Starting your own business may seem like a dream job for most people, but facts show that the majority of startups will fail within their first several years. Some fail quickly, while others enjoy a few years of fleeting success before they crash and burn.
Today, social media has made it much easier to start a business with instant connections for funding, advertising, marketing and sales. Despite these extra support systems, statistics show that the failure rate for business startups in 2015 are still very high. Take a look at the top three reasons that startup businesses fail and learn more ways to make your business succeed.
Lack of Research and Planning
Startup businesses without a sound business plan are doomed. A solid business plan includes proper research to determine a target market for goods and services, as well as proper planning to reach that market in your business area. Determining your business target market is essential to business success. Without valued customers for your goods and services, profitability will be hindered. When starting a business, your business plan should clearly define your business goods and services, your potential customer base, and your competition. While a long-term business plan will help keep you on track, be prepared to re-evaluate and re-plan in the first three months if your plan isn’t working.
Running out of money is a certain and quick way to kill a startup business. Insufficient financial resources to maintain your business will leave you struggling in every aspect of your business. Marketing, advertising, inventory, sales and profits will all suffer. Understanding your financial business needs and projections is essential if you expect to succeed. You can’t be in control of your business if you don’t know exactly what’s going on with your finances. If you don’t know the real bottom line, you can’t build a thriving business. A successful business can’t survive paycheck to paycheck.
Poor Hiring Practices
Although many startups begin with a sole proprietor, growth requires additional employees to manage operations. Too often, business owners try to wear multiple hats and handle every aspect of the business instead of delegating responsibilities. Hiring the right people is essential for long-term success. When you hire the right team who understands your business needs and goals, things are easier and more predictable. Take time to choose your employees wisely to ensure business success.