Why do businesses fail?
According to Bloomberg 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. That's 80%! But there’s many reasons that can lead to this downfall, avoid them and there’s no reason your business can't succeed. We’ve put together our top 5 reasons why businesses fail so that you prevent this from happening to you.
“It’s not the plan that is important, it’s the planning.” - Dr. Graeme Edwards
Lack of value.
What can you offer your potential customers? Value is so important when starting up or growing your business, you need to have something to offer that people want or need.
You’d think this would be obvious for any up and coming business but the simple fact is so many businesses start out trying to get rich quick, with that attitude you’ll find yourself failing before you’ve even started.
Creating value should be your top concern and investment. Picture it yourself, you receive an incredible mind-blowing service, what do you do? You tell everyone about how fantastic it was which gets your name out there and you’d keep going back yourself, creating a repeat customer.
Be proactive and clear on why you’re better than your competition.
Lack of funds and controlling expenses.
Money and money management of course is extremely crucial in starting any business, you need to be able to pay your bills, staff and resources as well as make profit if you want to continue in your efforts.
Before you make any big purchases you need to plan, plan and plan again. Is your business ready? Do you have enough cash to really get this going and keep it going? Let’s be honest here, spending money is easy, being smart about it is the hard part.
Research your costs, first and foremost this is the simplest start to avoiding this issue. You need to know what things cost in order to be realistic in your plans and not over spend. The last thing you want when starting a new business is having all your money caught up in unpaid invoices.
Lack of marketing.
You should always have some form of marketing even if you're just doing it yourself.
Surprisingly so many new businesses overlook their marketing, in a lot of cases they don’t do it at all and expect the leads to just magically come to them. But how do you expect your customers to find you if they don’t know you’re there?
Even the most generic marketing efforts can have great effect. Research similar businesses and see what kind of social networks and marketing platforms they use, you don’t want to spread yourself too thin or waste your time on platforms that won't work for your business.
Some good places to start would be making social media pages for your company, think about advertising on Facebook and Google or start a mailing list.
Lack of performance reports and analytics.
It would be pretty bold to assume your business will succeed without measuring and comparing how it performs.
Analytics and reports are essential in bettering your company. Every business at every level should have key performance indicators or KPI’s, these should be in your business plan from the outset and should be measured regularly. If you’re not reaching them, why not? If you are, how could you do better?
Lack of connection.
If you do not connect with your target audience, your business will fall.
Your job is provide your demographic with what they want and what they need, but if you’re not connecting with them are you really offering what you think you are?
You need to address the pain points of who you’re trying to sell to, if you’re not doing this then the chances that you genuinely understand them are slim. It’s for this reason that market research is so important when it comes to identifying your target audience.