Be aware of the potential pitfalls and common mistakes that business owners often make.
It’s a great achievement that you have finally started that dream business. Congratulations! But just so you know, statistics show that 30 per cent of start-ups fail in its first two years of existence: another 50 per cent in the first five years and 66 per cent in the first 10. So, be sure from the very beginning that your new business doesn’t increase the statistics. You can ensure that by recognising potential pitfalls and common mistakes that business owners often make that lead to the premature death of their businesses. The reality is that most of the time when people start a new business, they are often filled with a sense of optimism and the last thing on their mind is the thought of failure. But the fact is that it helps that you know and address these common pitfalls upfront to mitigate the chance of becoming a victim. Here are the six top reasons why businesses fail and tips for avoiding them.
- No market need for the product or service
Imagine starting a grilled chicken business in a neighbourhood where eating chicken is a taboo. Of course, the business is doomed to fail. This underscores the importance of conducting a market research before deciding on a business venture. You will save yourself from unnecessary headaches and disappointments if you take the pain to carry out the necessary market research, first to determine if there is a need or gap in the market. Do not be in a hurry to start as it will be helpful if you are able to use focus groups or sample populations to test your product. It must be absolutely clear from the beginning that any successful business must be based on the need to provide a solution that is needed or to fill an identified gap in the market.
- Starting your business for the wrong reasons
There is no such thing as overnight success when you are starting a business, so if that is your sole reason for starting your business, then you are doomed to fail abinitio. Some people are solely motivated by the need to have more time to spend with their family or they are tired of being answerable to a boss. If those are the reasons motivating you to start a business, you must have a rethink. There are better reasons why anyone will want to start a business. Consider the following reasons:
- That you have a passion and love for the business you are starting, and strongly believe, based on market survey that your product or service will meet an identified gap or need in the market.
- You are really driven and have determination, patience and a positive attitude. When others throw in the towel of defeat, you are more determined than ever.
- You can overcome failure and setbacks. You learn from your mistakes and use these lessons to succeed the next time around. Entrepreneurial success is often linked to the ability to build on earlier setback.
- You have an independent mind-set and are able to take needed control and charge to get things effectively accomplished, even with time and money constraints.
- Poor leadership skills
Your business can fail if you exhibit poor management skills, which can be evident in many forms. You will struggle as a leader if you don’t have enough experience making management decisions, supervising a staff or the vision to lead your organisation. Perhaps, your leadership team is not in agreement as to how the business should be run. You and your leaders may argue publicly or contradict each other’s instructions. When problems requiring strong leadership occur, you may be reluctant to take charge and resolve the issues while your business continues to slip toward failure. This is definitely a recipe for disaster and your business will not endure for long unless you improve on your leadership ability. You will need to learn, study, find a mentor, enrol in training, conduct personal research – do whatever you can to enhance your leadership skills and knowledge of the industry. Examine other business best practices too, and see which ones you can apply to your business.
To be continued