Everyone seems to have a million-dollar idea. You, however, have the desire and motivation it takes to turn your idea into a successful business venture. But before you take the leap, you need to do a quick reality check.
In 2018, there are 29.6 million U.S. small businesses (8 million of which are minority owned) that employ 47.8% of the United States workforce. Between the years 2000 and 2016, 234,000 small businesses started up. However, during the same period, a whopping 213,000 of those small businesses closed their doors for good. So what percentage of businesses fail? Up to 91%!
Here is a list of the top five reasons why most businesses fail. As you read through them, it’s important to note that many failures happen for more than one reason. It’s typically a combination of a few bad decisions that, when summed up, leads to the need to close up shop.
1-You Miss the Mark on Market Need
Your idea, service, or product needs to be different, in any way, than anything else out there. What are you providing that no one else already offers? Your business doesn’t need to be drastically different, but it must offer something people want which is worth coming to you to get.
This may take some in-depth research into your customer base. Invest significant time and resources into understanding your customer so you can be sure to fulfill their wants or needs. Also, you need to have a solid plan of how you’re going to communicate (or market) to your customers, so they actually know you have what they want.
2- You Underestimate the Competition
If your business does begin to be successful, especially if you start to win important customers, you will draw the attention of your competitors and you can bet they will undercut you. This is especially true of big businesses as they have the vast revenue stream to do whatever it takes to win their customers back.
3- Your Team Doesn’t Work Well Together
There are many ways a business can fail when its team doesn’t have a good teamwork attitude. Due to poor leadership skills or bad decision making, it’s not uncommon to see a business flounder and flail under pressure.
Sometimes the entire team doesn’t work well together. Whether there are personality clashes or they just don’t know how to optimize their workload, this is a big reason why businesses self-sabotage.
4- You Ran Out of Cash
There are many reasons a business might run out of cash…miscalculating its profit margin, overspending, selling less than expected, and not collecting on outstanding invoices are just a few. Unfortunately, businesses fail every day and since keeping a positive cash flow is the golden rule of business, it absolutely doesn’t pay to break this rule.
If you happen to find yourself out of cash, let Lift Credit help!