The term “dog eat dog” is a serious understatement when applied to small businesses. An amazing fact: 80% of all small businesses will fail within the first few years of operation. This is a very sobering statistic, even if you are not trying to run a small business.
When you open it up and examine what a small business is, you discover that it is really the life force that drives a capitalist environment. Excessive greed aside, small businesses are a staple of any strong economy and more must be done to ensure they don’t fail. But, they fail, they do, and in no particular order, the top 5 reasons small businesses sometimes fail …
One: No niche is a bad niche. Some companies have trouble developing a customer base. These “niche” markets are essential to the success of any business, large or small, and whether you run an online business or run a physical institution, having a customer niche is important. A niche must be catered for. For example, if you are hoping to attract the emo / goth crowd with your clothing store, then having sporadic shelves of I-Love-Hippies clothing won’t do. A niche of any kind allows a small business to compete with a large company. Ultimately, your niche will choose your business, but it’s up to the business owner to go after the niche.
Two: Looking for loot in all the wrong places. If you just started a business solely for money, you will probably fail. “Because you ask. It’s because you only care about profits – you will take shortcuts and do whatever it takes to make money. On the contrary, if you started a small business for other reasons, say, a small sandwich shop because you love to make sandwiches, more money goes into your business and the money is not the 500 pound elephant.
Three: find the right location. In high school business class, we are taught that location is the key to success. The correct location is essential and therefore the wrong location is the number three business killer. You have to configure the store where the customers are; where traffic and accessibility are minor concerns; where it is not in tough competition with other companies; where you can target your niche and hopefully qualify your business in the early stages.
Four: The Leap of Faith. You may think that your heart is in the right place, but faith and thinking are two separate things. It takes a lot of planning in your business. It is essential to have a plan from day one. If not, you can say goodbye to that business before the grand opening. Consider a team that helps you plan every detail imaginable, which brings us to number five …
Five: Put a self in “team”. Don’t start a business alone, that is, unless you want failure. Assemble a team of people, who don’t necessarily have to be paid and bought professionals, to help you with the process. The saying, “Two heads are better than one” applies here, even if it is the opinion of some family members. You need help with details that you may have overlooked, and in most cases other people offer different perspectives that can be interesting avenues to follow.