Sad businessman standing near sales chart
Running a business is about managing a lot of moving parts. From legal considerations to bookkeeping to HR, there are about a million things to consider and a million things that can go wrong.
And the statistics bear this out: only about 50% of small businesses make it to their fifth year. So what is it that puts your business at risk?
Below we’ll take a look at the six reasons your business will fail this year, and what you can do to save it.
- People Don’t Need Your Product
This one seems obvious: your business will fail if people don’t need what you’re offering. Assess your future clients’ needs, see what your competitors offer, understand what it is that’s lacking in your competitors’ product or service, and figure out how you can deliver that missing element. This process is known as defining your unique value proposition, and if you don’t understand how to create a product that’s new, different, and necessary, your company will eventually fail.
This means getting out there and actually talking to future clients. Share your ideas in-person with focus groups and use social media and email marketing to solicit feedback via surveys.
- You’re Not Competitive in Your Market
Understanding your market is also a critical step to take before you open your doors. If your passion is baking, you may want to open up a bakery, but what is the market in your hometown? Is there already a bakery? How successful are they? Do they have a particular focus (wedding cakes, donuts, decorated sugar cookies) that is similar to what you hope to do?
If your town is already well-served by the local bakery, you can either think of ways to offer your own spin on things (create a bakery that focuses on French pastries), consider another market (open up in the town down the road that’s bakery-free), or think about pursuing another small business idea that still speaks to your passion (create your own line of baking tools for the home chef).
- You Lack a Plan
One of the most challenging things for first-time small business owners is creating a plan. If you’ve never run a business before, it’s likely that you’re overwhelmed by all of the aspects you need to consider.
If you’re at a loss on where to start, consider turning to a site like Bplans for a basic template. Building up a team of trusted advisors is also key. Find a lawyer with expertise in your chosen field, a CPA who knows your state’s tax laws, and advisors and mentors in your sector who can help you along the way.
It’s also important to remember that a business plan should be a living document. Your vision for your business should change as your business grows, so you need to be ready to revisit and revise your plan on a regular basis.
- You Don’t Have the Right Team
Assembling a team that is dedicated, smart, driven, and hardworking will be key to your success. However, finding and attracting the best talent can be a challenge, particularly when you’re a young company with limited resources.