Six Big reasons why small business fails !!!
Small businesses are one of the major contributors to fuel-up economy of any country but sporadically faces pitfalls. Unfortunately, lack of direction and sometimes inexperience surface similar stories of either struggle to survive, if not fail. Based on the market feedback, the following are commonly blamed areas where small businesses should put their best mitigation efforts to become one of the success story.
1. Lack of Market study/analysis
“A person with a new idea is a crank until the idea succeeds”, Mark Twain
The fundamental flaw behind any idea is lack of research, market analysis, no or little knowledge of competitors, fail to assess strengths or steps needed to overcome weakness, are just a few which are ignored in the beginning of the venture. Remember, the business owner is going to take head on against more experienced market foes. A well thought SWOT analysis is the first step towards the right direction.
2.Skills assessment- over ambitious or non-utilizing strengths
The business owner should do an honest self-assessment and make a list of their personality traits, experience and qualification. Yes, any business can take-on any kind of challenges, but don’t get over swamped in the very beginning rather prioritize tasks to achieve greater mileage in the long run. On the contrary, never underutilize what the business owner is good at with. This is a slippery slope where it is so easy to trap into disillusions of achieving targets or objectives.
3.Owner lacks key skills
Many business owners have a good grasp of their own area of operation, but not possibly can be good for all aspects of the business. “If you can’t hire the skills, then take the time to educate yourself”. This is again sometimes the most difficult part to undertake and many businesses forced to look out for options as to hire professionals or partners.
4.Absence of Partnership agreement
“We were friends together and I trusted him”, this quote is commonly heard from the start-ups when things do not remain the same, as they took off. Ambiguous, shady understanding or not defining roles and responsibilities properly, strain relationships and sometimes end up in the courts. Avoid this situation to happen by hiring a lawyer or a professional to draft Partnership agreement for smooth relationship and business sailing.
5.Absence of budgets and plans
Simply, “If you don’t plan to succeed, you plan to fail”. Budgets and proper planning are guiding tools to keep business in the right direction. Experience and lapse of time may compel a change of plan and budgets, but changing factors should be identified as normal or extraordinary. This helps to either take corrective measures or to assess changes of plan.
Last but not least, many businesses, small or large, fail due to unreliable/ outdated bookkeeping. The business owner, without realizing the critical importance, gives low priority to this important area. The business risk associated with poor bookkeeping directly impact cash as external compliance agencies such as CRA are getting stricter in their requirements. Banks are unable to trust business in the absence of professionally drafted financial statements. Hiring a professional will save you time and money, and keep you from falling behind.
Admin (The Numbers Group)