This is a frightening but realistic statistic. It seems that, while every successful business is unique through a combination of various factors, there are some common causes that lead to failure.
Let’s dive in and see some of these issues that you should pay attention to at the beginning of your road:
1. Lack of planning
Businesses, like life, are full of surprises – some pleasant, some less pleasant. Too many businesses fail because they do not have a plan (or a well documented plan) based on which to act, follow their goals and develop.
If you want to have all the necessary resources to cope with the challenges that will come up and, in the same time, to be able to focus on a healthy development of your business, you need to plan!
Do not forget to include in your business plan some basic areas such as funding, marketing, sales, development, to think in perspective so as to prevent and to keep your expectations realistic:)
2. Failure to find the right people
Every business require some special skills. The wrong people in your team may cause you major problems such as: delays in providing your services/products, lower quality, frustration within the team and, the most important, losing your clients’ trust and your reputation.
Make a list with the required skills and follow them. Also, a strategy with different kind of people that should complete each other and would work efficiently together may be a solution.
Also, do not forget about your contractors. At some point, you will need some external services. Choose professionals that may understand the specific of your business.
Do not make a compromise when choosing your people, your business deserve dedicated and talented people!
3. Premature scaling
Great news, you experience an unexpected growth! Unfortunately, there are no few cases when this height, unexpected growth has killed the business. In this situation, you have to adapt your whole business to cope with this growth: employees, headquarter, marketing, payroll etc.
A good plan will help you in this situation.If not, you will need to find the necessary funds to adapt your business.
4. Ignoring the importance of technology and its consequences
No one can argue that technology has become an inherent part of our lives. There are some incredible benefits that technology brings to businesses, whether small or large, but even more for the small ones:
- you can gain visibility for the customers more easier;
- you can promote your business more effectively and easier;
- you can communicate more easier with your clients;
- you can find out more information about the online behaviour of your clients, discover their needs and their preferences;
- in many cases you can reduce significant business costs (e.g. rent for the headquarters) and the list can go on…
But, using technology means in all cases using sensitive information. Where there is sensitive information, there is a danger that it will reach the wrong hands. You may think that a startup or a small business does not represent such an attractive target for a cybercriminal as the large businesses. Let’s see what all the statistics say:
Over 74% of the businesses have more than 1,000 sensitive files. More than 55% of the small and medium businesses experience cyberattacks and face data breaches.
While most of the small and medium businesses invest less than $500/year in cyber security, on the dark web you can find hacking tool kits and software costing as low as 1$. Therefore, for many hackers will be more effective a cyber attack on small and medium businesses.
Consequences of a data breach?
- substantial financial loss;
- major reputational damages (do not forget: trust is an essential element of customer relationship);
- legal conflicts.
You need to protect your online business to protect its reputation!
5. Winning the trust of customers
The customers define your success, that is a fact! Winning the trust and loyalty of your customers means having a strong, sustainable business, that can successfully cope with the unpredicted changes that may occur.
You need to be persistent, to build a philosophy focus on the needs of your customers and to provide safe, quality products/services. People will see your dedication and commitment and the trust shall build itself.
Last but not least, founders who have failed at a prior business have a 20% chance of succeeding with their next business.
So, even when you fail, you succeed! For an extra boost, keep a close eye to the issues above:)