The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Starting a small business is an admirable dream and one that many people pursue every day. Unfortunately, the majority of these small businesses that set out to succeed ultimately end in failure.
This doesn’t mean this is necessarily your fate as well. The truth is by identifying the most common reasons for failure, you can avoid the same mistakes and increase your overall chance of success. To help you navigate the pitfalls of small business ownership, here are some of the most common reasons why they fail.
Lack of Planning
It doesn’t matter what kind of business you’re starting. Whether you want to be a virtual bookkeeper or you want to sell crafts on an established website like Etsy, the same rules apply— you have to plan ahead. A lack of comprehensive planning is one of the most common reasons why businesses fail early on. You must have a well-thought-out business plan that clearly defines what your goals are and how you plan on achieving them.
Without a plan in hand, you’re operating in the dark. In other words, a plan serves as your road map and lighthouse to keep you going in a clear direction toward success.
Not Enough Funding
While everyone has to start from somewhere, to succeed you have to have enough capital to be able to pay for your initial business operations. When you don’t have enough funding, you’re limited in the ways you require to grow this business. From your marketing efforts to your ability to hire employees, funding is essential to kickstart your business. As any successful business owner can tell you, entrepreneurship is a series of ebbs, flows, and financial storms. You have to be able to weather them, which is why adequate funding is crucial.
Not Enough Marketing
While word of mouth is a valuable tool for new customers, it’s not enough. The overall success of your business will ultimately rely on how effectively you market and sell. A robust marketing strategy is important, even for small businesses. This is because, in today’s day and age, we have a more competitive business landscape than ever.
You better believe that your competitors have tools in place like targeted advertising and automation. Failing to use these tools yourself to attract the right audience will result in being crushed by the competition because no one knows you exist!
Poor Leadership
When it comes to success, you’re only as strong as the person who is leading the ship. One of the biggest causes of business failure is ineffective leadership and ultimately poor decision-making. Entrepreneurs need to be the leaders they need to be otherwise find someone else to fill the role. Ultimately, this will prevent things from falling apart and foster a positive working environment with plenty of direction.
