Five things you need to avoid if you want your small business to succeed
Want to give your small business a fighting chance of succeeding? If so, here are five things you need to avoid.
Sadly, the failure of a small business is not an uncommon event. In fact, one out of five small businesses don’t make it out of the first year. Beyond that, only about half survive five years, and only about a third make it to ten years or longer.
After pouring your time, energy and money into starting and funding a small business, the last thing you want is to see it fail. And if you are going to avoid failure, it’s wise to be aware of the reasons why small businesses fail – and understand what you can do to prevent that from happening.
1) Not listening to customers
Customers are more than just a source of revenue; they can also provide valuable insights that might not be as obvious to the person running the company.
As a business owner, you shouldn’t just ask for customer feedback; you should encourage it. You can find customer feedback by checking your social media mentions, reading reviews online and by conducting customer surveys.
Both positive and negative feedback can be valuable. Positive feedback can tell you what you are doing well, and negative feedback can provide you with insights into how you could improve. Take all of this feedback in and try to turn it into actions that will make your company better.
You can read tips to help you use customer feedback (and handle complaints) in these articles:
- Five ways you can use customer feedback to improve your business
- How to handle a customer complaint
- Five signs you need to rethink your customer experience strategy
2) Incomplete business plan
Too many businesses are launched without a complete business plan. In most cases, the business owner knows they want to sell a type of product or offer a range of services, but they don’t have much of a plan beyond that.
When you start a business, it’s important to have a clear vision of what you’re working towards, and how you’ll get there. Who are your primary customers? Are you going to sell at a store, online or both? How are you going to market your business? How are you going to raise funding for your business?
To help you shape your vision and write a plan, we recommend these resources:
- How to put together a business plan
- Watch our Business Plan Masterclass
- 15 things you need to do when writing a business plan
- Why your business needs a mission and vision statement
3) Inventory management
Poor inventory management is a common reason why some small businesses fail. If your business is constantly running low on important inventory, it will make your business seem unreliable. So not only will you miss out on sales, but your customers could look elsewhere for a more reliable competitor.
And it’s not just under-stocking you need to be wary of. If you have a problem with overages, you are tying up business funds that could be used for something else. Depending on your business, overages could even result in losses as products get sold at a discount or possibly don’t get sold at all.
One of the best ways to prevent this is to use inventory management software. With the software in place, you can automate much of what goes into tracking things like sales, deliveries and orders. Many of these systems even have analytics that can help you predict your inventory needs in the future.
4) Poor accounting practices
A business owner should be able to keep track of every dollar that comes in and every dollar that is paid out. If your books are in a state of disarray, it’s only a matter of time before you run into financial trouble.
The best way to solve this issue is to stay on top of your finances, and use accounting software. Just like inventory software, accounting software will automate much of the process for you. The key is to find accounting software that can integrate in with things like your point of sale system and your inventory software.
Complacency is something that can affect small businesses that have been around for a while and have seen some success. You find a way of operating that works for you or your offerings please your customers for a while, and you get set in your ways.
Whether you are new to owning a business or an experienced entrepreneur, you need to avoid falling into this trap. Markets and trends change, so you need to do what you can to stay aware of the potential for change and be ready to adapt.
The marketplace is always evolving – new technology and competitors can enter at any time, and if you’re not continually evolving, and ensuring that you’re as good as you can possibly be, you’ll risk becoming outdated and overlooked.