It’s quite common that most new businesses fail and a lot of people still don’t understand why that is. It isn’t for lack of effort! Small business owners are among the hardest workers out there. But even with seemingly good economic conditions, a large percentage of new businesses fail. There are a multitude of reasons why—from not getting enough funding, to taking too long to become profitable, to having the wrong team. But in every instance, there is something that went wrong that could have been corrected early on. Let’s explore what businesses can do in order to improve their odds of success.
Not Getting Enough Funding
This one is probably the most understood issue out there—small businesses often have issues attracting funding and investment. And if you don’t have enough funding, then you can’t take your product to manufacturing and you can’t market your product to your target audience. Talking with investors is key for most small businesses, but an increasing number of startups and founders are crowdfunding their initial operations as well.
Sometimes Good Concepts Take Too Long To Become Profitable
It is important to remember that profitability isn’t something that comes overnight. Amazon wasn’t profitable for over a decade. Amazon was supported by big investors for years, as the company grew in size. That isn’t always an option for small businesses. Small business owners must be mindful of how quickly their product can become profitable. Even good ideas sometimes aren’t viable in the short term.
Having The Wrong Team
Sometimes you have money and a good idea, but you have the wrong people trying to execute the plan. If you pick the wrong people early on, it can lead to a death spiral for your company. You need highly motivated, skilled employees who fit in with your company culture.
Poor Marketing Or Targeting The Wrong Audience
Even with everything else right, your business could still be in major trouble if you whiff on marketing or your target audience. You need a marketing team that can help you reach an audience that is going to be receptive to your products and services. But even that won’t work if you are reaching out to the wrong audience. Make sure that your team does research beforehand to determine which individuals will be most receptive to what you are selling.
There are plenty of things that can prevent a new business from reaching its full potential. Funding is a big part of it, but it also comes down to how quickly a business can become profitable, and having the right marketing, audience, and internal team. Missing on any of these can lead to major issues, especially for a business that is relatively young as it is. Make sure that your small business avoids these pitfalls, so that it has a greater chance of reaching success.
Regina Fasold is a seasoned Executive Coach and Leadership Expert. Her extensive professional background and her 10+ years of experience as a Global Executive Coach have allowed her to assist over 300 senior executives in corporations throughout the United States and in over 25 countries around the world.
* Business Development image credit goes to: S O C I A L . C U T.