Tammy, a skilled and gifted horticulturist, called me to discuss what she needed to know to start her own florist and landscaping business. She had been in the horticulture industry for 10 years and was incredibly skilled at working with flowers and plants ? one of the best. She also had great design skills, as well as good customer service skills. But she had little business management experience and less self-employment experience.
Discovering why small businesses fail was a smart research project for her, as it helped her uncover her own weaknesses and begin to build up some strengths before she invested in becoming self-employed. It's no secret that a large majority of small businesses fail in the first five years. The question is: Why do they fail and what can I do to prevent problems in my own business?
As we talked, we reviewed some of the common reasons why small businesses fail. Here are 14 top reasons, which might help you to determine why your business isn't growing and thriving. Some of them are related to learnable business skills; others relate to personal attitudes, habits, or self-sabotaging belief, which are not so easy to change, except through coaching or other self-development work.
1. Mistaking a business for a hobby: Just because you love something doesn't mean you should convert it into a business. Too often businesses fail because the owner feels their passion is shared by others. Research your business idea and make sure it's viable.
2. Poor planning: Yes, you must have a business plan. It can be a simple three-page plan or a huge 40-page plan. The point is that you've looked at all the aspects of your business and are prepared to handle problems when they arise. Your business plan helps you to focus on your goals and your vision, as well as setting out plans to accomplishing them. And don't get mellow ? revisit and revise your business plan annually.
3. Entrepreneurial excitement: Entrepreneurs often get excited about new ideas, but are unable to determine if they're "true opportunities" and/or put them into practice. Test every new idea against your business plan and mission statement before deciding whether to undertake it or not, and ask yourself, Do I have the time and skill to implement this?
4. Putting all your eggs in one basket: Too often, small business owners will have just one product, one service or one big client. They cling tight to this one thing because it brings in good revenue. But what if the one thing disappears? Variety and diversification will cushion you against the ebb and flow of business tides.
5. Poor record keeping and financial controls: Yes, you have to keep financial and business records, you have to review your revenue and expense report each month, and you have to file taxes and other business-related filings. If you don't know how to do these, or don't want to, get help from someone who does.
6. Lack of experience in running a business or in the industry you're entering: There are so many hats you have to wear, from marketing and selling in order to run a business effectively. On top of that, you have to understand your industry, the skills required to offer your products and services, and the trends in the industry. If you don't know about these basic skills, educate yourself. Talk to others who are successfully running their own businesses, talk to industry leaders, get a book, find a website, get a coach, do your homework. And keep increasing your business and industry skills by attending classes or reading new books every year.
7. Poor money management: You need to be able to live for one to two years without income when getting started; often businesses are very slow to get off the ground. Also, you have to create and use a realistic business budget, and not constantly drain the business income on personal spending.
8. Wrong location: If your business runs out of commercial space, you need to make sure that you are convenient to your customers, and near to your suppliers and your employees.
9. Competition: Customers will go where they can find the best products and services. It's important for you to know who your competition is, what they have to offer, and what makes your own products or services better.
10. Procrastination and poor time management: Putting off tasks that you don't enjoy will sink your business faster than anything else. You can't afford to waste time on unimportant tasks while critical tasks pile up. All tasks need to be done; if you don't like to do them (or don't want to spend your time doing them), hire someone to do them for you. If your time management and prioritizing skills are rusty, hire a small business coach or take a class to help you.
11. Ineffective marketing: Learn the basics of marketing and make sure that you track the success or failure of each marketing technique you use, then dump those that aren't working.
12. Ineffective sales techniques: Once you have a potential client, you have to know how to lead them down the sales path. If you don't understand the basics of selling, get some education on it immediately. If a selling technique doesn't work, try another one.
13. Poor customer service: Once you have a customer, you have to keep them. There are two key points here ? make sure you pay attention to what the customer wants (and how these wants can change over time), and make sure you provide quick return of phone calls and emails, proper billing, win-win problem solving and an overall pleasant demeanor.
