers.
Wrong team
Finding the right people to work with is paramount for building a successful business. Hiring people with diverse skill sets who can work together as a team will increase feelings of positive collaboration, cooperation, and creativity in the office. Good training and continuous onboarding can help give people a clear understanding of their roles and the confidence they need to perform at peak level. If your business is a solopreneurship with no plans to add employees, you may still need to reach out to freelance or contract-based professionals to help fill in some gaps. Knowing your own business weaknesses and areas you lack expertise—in accounting, marketing, or legal matters, for instance—can help guide you early on toward the outside assistance you’ll need to ensure growth and success.
Flawed business plan
A realistic and well-researched business plan increases chances for a business’s success. Having clearly laid out goals—and the strategies for achieving them—is important for keeping everyone on the same page and for guiding decisions when unexpected problems crop up. A good business plan that outlines plans for operations, financial management, and marketing can not only guide internal decisions but may also be useful in attracting investors or securing financing. Lacking a thorough business plan is one of the main contributors to small business and startup failure.
Poor financial management
Running out of money is the number one reason small business ventures fail in the first few years. Businesses that fail to raise enough initial capital or take on too much debt too soon will face a constant struggle to get financially on track. Underestimating operating costs and supply and shipping costs can cause problems, as well, which is why thorough research about the market and affiliated prices is so important for long-term budgeting and financial planning. A wide array of financial management tools is available to small businesses to help maintain good financial management. Small startup ventures that can’t afford pricey accounting services can still benefit from high-quality, professional bookkeeping through automated, cloud-based applications that import receipts, track expenses, issue payments, and run reports. As your business grows and takes on additional staff, online automated payroll programs are available to take over complex aspects of HR and payroll management that may be beyond your expertise. Online check printing is an essential tool to add to your automated financial management services, as it allows you to print professional business checks on demand right from your office or device—wherever you happen to be working. Online check printing and mailing is vital for those times when you need to issue a paper check; choosing a service that is compatible with your other financial management tools means you only need to enter data once and it is automatically updated across all channels.
Being aware of some common reasons young businesses fail is the first step in avoiding them. Good planning, a well-designed product, thorough market research, accurate budgeting, and careful financial management can help make a young business one of the few that overcomes the odds and goes on to thrive for many years.