Did you know that up to 70% of businesses close their doors within ten years? It may seem like a decent length of time, but in business terms, ten years is the blink of an eye. If you’re the owner of a start-up, the harsh reality is that businesses fail every day and it’s harder to stay in business for the first year than any other time. Here are a few surprising reasons why businesses might fail.
Many first-time businesses owners make the mistake of promising too much to their customers. It’s not because they’re out to fool everyone- it’s usually because they want to gain and keep customers. The main rule of business should always be, under-promise and over-deliver. Don’t make promises unless you’re certain you can keep them. Otherwise you’ll start to look untrustworthy and there’ll be no value to your business.
Targeting the Wrong Audience
A lot of start-up e-commerce businesses make this mistake. It’s easy to think that an online store could sell to anyone. So, why not advertise to everyone? If you don’t identify and specify your target audience, the money you spend on marketing will be wasted. You need to connect with your audience, rather than spend time, money and effort on adverts that make no connection because they aren’t targeting anyone specific. Do your research and make sure you know who your customer is.
Lack of Trust
The world wide web really is world wide and people are more cautious than ever when it comes to making purchases online or hiring businesses for jobs. If your business hasn’t established credibility, why should anyone take a risk on you? Businesses like bourton.co.uk are a great example of how to establish a trusting relationship with clients and build a successful business. A business needs to look professional from day one, have safe and well-known methods of payment and client feedback present on websites and social media accounts.
There are some people who go into business with the view of competing against bigger, more established businesses. There are times when this can work, but it often leads to failure. Staying afloat is hard enough as a new business without the added work of having to compete against market leaders. Not only do they have the customer base already established, but they also have the funding to continue enhancing and investing in the business.
When you start out in business, everything has to be done in baby steps, including spending money. You may have big ideas about what to invest in next, but you have to be financially smart. Many business owners have failed because they’ve made basic finance mistakes in the first few years. There has to be a dedicated percentage of the profits that becomes take home pay and a percentage that is put back into the business. It’s a struggle and many business owners end up spending money they don’t have.
Simple mistakes can drown a business, so it’s always important to make smart decisions.