14. Entrepreneurial burnout: owning your own business requires a huge investment of time, money, energy and emotion. It's easy to work long days and forget to take time off. But in the end, this only causes burnout where your motivation and creativity will suffer, and a pessimistic attitude prevails. You'll find yourself unable to balance your business and personal life, and both will suffer. Schedule self-care time into your work week and be religious about taking time off from your business.
Dunn and Bradstreet recently did a study and determined that "90% of small businesses that fail do so because of a lack of skills and knowledge on the part of the owner." However, D&B also did a study that showed that over 90% of small businesses were still in business after five years IF they had the help of a Small Business Development Center (SBDC) or other expert assistance. You can find a list of the SBDC in your area here:
http://www.passionforbusiness.com/web-resources.htm
As Tammy and I concluded our coaching session, she made a list of the areas where she needed to grow, and created a task plan to get the help she needed. Today she has a thriving business and is happily self-employed. You can do it, too. It just takes a little planning and a close look at both the reasons for your success and where you might need to get a little help.
About The Author
Karyn Greenstreet is a Self Employment expert and small business coach. She shares tips, techniques and strategies with self-employed people to boost clarity and focus, create sustainable motivation, and increase sales and profits. Visit her website at http://www.passionforbusiness.com/web-resources.htm
Cadillac Deville rentals Bingham .. Lockport Chicago limo O’HareSeventy percent of US households use the web when shopping... Read More
Every business starts with an idea or a dream. To... Read More
Q. I am a former pastor who left the ministry... Read More
There are many choices when thinking about a small business... Read More
The Workers' Compensation situation in this country is unbelievable. Why,... Read More
Until the day I learned to play chess I loved... Read More
Microfiber cleaning towels have been around for about ten years... Read More
So what exactly is a "Small Business Lone Ranger?" A... Read More
You're pretty proud of yourself! After all, only four months... Read More
You bet a name is important. Many small business owners... Read More
Seems as though there are a lot of business closings... Read More
-- Beyond Cold Calling, "Warm" Calling and Sending E-mails --Many... Read More
Treat your business as a serious, full-time business and be... Read More
When should you leverage the relationship?Leveraging sometimes brings a negative... Read More
We visited Lexus USA, home of the Lexus North America... Read More
Marketing is one of the four corner-posts of a solid... Read More
As an Investment Representative you've worked hard to build trust... Read More
If you're organized, smart, capable and willing to work with... Read More
Why give freebies?We have all seen freebies at trade shows... Read More
Researching information for a recent business plan, I came across... Read More
There is a continual trend we are seeing which I... Read More
A solopreneur I know disappears from my radar screen for... Read More
Setting priorities in your business? Your first job is to... Read More
What types of companies do you want to align yourself... Read More
Here are just a few ways to increase and diversify... Read More
limo rental Des Plaines ..Time. As a small business owner, it's the commodity you... Read More
Why should you do informative talks to smaller groups?Informative talks... Read More
It's the dream of every person who starts a business... Read More
When do annoyances in a relationship become too much to... Read More
Why does consistency in the message have an effect on... Read More
Experts urge small business owners to "brand" their business ?... Read More
The restaurant industry in the United States employs an estimated... Read More
For the employees, payday is the brightest day; they finally... Read More
Many self employed professionals find themselves overwhelmed, frustrated, and confused... Read More
If you are thinking of turning your current into a... Read More
Hew Hampshire car wash market. Well we have visited every... Read More
Just as you are about to say "good-bye" to your... Read More
As a specialist in getting restaurants open, it is surprising... Read More
There will come a time in your business where you... Read More
Whether it has been thrust upon you by external market... Read More
Anyone in business today realizes both the natural dependency on... Read More
Whether your target audience is in your neighborhood or across... Read More
If you run a pressure washer business you need complete... Read More
In today's fast paced marketplace it is easy to neglect... Read More
Approximately 200,000 new businesses are started each year. More people... Read More
Small business success is very similar to learning to walk,... Read More
It behooves every professional mobile auto detailer to stay up... Read More
When small businesses fail, the wreckage is often assigned to... Read More
Start thinking about buying an established business if you want... Read More
There is a great deal of abuse going on in... Read More
Small Business |