Starting a small business can be extremely rewarding. You are your own boss. You find your own clients, and set your own hours and rates. Sounds easy, right? Sometimes the odds are stacked against you, with a surprisingly high small business failure rate. According to a research company, 20 percent of small businesses fail in their first year, with this figure rising to a stunning 70 percent failure rate by year ten.
Here are a few causes of some business failures: Preventable failure, which is caused by deviating from a known process; complex failure, a failure caused by a system breakdown; and an intelligent failure, which is caused by an unsuccessful trial.
Lack of Planning
One of the major reasons why businesses fail is that owners often lack the foresight to anticipate challenges they may face. You may consider yourself to be the best plumber or electrician in the world, but running a business requires a lot more than performing services or selling products. Recognise that a small marketing plan is an essential road map to guide your company and make you aware of both challenges and opportunities.
Lack of Research
Become extremely familiar with both your target customers and the competition. Identify what differentiates your business from your competition, and figure out how to turn that into a winning strategy.
If you ask the average person on the street why so many small businesses fail, financial woes would likely be among the most common responses. Many small business owners are not financially savvy, so failures run the gamut from simple errors in calculation to the inability to raise sufficient capital. It is also a wise idea to add 20 percent to your budget as a contingency fund, meaning that you raise more capital than you think you need and never assume the best-case scenario.
Lack of Business Expertise
An unsuccessful business is often headed by someone who tries to do it on their own. Expertise, and an understanding of marketing, sales, accounting and many other fields is required. It is rare for one person to be an expert in all the different aspects of running a business, especially when that person is an expert in a “non-business” related field. To arrest this concern, hire employees who are strong in the areas where your skills are weaker.
Neglecting the Essentials
Some small business owners end up forgoing items that are essential to success. Examples include a Business License and legal paperwork, regular health inspections or continuing education courses and annual recertification.
Let us not forget that business interruption insurance will be your protection against a wide range of potential issues. Whether a client trips over a power cord or a mistake is made that caused damage to your property, your business insurance can protect you from an expensive claim.
Overhauling the situation
Avoid emotional decision-making. Take measures to avoid similar losses in future by exercising coping skills, acknowledging realistic beliefs about failure, reinstating responsibilities, trimming the fat, accepting responsibility and not forgetting what you have learnt from your misfortune.
To stay afloat, find some time to sit down and analyse your company. Hire a business consultant if possible, and dissect the issues. Be proactive in identifying the problem and its solution, as remaining in denial is not the best remedy. It will not make the problem go away.
Remember that everyone fails at some point. However, this one failure does not mean it is the end. Until we meet again, fill your life with memories rather than regrets. Enjoy life and stay on top of your game.
• NB: Columnist welcomes feedback at firstname.lastname@example.org
ABOUT COLUMNIST: Deidre M. Bastian is a professionally-trained Graphic Designer/Brand Marketing Analyst, Author and Certified Life Coach
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