Unfortunately, according to the Small Business Administration, 50% of startups will face business failure within the first five years. No entrepreneur intentionally starts a business with the intention of it failing. Those who make it have the knowledge, skills, strength of mind, and will do whatever it takes, to create a successful business. Nevertheless, others will treat their business like a glorified hobby and expect it to succeed.
Starting up and running a business is not for everyone. The statistics of failed businesses are alarming. If you want to be fruitful, there are pitfalls you must avoid to reach your goal.
Which category do you fit in? Is your business on the road to success? Or, are you ignoring the warning signs that you’re heading for business failure?
Let’s look at some of the common reasons why you could become one of the statistics of failed businesses.
- Poor time management skills
Time management is one of the most vital skills you should master in life. And even more so if you’re a business owner. When you have poor time management, you will disregard time. Risk wasting time if you don’t take your business seriously. Wasting time is like dashing money down the drain. You lose time. You lose money.
As a business owner, you are your own boss. You can do what you want. However, there are adverse consequences if you do the wrong things.
Perhaps you think running a business means getting up whenever you please. Instead of working on your business, you waste precious time roaming around on Facebook. And, waste more time reading other businesses’ updates on social media. The wasted hours pile up as you bounce from checking your emails to reading irrelevant stuff on the internet.
Half way through the wasted day, you decide it’s time to start working. This is a formula for business failure.
You’re not managing your time effectively, therefore, you’re unable to focus. You find it difficult to work on the activities or projects needing attention. And so, you procrastinate and add it to your to-do list for tomorrow.
Your ever growing to-do list never seems to get finished. As a result, you jump from one task to another but end up getting overwhelmed. The knock-on effects are missed deadlines, being late for meetings and constantly running around unprepared and confused.
- Inability to plan properly
Everyone starts a business on the assumption it will grow and become successful. However, there are always exceptions. If you don’t make planning a regular daily habit, your business will struggle to survive.
There is a saying… Failing to plan is planning to fail. Planning is a road map leading to clarity and the direction of your business. When you have a solid business plan you’ll know what you aim to achieve, how you’re going to achieve it and how long it will take to achieve it. Planning ties in with your vision. Without the two, you’ll lose your way and go off track.
Also, failing to plan will put your business at risk and stunt its growth. Lacking a strategic plan followed by not taking appropriate action, will harvest disappointing results.
- Unwilling to update your skills
On the 1st October 1908, Ford Motors produced the Model T to the public. Imagine if over the years they didn’t update this model or designed other cars? If they were reluctant to keep up with the latest trends in the motor industry, what impact would that have on their sales? Apart from a few eccentric individuals, not many drivers would buy and drive a car appropriate for historical times. And, Ford Motors would undoubtedly have failed and disappeared.
The same applies to your skills. Owning a business is not about sitting back, folding your arms and watching life pass by. If you’re not updating your skills, knowledge and keeping on top of new trends in your field you’ll stay outdated. Furthermore, instead of meeting the constantly changing needs of your customers, you’ll drive them to your competitors.
- Starting a business for the wrong reasons
You’ve got a fantastic hobby. Everyone tells you how good you are at it. Some even suggest you should turn it into a business. You like the idea. You convince yourself you have a worthwhile business that will grow. After all, you’re passionate about it and friends and family will support you.
So off you go. You set up your business. A year later, it’s still a hobby. It hasn’t grown. You haven’t made any profit. And you hardly have any customers.
Before you rushed into the business, you didn’t consider the industry. Nor did you carry out market research to find out if your hobby was something prospective customers needed. If you start a business mostly to suit the desires of family and friends, that will not turn it into a sustainable high-profit venture.
- Prioritizing your wishes over customers’ needs
You could easily be tempted to become a selfish business owner. After all, It’s your business idea. Your business. Your product or service. Your brand. Your investment and so on. Nonetheless, if this is your attitude, where does your customer fit in the picture?
Running a successful business is more about the customer and less about you.
Don’t be fooled into thinking you know what your customers want by guessing. Or worst, you don’t see the importance of finding out. And so, instead of talking to them, carrying out surveys and market research you turn a blind eye. How can you expect your customers to buy from you if you don’t know what they want? Even more damaging, you run your business to suit yourself rather than them.
In conclusion, if none of the points above are relevant to you, then you stand a good chance of making your business work. On the other hand, look at the warning signs. If you’re guilty of the business failure traits, take action and make changes. Rethink your strategies and look at new ways of shifting your work methods.
Look out for next week’s article. I’ll be sharing valuable strategies to put in place to avoid business failure.