It’s a well-known fact that very few small businesses survive to ripe old age. Some close their doors just a few months after they were launched, while others survive for a few years but still end up declaring themselves bankrupt. Everyone knows about this, but the real question is: why does this happen? Why do a lot of small business owners fail?
There are hundreds of reasons for this, but there are several common reasons that are present in many entrepreneurs who had to close their doors. Here are some of these reasons:
They spend more than they earn
While it’s true that starting a venture needs a certain amount of funds, there’s no need to break the bank just to get it off the ground. Unfortunately, not all entrepreneurs realize this, so they end up throwing money at their business to make it rise. This is dangerous particularly during the first few months of their venture, during which they most likely won’t earn a lot since they’re still reaching out to customers and getting them to buy their products or services. This lack of income, coupled with sky-high expenses, can lead to bankruptcy in the blink of an eye.
They don’t stand out from the crowd
There’s no need to reinvent the wheel, but entrepreneurs do have to offer something that their competitors don’t. Otherwise, they’ll get lost in a sea of lookalike businesses and fail to attract customers. It doesn’t have to be a big thing (like selling a one-of-a-kind newly invented product), but it does have to be a unique selling point that will set them apart from the competition, such as better customer service, lower prices, higher-quality materials, or an easier return policy.
They fail to understand their customers
Many people think of a great business idea then proceed to turn it into reality — without taking to understand if their what they have to offer is really what their target market wants. This can be detrimental since anyone can come up with an excellent product or service, but not every product or service will be appreciated by customers. Because of this, it’s important for entrepreneurs to engage their customers in conversation and find out exactly what they want or need. Having this knowledge can help them create a product or service that will satisfy people, help improve their life, and attract customers to the business.
They hesitate to seek help
Many entrepreneurs feel the pressure to be independent and push their business towards success on their own. Unfortunately, this usually doesn’t work since succeeding in the business world requires entrepreneurs to partner with others who have the right skills, talents, and experiences. Because of this, business owners must learn to reach out to the right people and ask for guidance and support. These can include mentors who can give them excellent advice as well as freelancers who can tackle their non-core tasks and leave them with more time to spend on their venture.
There are many reasons why small businesses fail, but there are also many ways to avoid failure. One of these is to work with a business mentor like me, Paul Barradell. I’ve helped many new entrepreneurs create a strong and profitable business that can last for a long time, and I know I can do the same for you.