7 Reasons Why Small Businesses Fail - And What To Do About It
According to a study by the Small Business Administration, most startups fail within the first five years. They have identified seven reasons:
1. Starting your business for the wrong reason. If you start a business so you have more time for yourself, or if you start a business because you want to concentrate on being a great 'whatever,' you probably should not go forward. You will be working much more than 40 hours to succeed; you will have to learn to be an accountant, a marketing person, an IT expert, etc until you can afford to hire someone to do all these jobs.
2. Poor management. You need to know how to manage your time. You need to learn how to manage your business. You need to know how to manage your employees.
3. Insufficient capital. If you think you will be a millionaire by the end of your first year in business, you should probably have a serious conversation with other people who have started their own businesses. It will probably take about five years before you will be able to consider yourself a sure thing.
4. Wrong location. While I'm sure you can point to an exception to the rule, if you open a business in the wrong location, you have lost the game. One thing I'd say is this: if you are looking to rent/buy a place in which no business has succeeded in the past 5 years, you had better have a real good reason why you are going to succeed.
5. Lack of planning. I'm actually surprised that this is #5. I expected this to be #1. You must spend the time to plan your business: what do you want your business to look in 5 years, what are your business values, who is your competition (and please don't answer that you have no competition), and what are your goals for each of those 5 years? Then...you must follow and revise your plan as you go along.
6. Overexpansion. You have a great product, everyone wants your service. It's a dream come true. But, how do you continue marketing your business? How do you meet the need for so many more widgets? How do you get out the invoices, or deposit the checks that come in? If you have not planned for this tremendous growth, you will be in trouble.
7. No website. This was another surprise. In this age of the internet, I cannot imagine that anyone in business would not have a website. I can imagine that the websites are not good websites. One tip: spend the money and get a good, usable website, learn what you need to know to make sure you have a website that will work for you.
About the Author
Kathy Emond is an Executive Coach and co-founder Strategic Directions LLC, a Leadership Development Company, located in Nashua. Their tagline says it all: "Guiding YOU to professional and personal Growth." For more information about their programs and services, contact her at 603-880-8191, [email protected] , or visit their website http://www.StrategicDirectionsLLC.com.