You have come up with a great idea for your own business; you have the passion as well as the drive that can make your business a success, not to mention the willpower that will push it to life. Make no mistake, you are going to make just a few mistakes along the way – it is all an important part of the process. But, will you ultimately make one or more of these mistakes that will kill your start-up?
Not if you are reading this –
Here are the top 10 reasons that business start-ups fail, learn from them, so you will be able to avoid the doom of ninety percent of other business start-ups.
Failure to set up a business plan
Creating this plan will give you an idea of what resources you will ultimately need in order for your business to succeed. As well as being able to see the possible outcomes that you may expect to see. It will give you a little bit of clarity when it comes to your business goals, as well as allowing you to understand that areas within your business you deem to be important, what can be lowered on the propriety scale, and where your recourses will be needed.
Out of these 10 mistakes that will kill a start-up, undercapitalization is the quickest way to a business death.
It is very important that you receive the right capital from the very start of your business, or you will find that you will begin to rely more on debt when there is no equity that will back up your business.
Chasing Turnover At the Cost of Profits
While we are on the subject of money, let’s talk a little about where exactly your priorities should be.
Here is a very simple truth: it does not matter how much money that you may have acquired during a period of none of that money is yours. Focusing wholly on a high turnover rate has meant death to many companies due to the fact that while they may have a $400,000 contract, they just may need $450,000 in order to fulfill it.
Not Reinvesting those Early Years Profits in order to Achieve Stabilization
Too many times company owners see that the cash is starting to roll in and they decide to reinvest it…..in themselves. New business owners tend to upgrade their homes, vehicles, and go on trips – for a year or more.
As your business begins to gain that momentum, it is a perfect opportunity to reinvest the money back into the business and keep working on perfecting your processes. By doing this in the early years of your business you are ensuring the long life of your business.
Too Eager for Expansion
So many new businesses start to see profit and believe it is time to reinvest that profit by using it to expand. Profits are not the only indicator that a business should utilize to make the big decision of expansion.
Not Accepting Advice From Others
No one can possibly know how to do it all, so it is very important to have an open mind as you listen to another person’s perspective, to other people that have the expertise in areas such as accounting, marketing, and lawyers. Even your family and friends can be a big asset if you allow them to be.
Not Being Able to Deal with People
When starting your own business you cannot be that unlikable person, you will be eventually hung by your very own tongue!
Being that nice person does not only apply to your customers or clients, it needs to extend to your employees as well. Having happy employees will mean happy customers, in turn, will mean returning customers, and of course more profits.
Not Adapting to the Changing Times
The world has and always will be constantly changing, and for a business to be successful they will have to learn to adapt and overcome any and all challenges along the way.
As that business owner, you will need to be able to be open-minded to the changes in the business world as they occur and take the appropriated steps to meet the demand.
Issues with Management
Issues with management are normally cited as being the number one reason that many businesses fail. While not noted as mistakes, not knowing how to handle management is not a good thing, either.
Just because a person has ten years of experience in the industry does not make them a great manager. Your manager should have a combination of trade skills that are complemented by managerial skills. Finding this type of person is never a very easy task, but it is well worth the time and effort to find him/her.
Over-Depending on a Single Customer
You put in some long hours, and now you landed that client that you worked so hard on landing. That is fantastic, but take a look at the books does this one client account for more than fifty percent of your total revenue? If so, you are too dependent on him/her.
So, what do you do, don’t stop at that one big client, keep marketing and bring in more clients.