Owners of small businesses know the pressures of building a business. They don’t necessarily want to deal with the financial side. But it must be managed properly to keep the enterprise running smoothly.
One of the most common questions asked by savvy business owners is, “What happens if my customers don’t pay me?”The truth is you need to be prepared for all possible outcomes, and failing to do so can cost you in the long run.
So, what are the six main reasons businesses fail?
Reason #1: Not Delivering What People Want
One of the biggest reasons for business failure is that entrepreneurs don’t deliver what they promise. A lot of times, they may think their product is better than it is.
They may think they’re offering more value than they do or that there is a demand for their service that isn’t there.
The lesson: if you want to stay in business, you must deliver on what you promise.
Reason #2: Don’t Have A Clear Vision
In a recent study conducted by Small Business Development Center, a mere 36 percent of the business owners in the group had a full, clear vision of where their businesses were going.
Although it’s no surprise to anyone in the industry that business owners, in general, don’t have a clear vision in mind before launching a business in a new market, having a clear vision is a key component to small business success.
Reason #3: Owners Don’t Have An Active Role
You need to be involved, even if you’re working with others. Small business is a lifestyle, not just a job.
For example, if you’re an owner who’s hired employees to manage daily operations, you might find that you want to be there to help your employees. If they’re struggling, it helps to be nearby for guidance.
Similarly, if you’re no longer needed there, having regular meetings with the staff will help them focus on their work and reach their goals.
Reason #4. Don’t Know Their Competitors
The challenge of the competition is a reality for almost every new business owner. Therefore, having an idea of what your main competitors are doing is a great first step.
In the future, some businesses will indeed fall due to some new business model or service that does a better job of what they offer. Still, most businesses fail for one reason: they aren’t solving a problem for their customers.
You have to be more convenient, affordable, and easier to use than your competitor. It doesn’t matter how great your idea is if someone else can do it better, faster, or cheaper. To succeed in business, you must learn the serious business of doing business.
Reason #5. They Don’t Know Their Numbers.
Waiting until the end of the month to look at your finances is like driving on the highway without a speedometer. You’re just guessing how fast you’re going.
You need to know your numbers daily. Use an app like Xero or Quickbooks to monitor cash flow, sales, and expenses.
Reason #6: Not Accepting Change
Small business owners are notoriously resistant to change. They like the status quo and like to do things the way they’ve always done them.
For example, Accepting payments via credit cards is one of the best ways to ensure revenue growth. But according to a recent payment cloud study, only 46% of small businesses take credit card payments, while 23% make it a priority.
Having a small business in today’s era can be tricky, but knowing a few of the major reasons why they could fail and actively trying to avoid making them sure helps!