Itís an all too common trope that small businesses can easily fail within their first year of business. The reasons can be anything from mismanagement to not enough funding, but itís important to plan ahead to make sure you have options when things do get slow. Letís hear from these professionals giving advice on what small businesses can do to prevent failure.
Diversify Your Income
Being too focused on one part of your business is a big reason why a lot of niche companies go under fast. Having a niche is important, but you want to make sure you can diversify so that when one part of your business is struggling, other parts of your business will be thriving.
William Schumacher, Founder and CEO Uprising Foods
Hiring the Wrong People
A big reason why a lot of businesses go under is because they donít have the right people working with them. Make sure you hire people you trust and who appreciate your business model.
Ryan Fink, CEO Streem
Spending Too Much
Spending too much money too quickly is oftentimes a reason for a business failing. It is tempting to spend a lot of capital early on in the business’s growth, but spending money too quickly can deplete your capital resources for later down the road. Keep in mind that your capital is finite and you need to budget accordingly in order to sustain the business long term.
Darren Litt, Chairman and Co-Founder MarketerHire
A lot of businesses aim too high too soon. Start with small goals, a small team and a few essential products to sell. This way, you set realistic goals for your business and give yourself room to grow. Donít try to fill the pitcher all at once, slow and steady is the best way to think about growing your business.
Jeff Henretig, President Apothecanna
Lack of Funding
Lack of funding is oftentimes the cause behind business closures. This can happen when business owners fail to consider business finances before making decisions that result in insufficient working capital. Another reason is when business owners price their products or services too competitively and the revenue generated is too low to finance operations. Businesses that are unable to secure ongoing working capital or money for projects end up shutting down. This tends to happen in the startup world.
Carrie Derocher, CMO Text Sanity
Many people want to start a business to support the thing they love doing, but donít set clear goals for the growth of their business. Doing something you love is important, but it can be distracting from real business goals at times. Aim high, but be realistic, especially in your first year in business.
Eli Schurder, CEO and Co-Founder Soundsuite
Know Your Market
Make sure you understand the market before running your business full time. Many business owners donít do enough research on how markets ebb and flow, and they end up either running out of money or being run out by another company. Research your competition and know your market’s strengths and weaknesses.
Max Greenberg, Co-Founder and CEO Stoggles
Running out of cash
Running out of money is a big risk for small businesses. A lot of times, business owners are not truly aware of how much revenue is being generated and how that translates into paying the bills. This can quickly lead to disaster for businesses who cannot budget correctly and cover all of their bills.
Courtney Buhler, CEO & Founder SugarLashPRO
Marketing and Advertising
Marketing and advertising are essential in a company’s early stages. A lot of businesses rely on word of mouth without thinking about using digital marketing to their advantage. This can be done on a small scale to start off and gives a great boost for startups. If no one knows your business exists, they won’t know to look for you!
Jeremy Goldstein, CEO Navitar
Some small businesses fail because they do not have proper planning in place. Writing an effective business plan can go a long way. It works well to have effective and realistic goals in place for business and guidance from advisors to help you along the way. Proper planning and execution can make all the difference.
Brittany Kaiser, Chair of the Board of Directors Gryphon Digital Mining
Plan for Growth
In order to succeed you must have a plan for growth. If you donít have a plan for growing the business the business is likely to fail. Having someone in place with experience growing and scaling businesses is critical to your company’s long term success.
Chris Gadek, Head of Growth AdQuick
Do Your Research
Many small businesses fail because they didnít put in the research. Before you even think about turning a concept into a real business venture, youíll need to run the numbers, look into the market, explore your targeted demographic and completely analyze your closest competitors. Once you have the data that you need, then you can begin structuring your business, and looking at things like SOPs and your hiring process.
Ryan Rottman, Co-Founder and CEO OSDB
Make a Business Plan
Not having a business plan can be disastrous for small businesses. Furthermore, even if youíve devised a business plan but are unwilling to adapt that plan as industries and markets change, itís much more likely that your company will face insurmountable challenges.
Benjamin Smith, Founder Disco