You may not want to think about small business failure, especially if you are just starting out, but unfortunately it is a reality for many businesses. Research estimates that one-fifth of all small business fail in the first year with less than a third lasting for longer than ten years. These statistics do not have to be the grim reality for your small business.
Here are some reasons small businesses commonly fail and ways to avoid them:
Starting a business can cost a lot of money and so does maintaining it. Work with an accountant or financial advisor to get an idea of how much money a business startup costs and to have a realistic understanding of your potential profits. Businesses that fold within the first year often overextended themselves and do not have sufficient funding to keep going.
2. Poor Location
Before opening a brick and mortar establishment, make sure that you are choosing a good location. Choosing an inexpensive location may be top on your list, but a location that is far from where your customers are, with poor lighting, parking, or accessibility is unlikely to be visited often. Choosing your location wisely can make a huge difference in establishing a customer base.
3. No Website or Social Media Presence
With over 88 percent of the population using the Internet, it is imperative that your business establishes a well-designed website with key information about your business. The average consumer will look at your webpage before visiting your business and expects to be able to find key information such as business hours on your website. A social media presence is also necessary in modern times for building a stronger relationship with your community and making your business known! Social media is an inexpensive way to expand your reach and help new customers find out about you.
4. You Started a Business for the Wrong Reasons
If you left the security of a 9-5 job because you wanted to make more money, have more time with your family, or be your own boss, you may find yourself at the helm of a failing business. These are all great reasons to have your own company that can come with time, but they will not sustain or grow your business in the beginning. You should start your own business if you have a passion for starting a business in your field or industry and a well-researched business plan demonstrating the niche that your product or service will fill. Starting a business for any other reason is more likely to end in failure.
Many small businesses fail for making these four mistakes. Be careful yours doesn’t and be on your way to a healthy and thriving company!