Official statistics show that around half of all new companies will cease trading in less than twelve months. There are lots of reasons those businesses fail, and some of the most prominent ones will get a mention in this post. The purpose of the article is to educate new entrepreneurs and ensure they don’t make the same mistakes, so many others have in the past. Use the information to make better decisions and ensure any new ventures don’t backfire. Of course, there are many other reasons why an operation could close its doors. However, the ones listed below are by far the most common.
Not creating a business plan
Business plans are essential because they outline the way in which the company will make profits. The document should contain information about how much money entrepreneurs need to get started, and how they plan to spend it. People who don’t have a clue about the best ways to create that file just need to consult an expert or if you are looking into a new e-commerce venture then you may find this step by step business plan to be a useful starting point. There are lots of business advisers out there who focus their efforts on assisting with that task. So, it’s just a case of reading some online reviews and sorting the wheat from the chaff. If people have no idea how their venture is going to pan out, they’re guaranteed to make lots of mistakes. At the very least, a business plan should detail:
- How the company will make money
- How much investment is required
- At which points the firm will expand
Failing to seek enough investment
With the last section in mind, lots of individuals fail with their new business concepts because they don’t find enough money from investors. It’s often difficult to work out how much cash an entrepreneur might need before they start trading. However, it’s vital that everyone makes an accurate prediction if they don’t want to get into trouble. High street banks are less inclined to lend money to people without a proven track record these days. Still, anyone with an attractive business plan should manage to get the cash they require. If entrepreneurs struggle to get the level of investment their business needs to get off the ground, there are other options on the table. For instance, some people might like to consider:
- Private equity firms
- Personal loans and credit
Spending too much money
Far too many new business owners fail to keep their outgoings to a minimum during the early stages of their companies. That is something all readers will need to think about when pushing ahead with their ventures. There are many ways in which anyone can reduce spending and keep more of their cash in the bank. Some folks might decide to work from home for the first few months until they require assistance. That is an excellent move because it’s possible to knock a percentage of the household bills off the business’s tax return. Many individuals might also compare power companies and internet providers if they run an office. Other ideas entrepreneurs might want to think about include:
- Using cloud storage
- Employing temporary workers
- Using a VOIP solution
Not investing enough in marketing
Advertising and promotion are the keys to success in the modern business world. Entrepreneurs could come up with the best product or service concepts imaginable, but they’ll never earn a fortune if they don’t attract consumers. With that in mind, it’s vital that all business owners create a budget for marketing from the moment they begin trading. In the modern world, it makes sense for individuals to focus their efforts on the digital side of things. For instance, it’s much cheaper and easier to reach a target audience using the internet than it is when using traditional advertising methods. All new company bosses should promote their brands using:
- Social media websites
- PPC tools like Adwords
- Mailing lists
- Creative content
Failure to automate
There is a lot of buzz in the business world at the moment surrounding the concept of automation. Manufacturers now use robots to remove the chance of human error and produce their products faster than ever before. However, there are lots of ways in which even small business owners could take advantage of the concept. Anyone could purchase special software that removes the hard work from different aspects of their operation. For instance, it’s possible to find accounting tools that automatically record all income and outgoings. There are also programs that can monitor inventory and place orders to suppliers without any human interaction. So, think about that moving forwards and be sure to consider any concepts that will automate time-consuming tasks.
Not using the latest technology
New technology reaches the market every single day. For that reason, all entrepreneurs must keep their eyes peeled and their fingers on the pulse if they want to beat the competition. Just bookmark some relevant business tech blogs and be sure to check them every week for inspiration and new releases. Using the latest tech should slash working times in half and help business owners to get better results from their efforts. Investing before rival firms could assist in giving individuals the fighting edge. If workers have to use dated computer systems to perform their duties, they will never reach maximum productivity. The same goes for any other areas of the business where people have to use tech.
Getting website design wrong
All new companies will have to publish a website to promote their products or services. Lots of people make the mistake of using one of the free site builders the see on television adverts. While those designs are better than nothing, they tend to look like an amateur attempt. Considering that, it’s always sensible to employ the services of a talented web development team. Just be sure the final site contains all of the following:
- An instant means of communication (live chat)
- Multiple secure payment methods (debit cards, credit cards, PayPal, BitCoin)
- A clear company message
- A short backstory
- In-depth descriptions of products or services
- Professional photography
- Social media share and follow links
There are lots of experts out there who are more than willing to perform the job. It’s just a case of making a short list of companies and then getting in touch with them to obtain some quotes. Of course, there is always room for negotiation, and so it’s wise to use the figure from one brand to drive down quotes from others.
Failing to provide excellent customer service
People who don’t provide first-class customer service will always struggle in the business world. Consumers have come to expect a level of attention and care. When those individuals feel like they aren’t getting it, they will often complain. One disgruntled person will tell two of their friends about the experience, and pretty soon the company will have a bad reputation. Turning things around when that happens is often challenging and costly. So, it’s wise to get things right from the onset. Don’t worry too much if the business can’t afford to employ customer service personnel in-house. There are lots of specialists out there who focus their efforts on providing an outsourced alternative. In most instances, entrepreneurs will:
- Contact customer service outsourcing experts
- Provide them with information about the company
- Send a script for the call centre staff to follow
- Sit back and reap the rewards
The best thing about outsourcing the task in that manner is that customers and clients will have no idea they’re not speaking to an official representative.
Not creating a growth strategy
Business owners who fail to plan for growth are headed for disaster in most instances. Plenty of firms make a profit from the first day of trading, but still, end up closing their doors after six months. That happens because the entrepreneur didn’t make the most out of the profits they created.
A growth plan will highlight all the milestones an operation must reach before taking different actions like moving to new premises. Again, anyone who struggles to draw up a growth strategy just needs to get in touch with specialist advisers. For a small fee, there are people out there who will learn about the concept and then create the best possible plan on the business owner’s behalf. Ideally, all readers should attempt to do that themselves. Still, it’s hand to know that help is at hand. All growth plans should contain:
- A company mission statement
- Key performance indicators
Learning the hard way
Becoming an entrepreneur is a journey that has been taken by millions of people around the world, both successfully and unsuccessfully. With countless pieces of advice to be found both online and offline, entrepreneurs can learn from the documented mistakes and successes of others. Failing to use this wealth of information can be detrimental to hopeful etnrepreneurs. Below we have an infographic that shows downtime habits of successful people as we know that how business owners handle their time away from work can be just as important as how they handle their time at work.
Credit: Discount Displays
Now people know why so many companies fail within the first twelve months, readers should find it easier to avoid those pitfalls and get things right. Of course, every entrepreneur will encounter stumbling blocks on the road to success in one form or another. The key to success is to conduct as much research as possible and read every article available. Anyone who does that should manage to avoid common errors and give themselves the best chances of building something impressive. Who knows? Some folks might even make millions and retire to a private island by the age of forty. Stranger things have happened before now. Thanks for stopping by today!