It is a fact that more than half of new businesses end up failing during the first year. According to the US Bureau of Labor Statistics (BLS), it does not have to be always true. The data from BLS shows that around 20% of new businesses fail during the first two years, 45% during the first five years, and 65% during the first 10 years. Surprisingly, only 25% of these businesses make it to 15 years or more. These statistics have been fairly consistent since the 1990s. Although the odds may often prove better than the commonly held beliefs, there are many businesses that still fail all around the year. To combat this major problem, the right planning, funding, and flexibility give businesses a better chance of succeeding in the market. Here we will go through 5 major reasons and mistakes that make a business fail:
Not Investigating the Market Properly and Timely
Just because you want to do a business and you have the funding for it, it does not mean that you can get yourself opened without doing thorough market research. A major mistake that people make is that their impulse to open a business often blinds them to an economy that may be lying in a down housing market. This rush also blinds them to the perfect timing for their related businesses. This is a mistake that always results in failure from the beginning. In order for your business to succeed, you have to find an unmet need within a market and then fill it to make your brand, rather than trying to push your product or service in. At Esipick, we always give consultation to our clients in this regard that it is quite easier to satisfy a need rather than creating one and convincing people that they should spend their money on it.
Not Planning the Business with the Right Strategies
A well-planned and realistic business strategy plays a vital key in making it successful. In this plan, mainly the outline of the business, achievable goals, ways to achieve the goals, and other possible problems along with their solutions are mentioned clearly. This plan will also include why there is a need for the business in the market through surveys, it also has a map of the cost and input needed for the business and all the other related strategies and timelines that should be met. Once the plan gets laid out, it has to be followed religiously to avoid any chances of business failure. These business plans must be made flexible so that if any need comes in the future to alter it, then it can be done. You must avoid making mistakes in this plan, as it can cost you a lot and even end your business before it begins.
Having Too Little Financing
You cannot start a business with little to no capital, as your business will be needing continuous funding for the first few months until it settles down completely. If you are struggling with your business and are not able to meet its need, then asking for another loan from the bank may not be a good idea either as your position is weak. To combat this, you have to be realistic from the beginning and plan the finances during the business strategy phase. This way, you will be aware of all the potential expenses and can arrange them on time. Thus, if you try to stretch your finances, you may end up having a total business failure.
Having Rigid Attitudes
Once you are done planning and establishing your business, you will gain a customer base, but this does not mean that you become definite about it. It is so the need that you are fulfilling in the market today may not always be there. Thus, you should monitor the market to assess the needs so that you can plan your business strategies accordingly. For this, be on top of the key trends as it will keep you one step ahead for adjusting your strategy according to the current need(s).
Expanding Too Soon
After establishing your business, you would want to expand it, but you must treat the expansion as if you are starting all over again. To expand, you must know the trends and understand the areas and markets in which you are planning to go. If the expansion is out of scope and you have not done thorough research, then your business will be destroyed, and this mistake is often made by business owners. Thus, when a business expands too fast and does not follow the steps of research and strategy, the potential financial drain can sink the whole enterprise.
Just because 20% of the businesses tend to fail in the first 2 years, does not mean yours will too. You need to avoid these 5 major mistakes that doom a business and work hard to maintain it. Esipick also lays down a future plan and strategy for the survival of any new app or other technology you might need in order to make your business prosper.
