10 Reasons Your Small Business Might Fail
It’s not unusual to start something and fail, either because the idea wasn’t good enough or because you couldn’t execute it properly. Don’t be discouraged if your small business is teetering on the edge of failure! There are a lot of reasons why businesses fail. Still, there are also ways to avoid failure altogether by ensuring that you hire the right people and have proper funding in place to sustain your business before it even begins. Read on to learn ten common reasons why small businesses fail, along with suggestions for avoiding them and improving your chances of long-term success!
1) Wrong People
Just because you work well with someone doesn’t mean that they’re a good fit for your business. There are numerous things to consider when deciding who can best help your business succeed—including personality and industry experience. Before bringing on new team members, make sure you take these things into account.
2) Lack of Funding
One of the most common reasons small businesses fail is that they don’t have enough funding to get them to a break-even point. If you don’t have enough cash to cover costs for more than a few months, it’s hard to make it as an entrepreneur—especially if your business is new and untested. As soon as customers start cutting back on spending, small businesses without a solid cash buffer are left scrambling for funds. Once your savings are gone, so is your business.
3) Poor Management
Even if you have all of your other ducks in a row, poor management and company culture can be enough to sink even a solid small business. It’s essential to ensure that your employees (and yourself) are on board with your vision and working toward a common goal. If they don’t buy into it, your enterprise will quickly fall apart.
4) Negative Attitude
When starting a business, it’s easy to become disheartened and lose your enthusiasm if things don’t go as planned. It’s important to stay positive and have faith in yourself; otherwise, you risk losing key employees, who will then look for new opportunities elsewhere. Also, your negativity may rub off on your employees – affecting their work performance. Over time, negative attitudes can spread throughout a company, resulting in an entire workforce lacking motivation and commitment.
5) A Bad Location
Make sure your business is located in a place where there’s plenty of foot traffic. Without enough people walking by, you may struggle to grow your clientele. Unless you’re opening a shop in a tourist area, consider how many people visit during different times of day and year. Does it make sense for most of them to stop by? If not, re-think your location!
6) Poor Marketing Skills
If you’re not good at marketing, you’ll have a hard time staying afloat. If you’re hoping to start a small business, you need to learn how to market it—it doesn’t matter if your product is excellent; if no one knows about it, it won’t sell. The ability to sell yourself is just as important as whatever your business sells.
7) Weak Product
Even if you manage to get people interested in your small business, there’s no guarantee they’ll stick around. If your product or service isn’t up to par, customers will move on to a competitor who offers something of value. The best way to determine whether or not your idea is viable is to test it out with potential customers. Set up a landing page where visitors can sign up for more information and use their feedback to determine if they want to see your business come to fruition.
8) Failure to Adapt to Market Change
The marketplace is constantly changing, and your small business will need to adapt to these changes to succeed. If you don’t keep up with market trends, you risk going out of business. In 2008, Kodak declared bankruptcy because it had failed to adapt its image capture systems and services for a digital world. A lack of funding can also limit a company’s ability to adapt successfully. No matter how great an idea may be, it needs adequate capital to grow.
9) Poor Self-Marketing Tools
There are a lot of free or low-cost marketing tools out there for small businesses. It’s a shame that so many entrepreneurs don’t take advantage of them, as they help boost reach and sales without cost. These include white papers, infographics, how-to blogs, ebooks and webinars. Without creative promotion tools in place, you might end up closing doors before even trying to get your foot in them.
10) Not Being Unique
Most businesses fail because they try to be everything to everyone. Look at your business idea, and make sure it’s unique. What do you do that no one else does? How can you provide value to an underserved market? Do not try to jack all trades; instead, focus on becoming a master of ONE thing. Show potential customers why your products or services are better than those of your competitors; let them know what sets you apart from everyone else in your industry.