Starting a business may seem like a promising venture, especially when we hear success stories all around us. Unfortunately, for every business that becomes successful, there are many more that fail. It is estimated that only 80 percent of startups will make it past the first year mark, then the number drops off significantly each year that follows.
When an entrepreneur starts a business, they may be looking at the rosy side of things. Many of us are born optimists and are loathe to entertain negative thoughts. It is good to be hopeful as you launch a new business, but hope only goes so far. Business owners must couple their excitement with hard work and strategy and avoid common pitfalls.
Here are some missteps that cause new businesses to fall flat:
- Lagging leadership – When leadership fails to make the right decisions when needed, it will lead to the demise of the business. Failure in leadership has a trickle-down effect and employees at all levels will feel it.
- Biting off more than you can chew – Some entrepreneurs are so excited to see their business taking off that they immediately decided to add a new branch, new staff members, new equipment, etc. When scaling is done too soon, it can eat up valuable resources needed for sustaining your company.
- Failure to deliver value to customers – An entrepreneur should not always be looking for the fast buck. A business is supposed to serve the needs of the customers, and customers expect value for the money they spend. When a customer receives a service or product that really satisfies them, they will return for more and tell their friends about their experience.
- Failure to connect to the target audience – If you don’t know what your target audience wants, you won’t be able to deliver. Do the research to find out what your potential customers need. Otherwise, no matter how great the deal, you won’t make sales.
- Bad planning – When an entrepreneur is in too big of a hurry, they may be launching without the necessary preparations. They may make a short-term plan, neglecting to prepare for the long-term, but this is an invitation to failure.
- Low cash reserves – Lack of capital is a red flag in business. It can scare away investors and harm day-to-day operations.
Avoiding these and other common mistakes will keep your business from folding in the first year and make it sustainable for years to come.