Just about anyone can start a business, but very few can run it efficiently, if at all. By no means is that a dig to business owners. No one gives you the tools you need to prepare against the several internal or external factors that could lead to the downfall of your business. However, if you know how most companies fail, you can actively prevent your downfall through research.
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Why do Businesses Fail?
On average, 20% of small businesses fail their first year, 30% fail in their second, and 50% fall in five years. In 10 years, 70% of small businesses are dissolved, or even worse, bankrupted. Failure is less likely to occur in your business if you work against the following:
1. Lack of Marketing
If customers don’t know you exist, how are they supposed to pay for your products or services? All businesses should implement a traditional and online marketing strategy that focuses on finding new customers. Make sure you have a website and business social media account.
2. Lack of Scaling
Question whether you want a business that goes beyond you as an employee. Being a freelancer is amicable, but many startups will lose popularity suddenly or gain it all-at-once after a viral marketing campaign. It’s best to prepare for both to ensure you can scale when necessary.
3. Lack of Funding
Building capital goes beyond spending and saving. It’s worth investing the time and effort into comparing different business insurance policies in Australia to give you the best protection for money’s worth. This means that you can protect your assets if a customer is injured or damages your premises.
Preparing for the worst will keep your business alive and you out of the courtroom.
4. Lack of Customer Service
Low-cost products and services aren’t enough to keep your business afloat amongst your competition who may have similar costs and empathetic employees. A well-trained customer service staff is worth their weight in gold because they’ll help you gain and retain loyal customers or clients.
5. Lack of Valuable Talent
Hiring the wrong people in your business may be the final nail in your coffin if you don’t phase them out quickly. The most successful business owners know that they need to surround themselves with smart, capable people to survive. Never be the smartest person in the room.
How do I Effectively Run a Business?
From the last section, you already know that a business staffed with talented employees is more likely to scale. You’ll also need an ample amount of money, marketing materials, and the right attitude to scale. Don’t stop there; as a business, it’s better to be overprepared.
- Draft a Business Plan: A business plan includes your goals, workflows, and anything you need to share with your shareholders or your team as you start to scale.
- Define KPIs and Metrics: Your marketing team needs concrete data on your ideal customer, which can be found by reading social media KPIs and metrics. With these numbers, you’ll know what your customers like, making them easier to sell to.
- Set Profitability Goals: Create a set of revenue and profit goals that include staff, sourcing, production, capital, and more to determine your yearly financing needs.
- Hire Great Employees: Most small businesses should place the bulk of their time and effort towards hiring great staff. Surround yourself with experts from your industry that are clear in their intention to help you grow and achieve your business goals.
- Offer Fantastic Benefits: Although you may not be able to offer the best private health benefits to start, you should at least provide ample time-off and add-on insurance.
- Staff an HR Team: HR teams help you with the training and onboarding process, employee engagement, and performance. Some HR departments will take over payroll. Regardless, they play an essential role in building and maintaining your company.
- Implement Technology: The type of technology you need depends on your business needs, but a SaaS or CRM tool will help almost any industry over the company’s lifetime.
Running a successful business takes a substantial amount of time, effort, and commitment. In order to gain credibility in your market, you need to be professional and trustworthy.
