Why Small Businesses Fail
Small businesses often fail in their first year or two. Why is that? In this post I want to cover 6 common reasons why small businesses fail and by taking a look at these hopefully many people will avoid failure. With a very difficult economic situation it is vital that business owners minimize the the situations that could cause them to fail. These errors listed below although numbered should not be viewed in any order of importance.
6 Common Errors why small businesses fail
Number 1 – Lack of Commitment
Many people start a business and are sometimes unaware of how much effort and commitment will be required to make it successful. An employed person usually only sees a small part of what goes on in a business even if they are a key player in the company. This can give a false impression of what it takes to run a successful business.
Number 2 – Avoid Negativity
You certainly need to choose carefully the people that surround you. If they are negative about your business it can soon start to effect you and make you question yourself, your abilities, the economy and a whole lot of other things that can make you negative and start to make decisions that adversely affect your business.
Number 3 – Trying to Do Everything Yourself
Larger businesses have teams of people that take care of everything from marketing, accounts, buying, stock control, personnel management and much more. If you are working on your own you must realise that you can not be an expert in everything and whilst you may not be able to afford to employ full or part time staff you should look to find help on an hourly ad-hoc contract basis when you need it. There is lots of help out there at modest cost.
Number 4 – Be Careful of Shortcuts
It is often too easy to look for shortcuts when you have your own business due to a lack of time. Shortcuts in themselves are not always wrong but if for instance you take shortcuts and take a “that’ll do” attitude you could end up in trouble. As an example, for the sake of a little more time you might be able to improve an advert that you are making. A poor advert could cost you lots of money with little return whereas a good one could boost sales enormously.
Number 5 – Avoid Desperation
Many businesses go through a famine period and when you are looking for new customers you must not sound too desperate for their business and “push” them too far. You are more likely to lose sales when you are desperately in need of them due to trying too hard. This is often a common problem that small businesses face.
Number 6 – Get Your Pricing Right
Many small businesses fail because they fail to get their pricing right. In some sectors they can not compete with the larger companies and will be too expensive. In others they try to be much cheaper than the competition thinking that this will help them get more business.
Far too often small businesses fail because they price too low. Low prices can actually put people off as they may think your quality might be inferior to that of others. It is also possible to put turnover ahead of profit. Always remember the saying, “Turnover is Vanity – Profit is Sanity”. There has never been a truer saying for many small businesses. It is far too easy for people to say how much their turnover is but they often don’t know what their profit is. You could be turning over huge amounts of money but be on the road to going bankrupt.
Small Businesses Can Be Successful
The good news is that many small businesses are successful. It takes hard work and commitment along with a “never say die” positive attitude. Make sure that if you have a small business or are going to start one that you get these basic principles right from the start. You can then join the millions around the world that successfully own small businesses.