Running a successful small business can obviously be a rewarding experience. However, achieving success isn’t guaranteed. Statistics indicate approximately half of all small businesses fail eventually.
There are many reasons this may happen. Some are relatively easy to avoid, while others may prevent your business from thriving if you overlook them. Knowing what can cause your small business to fail is the key to making the right choices, for this you can also speak to experts of ThinkSME to ensure you have the support and resources your business needs to thrive.
What Are The Common Pitfalls For New Enterprises?
Here are four pitfalls that every business owner must avoid when starting a new business in other to achieve success. Specifically, you need to make sure you take all necessary steps to avoid failure resulting from the following:
1. Poor Leadership
You can’t run a successful business on your own. Even if you’re very talented and hard-working, there are simply too many tasks involved in running a business to handle them all by yourself. As your business grows, you’ll need to hire more employees.
You’ll also need to lead them effectively. If you’re worried about your leadership skills, research the best ways to engage your workforce. Applying these lessons will help you keep your employees focused, productive, and satisfied. For instance, maybe your business is struggling because your employees lack work/life balance.
This can lead to burnout, reducing their productivity. You might thus realize you need to offer flexible scheduling options to correct the problem. Of course, you also need a vision. That’s the mark of a true leader. Even when you feel yourself losing enthusiasm, focus on your vision, and your team will continue to trust you.
2. Failing To Differentiate Yourself
It’s highly unlikely yours is the only business offering the types of products and services you deliver. Your customer base has other options from which to choose. Knowing this, you need to differentiate your brand from the competition. There are many ways you can do this. The simplest way is to merely offer greater value than others.
If you can deliver stronger service at a reasonable cost, you’ll give your customers an easy reason to choose your business when they need your services. You might also differentiate yourself by specializing your services, cultivating a brand with marketing, and much more. The main goal is to ensure your customers understand why you stand out among the competition.
3. Weak Financial Management
A business owner absolutely must develop their financial management skills. It doesn’t matter if you’re making substantial revenue; if you’re not tracking expenses, your business could still fail. Avoiding this is as simple as identifying your financial management weaknesses, and taking steps to correct them. This may involve reading books on the subject, taking online classes, or coordinating with an expert to keep your finances under control.
Every business needs some kind of funding to launch, and a smart entrepreneur will carefully weigh the pros and cons of each method, whether it’s using his or her savings, pitching to investors or taking out a loan. For starters, you could use a simple loan calculator such as this one from Funding Circle. Are you confident enough in you product, your business operations and a demand in the market to justify the interest rate?
You want your business to grow. However, you have to accept that it will grow at a steady pace. Sometimes that means being relatively patient. For example, maybe you’ve made a strong impression on numerous clients, and have attracted many more new clients as a result. Your current workforce may not have the bandwidth or resources necessary to handle all the new work. If you take it on, you could make the wrong impression on these clients, substantially harming your reputation.
Don’t let this happen. While you may be eager to grow, make sure you’re genuinely ready to before taking on more work, adding new branches, etc. It’s easy to understand why many small businesses fail. There are numerous factors influencing their potential for success. Luckily, by keeping these tips in mind, you’re less likely to make mistakes that could otherwise prevent your business from thriving.