Seven reasons your new business will fail
Despite what the title says, there’s no guarantee your business WILL fail! But certainly there are some common mistakes made by start-ups that it’s important to avoid.
And to help you identify and avoid them, and steer your new business onto the success you aspire to, Yasmine Bachir has identified seven probable reasons why your new business will fail.
Starting a new business is tough
Anyone who has ever attempted it will attest to the fact that there is almost nothing more difficult than starting a new business from scratch. There are a million things to think about before you get going, and it’s inevitable that certain things are going to slip through the net, which is okay as long as they’re relatively small things.
All of the big things need to be done right, because if they’re not then the business won’t be likely to survive for too long.
Seven reasons your new business will fail
Here are seven of the big reasons that new businesses fail.
1) Failure to track finances
Finances are the most important aspect of a company, with particular attention needing to be paid to the management of the business’s cash flow.
The inflows and outflows of cash have to be tracked and monitored on a daily basis so that shortfalls can be identified ahead of time and planned for. If a company consistently has more money coming out than going in, it cannot cover things like rent, bills or salaries, so managing and monitoring the cash flow will ensure that it never becomes a problem.
2) No online presence
This is undoubtedly the digital age – it will be virtually impossible for a business that wants to operate on a national rather than a local level to succeed without having some sort of online presence.
It doesn’t necessarily need to be a website (though this will be essential if you’re an ecommerce business). It could be a Twitter account and a Facebook page, but anyone wanting to find out more about the business will look online first – if they don’t find anything, they won’t use you, and the company will suffer as competitors prosper.
3) Poor management
Management is a vast area to master, so it’s no surprise that it comes up time and time again as one of the reasons for small business failures. Purchasing, selling, planning, hiring and firing are all skills that need to be learnt and developed, but more abstract concepts like company culture, vision and so on are also management responsibilities.
A clear direction and method of getting there is vital for any company, and poor management will only end up sinking the ship.
4) Bad location
It’s quite easy to overlook the importance of location when setting up a business, but choosing the wrong area can spell disaster.
For instance, customers might have trouble finding you, there might be accessibility and parking issues, there might already be competitors operating nearby, there might be insufficient space to house stock and so on.
Making a successful start is great for any business, but it’s easy to become overconfident and start planning expansions.
This is fine as long as you treat any expansion as seriously as you treated the business’s set-up – expansion is basically like starting all over again. There has to be demand, facility access and a fresh understanding of the market and new products you might be selling.
Research, planning and implementation have to be taken seriously or the financial drain could ruin the whole enterprise.
6) No USPs
You might be entering an industry in which there are already well-established and trusted players, and if you don’t have anything different to offer then the customers already using those companies have no reason to give you a try. They get everything they want at prices they like and can enjoy a good level of service – what incentive is there for them to change?
A new business needs to offer a twist or improvement on an established idea in order to make an impact in any marketplace. So be really clear about your unique selling point (USP) – the one reason people will come to you over someone else.
7) Failure to set achievable goals and measurables
What’s the point in starting a business and not thinking about how to measure its success? How will you know if the business is working or making an impact in your chosen industry? More to the point, how will you know if it isn’t working?
Measuring your business’s progress and setting goals to be achieved will help you ascertain if certain parts of it are not working and allow you to take steps to fix them. If you don’t measure the business’s progress, things will probably become worse until they are irreparable.
Need more advice to get your new business off the ground?
You’ll find plenty of tips and wisdom in those articles:
- How to start a business – your first 10 steps.
- Five ideas for businesses you can start at home.
- Five simple steps to creating a fabulous business idea.
- 10 things you should never do when starting a business.
- Six business ideas for mums.
- Five reasons why mums’ businesses fail – and how to make sure you succeed.
Yasmine Bachir works as a content writer and outreach executive at digital marketing agency RocketMill. She writes on a range of topics but has a particularly interest in online business and marketing. You will find her on Twitter here.