Why 66% of businesses fail within the first 10 years
A known fact is that half of new businesses survive for the first five years and only one third of new business survive for ten years. That’s 66% of businesses that don’t make it before the ten year mark!
Why does this happen? What are the dangers a business owner can avoid?
- You’ve started your business for the wrong reasons
The main reason people start their own business is that they don’t want to answer to anybody else?
Or that they want to make a lot of money? If this is the case for you, you should have a rethink.
- Poor management
Many new business owners lack the relevant business and management experience in areas involving finance, making decisions, selling, production, and hiring and managing staff.
If this is the case for you, take the time to learn, study, or find a mentor to help and guide you. Do whatever it takes to enhance your leadership and management skills. Create a working environment that encourages productivity.
- Lacking value and uniqueness
You may have a great product or service that there is a strong market for, but you also need to think about your value proposition and how you approach your market.
What makes your business stand out from your competitors?
How can you promote your business in a completely unique way?
How do you create a customised approach or package that nobody else in your industry uses so you can use that technique as a strong value proposition that attracts attention and interest.
This is the beginning of building your brand – the image your customers recognise and associate with your business.
Your logo, tagline, colours and all other visible parts of your company should be supported by your value proposition. Get your brand out there through the use of social media, word of mouth, and other marketing techniques.
Create a USP unique to you. For Janelle and I, it is handwritten cards and letters. They go down a treat because it is a lost art!
- Poor finance management
This is the biggest downfall of most Business owners. What we call KYN. Know Your Numbers. It’s fundamental to know exactly where all of your money in your business is coming from and where it’s going for your business to be able to last and grow.
Business owners commonly underestimate how much money is needed. Sometimes people start businesses without having the skill or interest to manage cash flow, expenses, taxes, and other financial issues.
Poor accountancy practice puts a business on a path straight to failure.
Use professional business accounting software to keep records of your finances such as Xero or Sage, and include every expenditure and all revenues received to generate profit and loss statements. You need this valuable information in order to run your business and to know where you stand at all times. If you lack skill in financial management, consider consulting with a financial mentor who can help.
You must ensure you have a cashflow forecast, a budget and review your numbers every month.
- No website
If you have a business right now, you need a website.
Every business should have a professional and well-designed website where users can easily find out about the business and how they can get your products and services. If you don’t have a website, you’ll probably be losing prospects to those that do.
Ensure you have an online presence that’s well-optimised, and techniques to retrieve contact information such as subscriber newsletters and high-quality content to download. A great way of keeping your website updated is with blog posts.
Starting a business is exciting, but requires a clearly defined product or service with a strong demand for it. Whether you’re starting a new business or already running one, it’s vital to understand that success depends on careful planning, marketing and financial management.
And if you start a business for the following reasons, you’re going to have a better chance of success:
You have a great passion for what you do, and strongly believe that your products or services will fulfil a need in the marketplace.
You have great drive, determination, patience and a positive attitude. When other people give up, you’re more determined to succeed.
You thrive on independence and are skilled at taking charge when a logical or creative solution is needed.
Financial Failure https://www.investopedia.com/terms/f/financial-crisis.asp