The success of a company often depends not only on making the right decisions but also on not making the wrong ones. Preventing debilitating mistakes in business plays as much of a relevant role in growth as does your ability to recognize growth opportunities.
Written by Keith Coppersmith
An eager entrepreneur starting their own company will rightfully focus on the steps they can take to grow their business, a topic we’ve already covered extensively. In order to prevent the worst, you need to understand the potential scenarios that commonly occur in the market, no matter the industry or your level of expertise. The following are the selected culprits of small business failure that account for a major portion of unsuccessful companies–use them to expand your knowledge base and prevent them in order to succeed.
1. Lack of funds
In such a competitive market, it’s only natural for certain business ideas to thrive while others wither away. However, even the most brilliant of innovations might miss their mark if they aren’t supported with the right capital. In fact, according to a study, 82% of small businesses fail precisely because they lack the funds as well as the basic understanding of cash flow management–meaning that even with enough capital, the majority of small business owners will likely not know how to allocate it properly.
Before you take the leap into your desired industry, make sure you have made the right assessments for your financial forecasts, short and long-term financial milestones, pricing ranges, as well as overhead costs. Then, you can look into various funding options such as loans, investors, and crowdfunding, in order to find the best fit for you.
2. No plan for guidance
Another common hurdle is going into the business arena without a business strategy, clearly established goals or milestones, and other reference points that ensure success. It’s not just the financial plan that needs to serve as your guiding star, but also your branding, marketing, communications, and the like.
While it’s not set in stone, a plan is meant to serve as a prognosis for expected achievements, and as a way to measure progress and success in order to solve problems on the way and adapt. An overarching strategy is vital in order for a business to succeed.
3. No desire to learn
Even with a brilliant idea, an equally strong business strategy, and plenty of funds at your disposal, chances are that you’ll run your business into the ground if you underestimate your competitors or choose not to learn from experts in your field.
For example, an excellent way to prevent this issue would be to learn from the top 10 franchises in your industry, in order to pick up valuable branding and marketing lessons for your own services or products. They’ve earned that reputation for a reason and it pays to know how they’ve done it. Startups as well as franchises run the risk of failure equally in case the owner refuses to take a closer look at tried-and-tested methods used by their predecessors to establish a business in its own right.
4. Unclear value proposition
From selling a household commodity to offering a valuable service, a business cannot be truly called a brand unless you have defined your unique value proposition. Yes, even toilet paper brands do their best to focus on their strongest qualities, no matter the fact they are selling a necessity–because a customer will always go to the next one on the shelf if they’ve managed to send their message across more successfully.
Make sure you have defined your value proposition and then imbued your entire business model with it. From all of your online and offline content, all the way to your visual identity, your brand needs to become an experience, not merely another product.
5. Lack of management skills
We’ve already seen a hint of this issue earlier, but a lack of organizational and management expertise is not merely a problem in the realm of finances. It can also affect every other relevant segment of your business, from managing employees, negotiating with investors, all the way to choosing the best marketing methods.
A smart business owner, whether of a startup or a franchise, will delegate the tasks they are not proficient at. That way, you’ll have peace of mind, knowing that the most vital parts of your business are operating well, and that you are devoted to what you do best, whatever that may be.
6. Poor marketing methods
Entering a competitive market requires thorough analysis, preparation, and measuring tools to ensure that your own brand will earn a high-ranking position in the search engines as well as the eyes of your target audience. Doing that without a detailed marketing plan is closer to a brand suicide mission than an attempt to run a business.
In these modern times, a brand needs to utilize contemporary marketing methods such as content diversification through producing podcasts, vivid infographics, and detailed blogs. Social media influencers are a valuable option for relevant industries as well while a general social media strategy is also in order. Generally speaking, no aspect of marketing can go well without a plan, so make sure you treat it with equal attention and care as your business strategy.
7. Infrastructure issues
Finally, one of the most commonly overlooked issues small businesses face is lack of internal cohesion. Simply put, if your team members are not carefully chosen and they don’t collaborate well, your entire business is likely to suffer.
This is especially prominent in the early stages of developing a business. You need to make sure that every hire is based on shared brand values, diversification, and a necessary skill set to thrive in your given industry. Otherwise, you will put your entire business in the hands of people who will not be able to let it flourish.Consider these snippets of wisdom a boost in the immune system of your business. Much like you would do your best to prevent catching a cold, make sure you include all the needed preventative measures to keep your own business healthy and able to grow.
About the Author
Keith Coppersmith is an Adelaide-based business consultant with a degree in Media Management. With experience in numerous small businesses and startups, he enjoys giving advice on all things marketing.