Market research and studies indicate that 8 out of 10 start-ups fail and that is because it is a jungle out there. It is competitive, claustrophobic and difficult to stand out. A new business owner will never start a business just so that they can fail. That doesn’t happen.
You may be trying your hardest, but still failing and there may be a number of reasons why that is happening.
Here are 8 of the most common reasons:
#1 No market for the product/service
This is often the biggest mistake start-ups make. Sometimes the market simply isn’t ready for what you are selling. Almost 20% of entrepreneur’s state that their business venture failed because of their service/product market fit.
The most glaring mistake start-ups make is not conducting a sufficient amount of research and understanding the market before diving in. This can result in detracting from one main idea, focusing on multiple ones and being out of sync with the target market.
To get off to a great start, you need to identify your market and where your product will sell, if at all. Sometimes it is best to sell products that are already tried and tested in the market. Sure there is more competition, but you know for sure that the product sells if you get your marketing right.
#2 Growing too fast
Growth is desirable for any business. But growing too fast can also be the reason why a lot of businesses fail. Overexpansion is a serious error. Make sure you have the structure and foundation for your business laid out before you grow.
Grow at a pace that you sustain. Grow your team alongside so that you can manage your extra workload. And remember, an increase in growth is a strain on your finances. While growth is definitely desirable, growing too fast and overexpansion are serious errors.
#3 Not tracking your finances
Cash flow, cash flow, cash flow.
Cash flow is the bare bones of any business. If you take a good look at failed ventures you will learn that most of them failed because of lack of funds and profits and debt. It’s crucial to pay close attention to your finances and maintain detailed records of all your incoming and outgoing money.
#4 Excessive spending
It’s not uncommon for enthusiastic entrepreneurs to burn right through their capital well before their cash flow shows improvement. This often occurs because they have misconceptions about how a business should operate. If you’re just venturing out into the business space, seek out experienced veterans that can offer you sound advice before making spending any major amounts of money.
#5 No reserve capital
It is important that when you start your business you are prepared for the unknown. There will be expenses that you may be unprepared for like labour, materials, utilities. Make sure you set aside sufficient reserve cash to carry you through seasonal slowdowns and difficult market conditions.
#6 Poor choice of location
Don’t let a low lease tempt you into settling for the wrong location. You need to keep aspects such as accessibility and competition at the forefront while making your choice of location.
#7 Poor execution
Your prospects are looking for good quality products – that’s a given! But they are also looking for an awesome experience. That is the thing they will remember and rave about.If you have employees that are not executing exceptional customer service and are incapable of delivery, then you have a problem as this will quickly drag down your business.Make sure all your employees are focused on customer service. Develop processes and systems to perform tasks efficiently and effectively, and create robust internal controls to monitor these.
#8 Ill-thought out business plan
If you don’t have a well-thought-out business plan, it will only lead to the failure of your business, even before it gets through the first year. A strategically positioned business plan will give you more focus and equip you with resources to overcome any hurdles faced. future It also forces you to consider your marketing and management plans, your financial needs, overall strategy, and the competition.
In addition to all these things, you need to be dynamic and have an effective marketing strategy in place. Advertise and promote your start-up via avenues like local search, email marketing, social media and other organic and paid online marketing strategies.
For more information on how Max My Profit can help you with your business, please contact us here