Many businesses fail within 5 years and usually all for the same reasons. Its not really from bad intentions or programs that don’t work it is usually from a lot of the same mistakes that people make over and over again that make their businesses fail. The first and biggest mistake people make is starting their business for the wrong reasons.
Even if you want that time with your family or being your own boss there are some really important things you still need to have as internal tools. If you don’t have a drive or passion for what you are doing or you are starting your business just for selfish reasons then your business is going to fail. Starting a business because you are choosing a product or service that you are passionate about and can work hard at is a great reason.
Many businesses fail due to bad management. Businesses require a good concept but also require solid organized day to day operations as well. New business owners frequently lack relevant education in business management, finance, purchasing, selling, production, and human resource needs. Unless they recognize what they don’t do well, and seek outside help, business owners may soon face disaster. They must also be educated and alert to fraud, and put into place measures to avoid it and recover losses in the event that it does happen
Business that don’t innovate will also fail. Businesses have to regularly study, organize, plan and control all activities of its operations. This includes the continuing study of market research and customer data, an area which may be more prone to disregard once a business has been established.
Businesses are like any other human institution despite the fact that they are money making operations and the management needs to hire good people, train them well and delegate authority knowing that things will still get done and then not to hover over those process. From in-house to freelancers this principle is most important!
Insufficient Capital
If you do not have the sufficient money to startup your business and keep it running long enough for sales to begin to make you money. If you are working at building a business you do not want to worry about running out of money while you are selling your product or service. Having the cash to position yourself in the right way to make your business successful is absolutely necessary for success. Location, Location, Location
Your college professor was right — location is critical to the success of your business. Whereas a good location may enable a struggling business to ultimately survive and thrive, a bad location could spell disaster to even the best-managed enterprise.
Some factors to consider:Where your customers are
Traffic, accessibility, parking and lighting, Location of competitors, Condition and safety of building, Local incentive programs for business, start-ups in specific targeted areas, The history, community flavor and receptiveness to a new business at a prospective site
Lack of Planning
Planning, hard work and methodical execution of that plan are crucial to the success of any business or any other large operation. The same could be said of most business successes.
Some important components may include:
Description of the business, vision, goals, and keys to success
Work force needs
Potential problems and solutions
Financial: capital equipment and supply list, balance sheet, income statement and cash flow analysis, sales and expense forecast
Analysis of competition
Marketing, advertising and promotional activities
Budgeting and managing company growth
In addition, most bankers request a business plan if you are seeking to secure addition capital for your company.
Over expansion
A leading cause of business failure, over expansion often happens when business owners confuse success with how fast they can expand their business. A focus on slow and steady growth is optimum. Many a bankruptcy has been caused by rapidly expanding companies.
No Website
If your business does have a website than it is probably not being successful. 70% of commerce in the US is conducted online.
The secret of businesses success is the owner themselves. Their drive, desire to succeed and give people what they want, where and when they want it is the fundamental law of capitalism. For many successful business owners, failure was never an option. Armed with drive, determination, and a positive mindset, these individuals view any setback as only an opportunity to learn and grow. Most self-made millionaires possess average intelligence. What sets them apart is their openness to new knowledge and their willingness to learn whatever it takes to succeed.
