Tips to Avoid Business Failure
According to the Small Business Administration, over 50% of
small businesses fail in the first year and 95% fail within the
first five years. This is further supported by Harlan Platt,
author of "Why Companies Fail, who claims that a business fails
every hour in the United States. It's a harsh statistic but a
reality for many new entrepreneurs. The numbers are not meant to
scare you away from starting a business, but underestimating how
difficult it can be to start and run a business is one of the
largest obstacles that new business owners have to overcome.
Businesses tend to fail because they have:
An unrealistic or inadequate strategic plan Many new business
owners fail to develop a strong strategic plan or to set
realistic business goals. Be sure to create specific goals that
include deadlines and a formalized plan to achieve them. Revisit
your business plan on a regular basis.
Poor customer service Customer service is no longer a benefit.
It is an expectation. Failure to provide a strong focus on
customer service can easily spell doom for your business. This
is particularly true for fitness providers that are
service-oriented businesses. Take the time to educate and train
your employees to provide great customer service.
Insufficient Marketing Advertising, promoting and selling to
potential customers is an on-going commitment. A marketing and
advertising campaign must occur year round in order to prove
effective.
Poor Employee Training Under trained or poorly trained staff can
frustrate customers. It's a no brainer to assume that frustrated
customers leave and go elsewhere. Invest the necessary resources
and time in training your staff.
Excessive Spending Evaluate your expenses and ask yourself some
hard questions. For example, do you need to purchase the newest
equipment or can you buy used? Also consider developing some
type of control system that will track and monitor your expenses.
No Cash Reserve or Working Capital When times are going well for
your business, set aside some of your resources for a rainy day.
Consider investing your spare capital in a money market or
mutual fund. That way it will be there when you need some
working capital.
Poor Financial Record Keeping Ultimately, it is your
responsibility as the business owner to know how much money is
coming into your operation and how much money is going out.
Maintaining detailed books and an appropriate financial
statement of your business is necessary. Always keep your
records current and detailed.
Tax Problems Whether you want to or not, you are going to have
to pay taxes. So, follow the rules and pay on time. Getting
behind with Uncle Sam can only result in unnecessary government
pressure, penalties, and late fees. Over time, this can become
an overwhelming amount of money.
A Lack of Business Knowledge Operating a business involves more
than just sales and great customer service. As a business owner,
you owe it to yourself to become more knowledgeable about
operating a business. Take the time to read books, take courses,
and seek professional advice whenever needed.
So, ensure you heed the advise of the many businesses before you
as to not end up one of the statistics.