Running a Small Business is hard. Statistics show that many small businesses fail in the first 5 years. They may be service, retail, wholesale, manufacturing or any one of a number of industry types. Why is this? Are there common denominators regarding these businesses? Let’s explore some of the most common reasons.
- Under-capitalization. It takes some time for a new company to establish itself in a community or a particular industry. So it is important to have an operating “nest egg” until business starts to roll in. Do all you can do to preserve your dollars.
- Improper planning. Create realistic and attainable goals when starting out. Everybody wants to be big but you can’t be big over night. Goals should be written and reviewed and possibly altered from time to time.
- Cash flow problems. It is important to track the flow of money both in and out. Failure to do so will have you spending more money than you have. Even a profitable company will run into problems, if it is short of cash.
- Procrastination. Do things efficiently and as needed. Don’t let paperwork or duties pile up. Putting off tasks will eventually allow them to overwhelm you.
- Ineffective or no marketing. Products or services do not sell themselves. Continuity in marketing is very important. If advertising dollars are limited then make cold calls, network with other businesses and or barter for goods and services.
- Ignoring customers. This is probably the biggest but yet most controllable reason that a business fails. Listen to your customers. Follow up with them. If you do not satisfy their needs another company will.
- A closed mind. We all go into business with preconceived ideas. Some are right some are wrong. Be versatile and flexible and continually search for better ways to serve your customers.
Businesses that are able to control and manage these hurdles will more often than not be successful and therefore profitable.
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