According to the US Small Business Administration 50% of all small businesses fail in the first year. 95% fail in the first five years.
Business researchers report several reasons for this dramatic failure rate:
1. Too little business experience.
2. Not enough money to sufficiently run and maintain the business.
3. Lack of understanding of competition in the business sector being entered.
4. Too much money invested in the wrong type of tools and products.
5. Too much money invested in permanent fixtures versus renting fixtures until the business proves its stability.
6. Too many purchases made using credit and poor credit management.
7. Business grows too rapidly and entrepreneur does not have enough funds to meet the business expenses required by the rate of growth.
8. Slow sales.
9. Too little marketing to get the word out.
10. Too much marketing to the wrong sector of potential customers.
So, now that you know the mistakes that lead to early business failure, let’s look at the top ten tips that can help ensure your success.
1. Avoid Procrastination. Once you decide to start and grow your business, you will inherit a new set of responsibilities that are not as much fun as you anticipated. Putting off your paperwork and labor requiring tasks will eventually lead to the failure you are working to avoid.
2. Prepare yourself for the competition. Building a list of thousands of loyal customers requires that you provide the best quality of products and services in the marketplace. Surf all of your competitor’s sites and make notes on their campaigns. The bigger they are the more you will learn.
Pay attention to their guarantees, warrantees, and pricing and be sure to emphasize these in your marketing strategy. Don’t fail to think out of the box when it comes to out-promoting your business. When all else fails, copy the success of others in your industry.
3. Poorly thought-out marketing. Don’t be afraid to venture into areas of marketing you haven’t tried. No one becomes successful in business by being timid. Make your marketing decisions quickly and get into action.
Even if you make a mistake you’ll be able to correct your process and re-start in the opposite direction. Inactivity is your enemy. Be sure to review the top level sites in your industry and make a list of all the best practices you observe. Keep your product’s active and selling through effective marketing ideas and practices.
4. Pay attention to your customers. Create surveys and use them regularly. Their feedback is critical to your success. Even when customers don’t respond they get the idea that you care and that translates into dollars in your bank account.
Work hard to stay tuned into your customer’s needs and desires. Marketing creates desire and communication with your customers build strong relationships. Relationship marketing is the key to your success.
5. Incompetent employees. Hire only workers who are essential to your operation. When you do hire employees, make sure they’re well trained and able to complete the tasks expected of them. And remember that happy employees make good workers — try to create a work environment that keeps your staff happy and motivated.
6. Don’t be afraid to Walmart your business. When you’re going to build a business, you must learn to study the big guys. Subscribe to industry newsletters, regardless of the industry as long as it is retail.
Copy the major player’s strategies and learn how to negotiate. Big W is known to play hardball when it comes to the prices they pay for goods they retail. They are big enough to make or break a company due to the volume of goods they move on a daily basis.
While you’ll be starting at a much different level, you too can play the game better by watching the bottom line with your purchases. Make every dollar do at least ten dollars of work, or produce ten dollars worth of sales, and you’ll do just fine. You must build a mind-set that is outside the box in every way.
7. Position yourself appropriately. It is not unusual to surf the net and see ads on a variety of products and services that have nothing to do with the information you are reviewing.
While this can be a great strategy once you’ve built strength into your business, it is not the most efficient starting path. Fine tune your targeting toward the biggest source of potential customers for your specific products and/or services. Don’t use a shotgun approach to your ad placement when with a little more work you can hitch yourself to a huge market of thousands of customers looking for exactly what you have to offer.
8. Watch your budget. Advertising is the most important investment for the early stages of your business with quality customer lists in a second-place position on your must have an agenda.
In any case you will want to add an accountant, or a good business accounting program to your budget so you can accurately track and review your expenditures. Most businesses fold because they don’t have enough money to keep going.
Faulty planning is a culprit in this process but failing to have a good money flow tracking system is high on the list. It doesn’t hurt to have a friendly investor or two on the side to help with unexpected events. Often a family member or close friend can fill that spot for you.
9. Keep yourself open to opportunities. Because you have read this far you are most likely someone who believes in doing the research and planning that is a must do for any business. In addition to reading business tips you will also want to try an approach a good friend and self made millionaire shared with me.
My friend found a business college in his town, and promptly walked into the placement office, and asked if they could refer him to one of the top senior graduate students in the school of business. He fine tuned it by saying if the person has a marketing major it would be even better.
The office manager was happy to give him a list of names and he immediately camped out in the student union. We used to laugh about how much he learned for the prize of a couple of pizzas.
Don’t be afraid to stretch your mind to areas outside your normal range of contacts.
Young minds are out there just waiting for an opportunity to grow with a new business that offers an exciting idea or two.
10. Plan to succeed, don’t plan not to fail. It all begins with a written plan of action. If you’ve ever done any research on business plans you’ve probably spent a few hundred dollars on aspirins.
A business plan is absolutely mandatory if you want to plan to succeed. Starting out on a path to build a successful business without a business plan is like planning not to fail. The focus is all wrong if you truly want to succeed.
The best suggestion I can offer is to download a very simple and basic business plan template from Microsoft’s website.
Just going through the steps of answering the questions, even if you don’t complete the business plan, will clarify the important items for you to add to your pre-start-up list of things to do and things to know.
Do not fail to plan for your business. Otherwise you will find it easier to hit the next lottery jackpot than to build a business that will last for more than 12 months.