There have been plenty of articles written out there about why businesses fail. All of them list many different reasons. Some of them might sound like they are either common sense or may have reasons that are just not specific to your given industry. However, there are some common pitfalls that small businesses encounter that are in fact easily avoidable. With just a little help, you can avoid these 5 common reasons why many businesses fail.
1) Not having a proper business plan
While this step sounds like common sense, many people who start a business do not have a solid business plan. You may have the greatest idea ever for a business, but boundless optimism and confidence only go so far. Once you actually get started, you might find that you hadn’t thought it all the way through exactly. You may find yourself wondering what the next step might be. This is the last thing you want to have happen. But don’t be too hard on yourself, because no one can plan for everything.
WHY YOU WON’T: It’s important to consult a business expert about your business concepts to make sure that you’ve planned for certain contingencies. A consultant can help ensure you are taking the right steps in thinking through the process. You need to get your business set up in a way that is both efficient and organized. Well-organized and efficient businesses can survive a lot of unplanned contingencies. Those lacking in one or both areas can find themselves faltering without a clear reason as to the exact reasons how or why.
2) Insufficient capital?
To be perfectly honest, a huge amount of businesses fail due to insufficient capital. However, while sometimes this is an unfortunate inevitability in some ventures, this sort of pitfall can often be avoided with solid financial planning and good bookkeeping. If the expenses begin to greatly outweigh income and these things are tracked with great accuracy and attention, you can often see a train-wreck coming far before the train actually arrives at the potential disaster.
WHY YOU WON’T: Not only can your friendly business expert help you with building a business plan that incorporates both your sales and financial goals, but this expert may also be able to assist you with your bookkeeping procedures, as well. Not only that, but some business consultants can even take over your bookkeeping and allow you to focus on building your client or customer base.
3) Not differentiating yourself from the competition
Some businesses fail because they simply didn’t stand out from their competition in some meaningful way. Believe it or not, you don’t have to be in the most innovative industry in order to be innovative. This is also where a solid business plan comes into the picture, but in this case, you may find that while your plan is sound and things seem to be functioning well, the sales simply are not coming.
WHY YOU WON’T: If anything, standing out from the competition may sound like the most important thing to do in any business. Your business expert will be happy to consult you on analyzing your competition to find potential opportunities that you may be able to exploit such as pricing or product and service options. There are also marketing opportunities that your competition may not be taking advantage of or doing effectively, such as social media promotions or email clubs.
4) Improper marketing
The last thing you want to do is purchase “one size fits all” advertising. One of the worst things you can do in business is to advertise yourself all wrong. Sometimes businesses find themselves pushing marketing messages to the wrong audience. Or even worse, businesses will find the right audience and market to them in the wrong way. Many marketing companies will come up with what sounds like a fantastic marketing package until it’s put into action, tons of money has been spent, and few or no leads emerge. Sometimes these marketing plans fail so miserably that advertising money is not only wasted, but also alienates potential clients with improper marketing.
WHY YOU WON’T: Therefore, it’s important to have a company that sits down, interviews you, learns your process and what your business is all about. Then figure out exactly who your audience is and learn what it is interests them and work from there. Once you find common ground with your customers, you’ll find your marketing becomes not only less expensive, especially when it’s through low-cost channels such as social media and content marketing, but it will be more effective and open, as well. Two-way communication is the best. One-way marketing simply is not the way to go for small businesses anymore. The last thing you want to try to do is act like a corporation, yet so many marketers seem to think that is still the way to go – if you hear that sort of sales pitch, steer away and come ask us for advice.
5) Failure to provide sufficient customer service
To anyone who has ever shopped anywhere or dealt with any sort of business whatsoever, you know full well that customer service is the most important aspect of any business. Without customers or clients, there is no business. Believe it or not, you may actually be surprised at the number one reason that customer service can go south. It’s disorganization.
WHY YOU WON’T: You might think that it’s rude employees. Lack of follow-up can be a big reason, too. But both of those things are products of disorganization, just of different types. The first is an organizational issue with your team and your business goals. The second is a product of lacking housekeeping. Of course, the first is an extremely important thing to correct as soon as possible. The second, of course, is easily outsourced. You always want to make sure you can stay in constant contact with your clients at any given time and have their information cross-references in some sort of CRM (Customer Relationship Manager) software. Keeping in touch make sure your clients and/or leads to let them know you remember them is paramount to being top of mind and more successful.
Keeping all of these five things in mind, your business should have no trouble finding consistent progress towards profitability and success. To see how 118group can help you in these areas and more, please contact us today for a free no-commitment consultation. We look forward to helping your business grow and prosper!