Why new businesses fail ?

Why do people get into business i.e Start up their own Business or Company ?

Is it because we are sick of the 9-5 rat race or perhaps we just want to be our own boss and provide opportunities to others ? Or maybe it’s because we want to generate an abundance of wealth if we look to create something of real significance to impact the lives of others.

There are plenty of reasons behind why we choose to go into business for ourselves, we have all these hopes and dreams of creating a successful business but find out quickly it’s harder than we imagine and truth is we go in unprepared for the road blocks that are bound to happen in a business startup.

I’m going to take you through my top 5 reason why new businesses fail to help you gain valuable knowledge to overcome or prevent these problems that are bound to occur so that you can move forward and create a successful business.

Top 5 reasons why new businesses fail

 

1. Business owners quit to early

You know the age old saying ” When the going gets tough the tough get going”, unfortunately when business owners have their backs against the wall the majority pack it all in and quit way to early on their business more importantly their vision and this is a core reason why new businesses fail. Many successful businesses today didn’t start seeing success till after  3 years, 5 years even after 10 years. Many business owners believe if it’s not successful after a year then it will never be successful, and an attitude like this will defiantly cause you to fail. why new businesses fail

If you believe in your product, your vision, and what you have to offer will benefit the people then don’t quit on your business more importantly don’t quit on yourself. If you don’t see instant success or after a year DO NOT QUIT, keep looking to improve on your business, your products or services and start investigating why your business is having slow growth, research your competition who are having success, start putting some solid ground work into understanding your market. why new businesses fail

When you start gathering intelligence you will find your business will start to develop in the right direction. why new businesses fail

2. Poor Marketing campaigns

When new business owners get into business they haven’t got a world of clue how to market a product let alone their entire business and this is why poor marketing campaigns is my number two reason why new businesses fail. why new businesses fail

When we get into business we are a little naive because we believe we got such a great product or offer such a great service that we are going to get a flood of customers just like that. Wrong.. And when we realize  this isn’t the case we start looking at how we can get our product out there to our audience and this is when a lot of the big problems start to happen and money is wasted.

When new businesses start to market their products and services they go wrong in a number of areas as follows:

  • Don’t know who their target audience is for their product or service
  • Spend thousands of dollars on the wrong marketing strategies for their business
  • Don’t test their marketing campaigns to collect valuable data which is measurable and scalable
  • Don’t research their competitors and the marketing strategies they implement

3. Can’t close the sale

Most business owners don’t get into business to sell, but find out very quickly they got to learn how to sell very fast and this is why can’t close the sale is number three on why businesses fail. why new businesses fail

What is it about selling that people hate ? Is it because they don’t believe in the products or is it because they’re sick of people selling to them and don’t want to piss people off, or is it really because of fear, fear of confrontation, fear of getting out of their comfort zone and speaking to people about their products and services and the benefits if they buy..why new businesses fail

My number one reason why ? Is the Fear of Selling.                       

Yes it’s daunting to speak to total strangers who you wouldn’t know from a bar of soap, yes it’s daunting trying to persuade someone why your service is the best, but most of all it’s the fear of hearing NO…. If you want your business to be successful you have to get over the fear of selling otherwise you will have no business, if you suck at selling then take action and the best way is to start getting yourself in front of people. If you’re passionate about your business then it will become more natural and your passion will help you generate the sales, and if you can’t do it yourself then utilize other experienced sales people or marketing campaigns to generate the sales.

Once you’ve established the sale it’s vital you now close that sale, closing is the easiest part of selling and if your prospect has listen to you for more then 5 mins , 10 mins  etc and is genially interested in what you have to offer because you provided enough value to benefit them, then you need to create a call to action. People need to be told to buy either because they have objections i.e there spouse is a major one, or have poor decision making skills. . 9/10 you’re making the decision for them to take action Right NOW.

So what are you going to do ? Get good at Selling.. why new businesses fail

4. Internal issues

One of the major reasons why businesses tend to fail is because of internal issues among the business partners, and this is why it’s number four on why new businesses fail. why new businesses fail

Internal problems among businesses can determine whether a business will succeed or fail. Usually when a new business starts up, the partnerships between the owners get off to a wonderful start but when things start going from good to bad the real test on your partnership will begin. A lot of people can’t deal with defeat and start to struggle when things start to go bad, a lot of people tend to freak out, they begin think to negatively, start to complain and there work ethic starts to collapse and soon comes the arguments and the fighting begins between the partnerships and I’ve experienced this on a number of occasions in previous business ventures.

So how do you combat this ? Here are some answers below:

  • Get together with your business partners and discuss why you started the business – doing this will help bring back some motivation and the real reasons you started in the first place
  • Bring in a helping hand – Sometimes there can be too much pressure on someones shoulders and if bringing in a third partner or fourth can help ease the load and take the business forward in the right direction then this is an option. *Note do your due diligence first when making a decision on bringing in a new partner
  • Removal of your business partner/s – This should be your last resort, if you can’t come to a resolution and your partner continues to affect you and the business then you have no choice but remove your business partner from the business and this will involve legal matters at the best of times.

5. Poor Project Management

The development of your business is crucial for it’s success and this is why poor project management is number 5 on why new businesses fail.

The development of you business is crucial for success, and the tasks you set must be followed through and completed at a set date with no excuses. Lack of motivation and the reasons mention above on why businesses fail are the causes for poor project management and tasks becoming incomplete. When getting into business for yourself you have to accept that your business will be a continue development and there will always be areas you need to improve on.

Another reason why task get delayed or become incomplete is because to many projects were created. If you’re stretching yourself thin you need to hold off new developments and focus on the most important and urgent tasks. When you utilize the important and urgent scale to measure your tasks you will find structure in your project management and your task will be completed much sooner. The task you set should always revolve around improving customer experience and the improvement on your products and service, when you focus on these areas you sales will improve along with it.

Bonus: 6. Bottom Line is they have Poor Bookkeeping Skills

This is a major contributor to small business insolvency. It not only relates to recording transactions but also tax compliance. Debt to the ATO if not recorded properly doesn’t appear in the accounts, BUT it is still payable. You need to hire an accountant or at the very least use an online bookkeeping service

Business should review their position regularly and be aware of changes in the market so they themselves can make changes. Forecasting IS important as you cannot steer a steady course if you have no destination in mind.