If you own a business, you know that it takes a lot of hard work, time, and discipline to make it run even relatively smoothly. In truth, it may take anywhere from two to five years before your business is performing well.
It is important to set the right foundations, create the right habits, and avoid activities that can be detrimental to the growth and survival of your business. When you’re running a business it’s easy to fall into a routine and forget about how even the smallest misstep can permanently damage your business. It’s equally damaging to overestimate your business’s ability to succeed in a short period of time.
Below are the top five reasons why businesses fail.
1. Lack of Planning
A business without a plan is like a ship without a sail; it is destined to float along, wherever the current takes it. Wouldn’t it be great if there was a document somewhere that specifically outlined a business’s goals and how to reach them?
Good news! That document does exist: it’s a business plan. A business plan is an extremely valuable resource that serves as a blueprint for your business and what you envision for its future. It’s like a road map to success: with it in hand, you know exactly what you want for and from your business, the direction you want it to go in, and how to get there.
2. Poor Management
It is a struggle to find the time and resources to juggle the many demands of a business and help it grow. Among other things, poorly managed businesses have problems keeping track of and stocking inventory, are short on cash, have a hard time keeping staff, and create dissatisfied customers.
Additionally, the owner/operator of the business is often overwhelmed and unable to find a balance between business activities and personal activities such as spending time with family.
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3. Poor Marketing Strategy
Even the greatest product goes unsold if it is marketed poorly. Potential customers have a lot of options when choosing a product or service, and simply offering something that people want does not mean that you will end up with even a single customer, let alone a line out the door.
Education is essential in marketing. Your potential customers need to not only know that your product(s) or service(s) are available, but need to be able to access them, afford them, and find use in them.
Poor estimations of start-up and operating costs can set you up for disaster. Sadly, this is a common mistake; entrepreneurs often think that they will generate income as soon as they start their business, but usually, sales are slower than anticipated during the first few months of operation.
For obvious reasons, it’s important to have enough funds available to you before you start a new business. Creating a solid budget ensures that the money you have available is not wasted.
5. Lack of Motivation
It’s a well-known fact that most businesses do not see any significant profits during their year. Great successes don’t happen overnight, but understandably it’s hard to stay motivated if you aren’t seeing any growth. You can help combat waning motivation by looking at your long-term business goals. Where do you want to be in one year? What about in five years? What do you need to do in order to reach those goals? What can you do today that will get you a little closer to your long-term goal?