There are a more than a handful of people who go into business every year. There are a significant number of start-up businesses that are launched each year too. Sadly, more than half of these start-up businesses close only after a few years of operation. Start-up businesses help the economy in more ways than one. They push the boundaries of technology and innovation. They can provide products and services that big businesses rarely go into. Small businesses can create a market for what they offer, and that’s how they find success.
And yet, in Canada alone, only a little over 50% of all the startup businesses survive for more than one year. A fewer of those usually end up closing down. This brings experts to question – Why do small businesses fail within the first five years of operation? What could be going wrong? Here are some ideas you might want to ponder upon.
· Poor Management Practices
Although most business owners think that bankruptcy is the culprit to the failure of their business, the root of the problem isn't that. They fail to see that it is the poor management practices that led to bankruptcy that is pulling them down. Most entrepreneurs don’t have experience in running a business, which entails managing and directing the people. So before it is too late, plan. Build a management structure early on and work well with others to improve it.
· Negligence In The Company Finances
Are you too focused on making a profit? If you are, then you should think twice about what you are doing. Remember that the goal of every business should not be the profit but how to capture the market. Start-up businesses depend on investors to generate more funding. It can be quite easy to lose control, but you should always be grounded. Know the financial situation of your company and work things out from there.
· Poor Marketing Efforts
No matter how good your business idea may be, remember that it cannot sell itself. Don’t expect it to market itself and generate sales. The worst thing that a business owner can do is to come up with marketing campaigns that are not good enough for the target consumers. Without the right marketing, your consumers won’t be aware of the product or services that you offer. This is the reason why you are not making the sales that you expect.
Running a business isn’t easy, and it becomes even more difficult to pass the five-year mark. But knowing what you’re doing wrong is the first step to making it right.