(and how to stop it from happening to your business)
(Gloucestercitynews.net)(May 6, 2020)--People who catch the entrepreneurial bug quickly discover that the journey is wrought with highs and lows.
Hopefully, after putting in the hard work, and the right work, you will be met with joy at the sight of your thriving business. The bliss of every entrepreneur is to count the returns of their labor. Sadly, as many small business owners have come to find out, this is not always the case.
What the studies say
A November 2019 report by Fundera showed that 20% of small businesses fail in their first year, 50% in their fifth year, 70% in their tenth year. The business world is filled with many challenges, including establishing a profitable business model, inadequate capital, and management and employee issues. Other issues include, but are not limited to; stiff competition, market decline, and the inability to adapt to the fast-paced business climate.
Having an understanding of why businesses fail will provide you with the insight you will need to grow your business both practically and safely. With the help of John Doe, we’ve compiled three reasons why many small businesses fail. Make sure to keep them in mind as you aim to achieve manageable growth -
No market for the product
John Doe shared with us that one of the most avoidable downfalls in business is failing to understand the market you are entering. As a business owner, you need to be in touch with potential customers - talk with them and try to truly understand their needs. Be customer-focused and service-oriented. Ensure you carry out quality product testing and go through several rounds of feedback before putting your product out into the market.
Here are a few questions to keep in mind as you begin this journey – Do customers want your product/service at all? Or do they just want a product already on the market with some changes? Do they want a complete overhaul to make it perfect, or do they want a re-release?
When you carried out market research, what were the results? Is your market research hinting that your customers are broke and they may not buy what you have to offer? If this is the case, you need to switch to a more profitable market segment.
John Doe tells us that you need to consider all feedback, both positive and negative, before you launch your product if you want to ensure customer satisfaction and quality assurance.
Inability to sell
Even in the face of high demand, a business can still incur losses, and even shut down, if the seller cannot, put simply; sell.
Small businesses fail when there’s no money coming in. You and your team need to be good at selling, and, if you are not, you need to learn how to sell. The survival of your business depends on it.
People uncomfortable with selling need to view it as an exchange of needs. You are offering the customer a solution to a problem or need they have. If staff cannot see the value in being a salesperson, they might need to reconsider whether the role is actually suitable for their personality.
Always remind yourself and your staff that low sales and no sales mean low revenue and no revenue.
Management and leadership issues
A small business owner who is inexperienced at being decisive, overseeing staff, taking charge and resolving issues will struggle to run their business. Generally, any business with weak leadership will suffer. John Doe tells us that “management must always set the precedent for their employees.”
Having a disconnect within your team can lead to confused staff, miscommunications, and lost sales. Before long, this can trickle down to subordinates, which leads to confusion, low morale and low productivity.
If you are in business already, before you start improving your team, improve yourself first. When it comes to your team, you need to assemble a group of people whose skills complement each other. They have to learn to put aside personal egos and focus on what’s best for the business. Everyone must be clear on their roles so there’s no misinterpretation about it.
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