Running your own business can be an exciting venture but the looming thought of failure often sticks in business owner’s minds. With great rewards come great risks. Only two thirds of businesses survive and can go on to prosper and expand, by identifying the main reasons why small businesses fail and being aware of them may be one step closer to success:
#1 No Business Plan
Not having clear structured business objectives in place and not knowing your short and long term goals can create real difficulties. Knowing what your business does and what products or services you sell is simply not enough. If you are unclear on what to include in your business plan take a look at our guide to writing a business plan.
#2 Not being in touch with your customers
Talking to your customers and getting to understand what they want and need is crucial, finding out what is best for them can really put your business ahead of others. 140 character tweets don’t count either, taking your time to get to know your customers by real dialogue can really help.
#3 Lack of unique proposition
A main reason small businesses fail is due to the product or service having no real differentiation in the market. Conducting market research to see where your product could fit in the market and figure out what your business really brings to the table. Setting yourself apart from other businesses is a major step; no one wants a mundane product or service.
#4 Failures to communicate value propositions
If you don’t engage with your customers in a clear, concise and compelling fashion then your business will fail to communicate well with customers. Once you have identified your point of differentiation communicate that message to your customers in a truly engaging way.
#5 Poor Marketing
Successful modern businesses understand the importance of marketing, market planning and market research is essential for small businesses. To discover the extent of competition and to keep ahead it is crucial to have a excellent marketing strategy, your business will also go further if you understand consumer preferences and tastes.
Don’t lose sight of your core values, the business aspirations you once had, don’t let them be forgotten. By creating a plan B can also help, minimise the exposure to risks with a back-up plan. Remember without cash your business will fail, make sure your business is supported by long-term capital or working capital…or both.