Entrepreneurs and Small Business Owners, Don’t Make These Common Business Mistakes
According to data from the U.S. Bureau of Labor Statistics, approximately 20% of small businesses in the United States fail within their first year of operation.
By the time year number five has come and gone, around 50% of small businesses will have closed their doors. After the ten year mark, a mere one-third of businesses will have survived.
Don’t let those numbers keep you from realizing your entrepreneurial dreams, though. It’s entirely possible to build a thriving business — especially if you know how to avoid some of the most common business missteps.
From a lack of demand to choosing the wrong team, here are four of the most common reasons businesses fail (plus tips you can use to avoid making the same mistakes).
1. There’s no demand for the product or service
A great business idea isn’t enough to guarantee success. There also needs to be a demand for whatever it is you want to sell.
Fortunately, there are plenty of ways to determine whether there’s a market for your product or service:
- Talk to potential customers to better understand their problems and needs. Surveys can also be a helpful tool for this step.
- Conduct a thorough market analysis using the guidelines in this handy article.
- Subscribe to industry newsletters and publications to ensure you have a complete understanding of your potential niche.
2. Problems with cash flow (both into and out of the business)
Money management is a common problem for many new businesses. Unsustainable growth will make it difficult to remain profitable. On the opposite end of the spectrum, a lack of sales will also lead to cash flow issues.
At the end of the day, there needs to be an equilibrium between cash flowing in and out of the business. This equilibrium will look different for every company.
If you aren’t sure how to best manage the financial side of your new business, consider enlisting help from a financial expert. With the right help, you can protect your business’s financial stability from the beginning.
3. Underestimating the administrative side of running a business
If you want to run a successful business, you need to either become comfortable with administrative tasks or learn how to outsource.
Administrative tasks are like the backbone of your company. Customer service and phone answering, inventory management, calendar management, bookkeeping and accounting, updating spreadsheets and data, and countless other admin projects can easily eat up your time.
So, what’s a busy entrepreneur to do?
The easiest solution is to hire someone to handle the administrative side of things. This could be a dedicated administrative assistant that you hire and train yourself or a virtual assistant that has already been vetted and trained.
Virtual assistants are a great option for small business owners and entrepreneurs who already have too much on their plates. You won’t have to make a job posting, read through resumes, or conduct interviews. You can also use their assistance as-needed, whether that’s five hours a week, full-time, or something in between.
4. Choosing the wrong business partner
You don’t necessarily need a business partner or co-founder to launch a small business or startup. However, having the right leadership team can make or break your company.
There are many ways to find the right partner. You may even already have someone from your network in mind. But here’s another option you may not have considered: opening a franchise.
A franchise business will offer access to an experienced team with proven success in a specific industry. The initial capital investment and cash requirements will vary, so there’s bound to be an arrangement that works for your goals and financial situation. You can view Intelligent Office’s franchise requirements here, for context.
No matter how you choose your business partner, be sure to select someone who is also committed to avoiding these four common business mistakes.