Running a business is hard. For every successful company, there are hundreds of others that fail. It is not just the big companies that suffer; small and medium-sized companies have an even harder time surviving than their bigger counterparts.
According to Australian Bureau of Statistics data, more than 60 per cent of startups and small businesses will fail within the first three years of operation.
You may think that your business will succeed because you’re intelligent, passionate about what you do, and have a great product or service to offer. But if you don’t address these common failure causes in your business plan, then it’s likely that your business won’t survive long enough to become a success story.
With our guide to safeguarding your business against common failure causes, you’ll learn how to protect yourself from these threats and ensure long term success for your company.
Educate and Update Yourself On Current Business Trends
Do you want to learn more about business trends? Training courses for small business owners are a great way to stay up-to-date on your industry’s latest information and techniques. For example, our Small Business Management course will teach you how to make better decisions, manage your time, and grow your company. You’ll also get an introduction to accounting principles and financial statements.
These skills can be applied to any industry or sector of the economy. So whether you’re running a restaurant, designing clothes or managing a team of people – these skills will make your life easier and more successful.
Financial mismanagement, inaccurate business records and inadequate planning are the leading causes of small business failure. Ensure you have all of the latest skills and trends under your belt before diving into the deep end.
Cash flow Issues Are a Significant Cause of Small Business Failure
Cash flow is the lifeblood of your business. But if you’re not careful, it can quickly turn into a death spiral. Most small business owners know that cash flow is essential, but they don’t understand why or how to keep their company’s finances healthy and growing.
Cash flow forecast tools can ensure that you always know how much money you will have coming in and going out each month. If something changes (like an unexpected increase in costs), then you’ll be able to adjust accordingly so that your business continues running smoothly.
Unexpected Lockdown Periods
A relatively new addition to the list, but an important one in light of COVID-19. There have been numerous lockdowns and restrictive periods put in place by state governments that have impacted businesses across all industries.
You must understand what rebates and incentives are available to your business if you are forced to close, as well as the best measures you can put in place to remain attractive to clients and consumers when restrictions are in place.
Don’t Suffer From Growing Pains
While business growth is often viewed as a positive thing, growing too quickly carries its own set of challenges. Growing too fast can be a bad thing because it can lead to problems with cash flow, hiring the wrong people, and other issues that could damage your company’s future.
It’s crucial to maintain the quality of your products and services to keep your customers happy, and growing too fast can jeopardise that.
Tighten Your Marketing Efforts
Another leading cause of SME failure is poor marketing and advertising efforts. This is not Field of Dreams, simply building it does not mean your customers will come. You need to place your product or service in front of your target audience at the correct times during their buying cycle and inspire them to take action like making a purchase.
Advertising and marketing should never be viewed as an expense; they should always return on investment when carried out successfully.