Thousands of businesses enter and exit the marketplace annually. On average, 99,000 new small businesses are created in Canada each year. Studies have shown that over 50% of small businesses will fail within the first five years.
Below is a list of the four most common reasons for business failure:
Failure to understand your market
Before you open the doors to your business, ask yourself, “Who are my customers?” These are the people that will keep you in business. If you don’t know what they look like, how they spend their money, or why they spend their money with you, you will be unable to capture them.
Failure to communicate what you’re selling
You must clearly understand what benefit your product or service provides, what makes you better than the competition? This will be the basis for your marketing strategy and it will help develop your message.
Managing a business involves a lot of activities, and assuming you can play all the parts is stressful and important activities will get overlooked. Don’t be afraid to give your employees responsibilities and autonomy over various tasks to take the pressure off yourself. Develop processes to open communications between various departments so you know where you stand at all times.
Lack of planning
A business plan is the foundation to a successful business. Business plans require you to take a step back and strategically plan your actions. It requires you to conduct market research on your customers, your competitors, and your industry, all of which will help you better understand the market you are operating in.
In addition, business plans make you consider possible problems that may arise and solutions to fix those problems. So when a problem does develop, you are able to handle it strategically rather than making impulsive decisions that may further damage your company.
Keep your business from failing by doing everything you can to understand your market and plan your business decisions; it’s never too late to plan.
To learn about some of the other reasons for business failure, check out this article from MyStrategicPlan.com.
Inderpal Gill, Firstbase Business ServicesFREE Consultation