Most entrepreneurs start with stars in their eyes and hope that their business will get off to a great start and have a multi-million valuation in no time at all. However, tragically, an astonishing 70% of businesses with employees are not able to keep their doors open after the first ten years. Other statistics put out by the Bureau of Labor Statistics are no less shocking; while 80% of startups make it to the second year, by the fifth year, 50% have sunk without trace. While most entrepreneurs would not want to reckon with these very harsh realities, there is no point in ignoring the elephant in the room. Businesses don’t fail mysteriously; some common reasons account for these failures, and you will do well to recognize them so that your business does not end up becoming a dismal statistic.
1. Not Being Able to Deliver Any Real Value
The reason for the existence of any business is that it delivers value to its customers who are willing to pay good money for it. The way to satisfy and delight customers is to under- promise but deliver more than expected. And when you can do this again and again, you are laying the foundation of your survival. Businesses that endure identify a solid value proposition that is qualitatively superior to that of the competition and is willing to defend their position. Since the environment is constantly changing, you will need to keep on realigning with the changing needs of the customers and keep the value-proposition intact. Businesses that deliver value consistently end up with customers being their brand ambassadors and there’s nothing to beat that.
2. Not Being Able to Vibe with the Target Audience
Most businesses think that all you need to do is to identify your target audience. However, the real intent of the business should be to understand their needs and aspirations and deliver products and services that satisfy that need better than anybody else. If you do not know who your target audience is and what they want, there is no way that you can design your products to fulfill their needs. To be truly successful, you have got to understand the customer in detail including his points of discomfort. Rather than making assumptions about their profile, you should be scientific in your approach; use market surveys, focus groups, telephonic interviews or even email campaigns to understand who your customer is and what motivates them. The more detailed your information, the better your understanding and your connection with them.
3. Failing to Keep a Check on Expenses
Most businesses when they are starting tend to be very cautious about spending money because there’s not enough. However, it is when that they receive the first tranches of investor money or take loans from private lenders like and find their coffers full that they tend to run amuck and start spending like crazy to accelerate the business. It is essential to keep a strict watch on the money and make everyone involved accountable so that you ensure a positive ROI. Sure, you will need to make investments that do not have an immediate payoff, but you should understand very clearly what the need is and how much to plow in. If you are careless with your own money, it is very likely that your business finances will also be shot and survival threatened.
4. Inability to Optimize Sales Conversions
With multiple issues to be addressed at the same time, entrepreneurs often forget to address one of the most important concerns; that of optimizing the sales conversions without which, the business burns money so fast that its survival becomes very difficult. Typically, this is seen in the form of very heavy advertising and promotional spends that are incurred when the business is trying to make its mark in a crowded and competitive field. By addressing the efficiency of conversions from the very start, entrepreneurs can ensure that the return on investment is positive and the business is sustainable. Sales conversion optimization is all the more important because doing only SEO (Search Engine Optimization) cannot get you the results that are required quickly enough.
5. Not Being Able to Establish a Sales Funnel That Works
Business owners need to think actively about creating an effective sales funnel right from the word go. Without the presence of these devices that automatically propels potential customers to the ultimate goal of making transactions without any intervention, most online businesses would be spending too much time and effort in making sales. When you have a finely-optimized sales funnel, you can have more time to focus on other customer initiatives like customer education. Using an effective sales funnel lets you compete with businesses that have been around for longer or are larger. Business owners are also able to use sales funnels to build a better relationship with their customers. Sales funnels serve to create a special relationship with customers enabling you to tell your story while also promoting your product or service; you can look at it as a soft sell with value additions.
6. Failing to Compete with the Market Leaders
One of the biggest challenges that small businesses have to face invariably is competition from the larger and more established players. If the market is very lucrative, they will be up, and against cutthroat marketing tactics designed to wipe them out with lost sales and cause debt. For more details, please visit here. In such a scenario, it is essential that small businesses find a niche that can give them the space to grow without inviting the wrath of the bigger players.
Establishing a business like a restaurant or retail store can be far easier than making it grow and surviving the first few years. Companies that have thrived have not only avoided the pitfalls discussed here but also ensured that they operate transparently and ethically where customers will like and reward their establishment. Healthy businesses are ones built by management that provide useful and strategic leadership.