How to Avoid the Six Causes of Business Failure

Did you know that around 50% of start-up businesses fail in the first three months? We mentioned the most frequent causes of business start-up failure in one of our previous posts. But before you start panicking, it’s not all bad, you don’t have to be in that 50%.  We’re here to help. We want to share our knowledge to ensure our customers’ business ventures are a big success.

If you know what the main causes of business failure are, then you can figure out ways to try and avoid them.

Here are six reasons for failure and some potential solutions to consider:

1. Initial reasoning

You need to be clear from the start about why you are starting a new business. Some businesses fail because people just want to make more money or find a way of getting extra cash. But your connection to your business needs to be deeper than that. In order to succeed, you need to really have a strong passion for what you do. Embarking on a new business venture is an enormous commitment, which is why it’s so crucial that you’re doing it for all the right reasons. For example:

1. You love what you do
2. You have the necessary drive and commitment
3. You can learn from your mistakes
4. You’re independent and trust your own decision making
5. You’re honest and enjoy interacting with others

2. Money

Businesses don’t just appear out of thin air. If you want to get your business off to a good start, you’re going to need money. It’s so easy to underestimate just how much money it can take to start your business. Which is why so many businesses don’t even get off the ground.

Keep in mind your business might take a year or two to gather some momentum, and the first year will be financially tough. It pays to get your financial estimations right.

Take a look at this handy business calculator below to help with your estimations:

http://www.businessknowhow.com/startup/startup.htm

3.Management

Another thing to keep in mind is that it’s a good idea to update and review your business practices. Keep it fresh and always stay ahead of the game. From the tools you choose and the techniques you employ to your advertising and marketing. Industries constantly change, including the world of decorating and interior design. As well as staying ahead of your competition, it’s important to recognise what you don’t do well and improve.

4. Digital presence

If you’re not online and making the most of digital platforms, you will miss out on a huge chunk of business and the chance to put yourself out there online. Plus, if you’re not online your customers will become frustrated.

Your business should be visible on mobiles and tablets as well as social media and on desktops. More people browse the web on a mobile device than desktop these days, so it’s time to step up your mobile marketing game.

It is extremely likely that if your competitors have an online presence and you do not, your customers will go elsewhere. Get online and create a web presence that reflects your brand.

5. Location

If a good location can help a business succeed, a bad location can do the exact opposite. Consider the following factors when choosing a location for your new business:

1. Where are your customers?
2. How easy are they to reach?
3. Where are your competitors?
4. Are there any incentive programs for new businesses in your area?
5. Will the area welcome a business like yours?

6. Overexpansion

Don’t get overexcited and expand your business before it’s ready. This is a key reason why so many businesses fail. You’ll get success from gathering a loyal customer base and growing your business at a natural rate. Be sure to do some serious number crunching before expanding.

Hopefully, these insights into why so many startups fail, and how you can avoid making the same mistakes will help keep your business on the right track. It’s also worth getting advice from other industry experts who are at the top of their game, as well as friends and family. But at the end of the day, the success of your business is down to you. Approach with caution and you’ll have a better chance of survival.