There are way too many small businesses closing the doors and the small business owners have no idea what they did wrong. Usually there is more than one thing that owners do wrong or not do at all that make businesses fail.
Here are top 5 reasons why a business would fail.
- Wrong reasons
Do you know why you have business in the first place? Do you know how to run a business? You may own a business, but it may be having some difficulties because you’ve run the business or do not know what it takes to run a specific business. For example, restaurant ownership seems so attractive to many people, so they jump into that boat without ever been in this business or worked at a restaurant. So they have no idea what it takes to work at a restaurant, run a restaurant, what daily tasks should be, how to advertise, etc. Therefore, it is natural that they may fail unless they learn things they need to know.
- Lack of investment
The business cannot run by itself, at least not at first. This should be a common sense, but unfortunately it is not. Many “fresh” business owners think that if they open a business, that is all they need to do. You have to invest your time and money (but not limited to that) to get it off the ground. If you own a new business, you do need to spend time organizing your business, developing & setting processes & procedures in place, developing & growing your employees, etc.
If you have hard time juggling between your business and personal life, you need to find a way to balance things out. It can be hard, but not impossible. You may need to do a better time management, prioritization, or just a better delegation.
- Lack of knowledge/ experience
Let’s assume that you have a job or own a business. Go back whatever many years you need to the time when you just started out and got your first job. How much did you know about that job? How much did you need to learn? How long did it take you to feel 100% confident in that job (if ever!)? I’m sure the answers may vary, but I could bet that majority would say that it took some time to learn things, get educated, or acquire experience. Usually it does not happen overnight and you need to allow time and practice to get better and then be great at what you do.
If you really want to succeed, learn the basics, get knowledge and experience, and you will see the difference. Some would argue and say that you may also hire someone who has knowledge and experience. Yes, very true, you can. But my opinion is that you will have a greater success if you invest in your business development and growth and at least learn the basics of every aspect of your business. In addition, wouldn’t you want to understand or at least have an idea what your employees or contractors are talking about or if they do things right.
- Lack of or non-existent marketing & advertising
You cannot even imagine how many times I have heard “I cannot get sales I want”, “No one wants to buy my stuff”, or “I cannot afford advertising”. The reality is that if people have no information about your product or service or that it exists, they cannot buy it. If you do not tell them about you, about what you do or sell, how they can know?
You have to market and advertise. Whether it is store window or street advertising, direct mail, or online marketing – you choose – you have to do it. If you do not market your business, in most cases, you will not get sales and will have to shut down. It is the same as if you want to win a million, but all you do is just “want” and never buy a lottery ticket. What is the chance that you would win? We are not talking about the odds of winning as this already is another topic.
- Wrong marketing/advertising channels
As much as we all would like that, there is no one single proven method to market your products or services. Whether you own a large business or are a small business owner, you should use several different marketing strategies, test them, evaluate results, and then choose and use the ones that work. Let’s say that you own several travel agencies in different states. You choose to advertise only in a national magazine trying to get to the broader audience. There is nothing wrong with this strategy. But this strategy alone may not give you the results you want. How about internet marketing to target customer globally (if your services/products involve international travel) or direct mailing to potential local customers? You really need to know who your ideal customers are, where they are in the highest concentration, and how you can reach them. Only then you can identify appropriate marketing strategies and double or triple your business. Check out this article on identifying your target audience – your customer base.