Congratulations on starting your new business! The steps you take on first year of your business will set the stage for the entire existence of your business. I love new businesses that they start with a clean slate, no regrets, nothing to go back and try to fix later, and best of all it’s all hopes and prayers for wishes that eventually will come through.
According to Small Business Administration, over half of businesses fail in the first three years and only one in three get to their 10th year anniversary. Many sources teach these three valid reasons as the reasons for failure. Lack of right planning, funding and flexibility are the major factors. Other factors such as not knowing the market and unfamiliarity with a business plan can contribute to dilemma and failure.
The number one reason for business failure is because a decision maker who can be also owner of the business decide the business does not worth the time, effort and pain required to operate for another day. But what have changed from less than a year ago when the owner had
"whatever it takes attitude".
The first day when people opened up their business, unbelievable they are enthusiastic and at the time of permanently closing, they carry unimaginably sorrow. A friend of mine was operating his business for 30 years, but he lost his lease, equipment, and his inventory. He doesn’t know why he gave up, but the good news is that he still talk about coming back to a different location and start all over.
As a business progresses and starts servicing their customers, they develop issues in operational part of the business that need solutions. Many times we leave few of these little pesky issues behind. As a small business owner, you will manage many of the issues very well but the cumulative effects of the leftover issues is greater than the time available to operate a business. Generally failure is brought by;
There are so many things coming at the business owner that he cannot keep up with all of them and he simply gives up.
All business owners are probably great and have expertise at their product and service but other expertise such as finance and marketing is a mandatory element of a successful business and managing the business financial status unless it will stop the progress at some point sooner or later.
They have a strategy for saving but they don’t have a plan for growth.
There are many aspects for a business to succeed. We took out many technical jargons and simplified the process. What we found three segments for each business. All these segments relate to revenue. At the bottom line, when a business revenue is lower than what supposed to be means it is failing.
1. Operation is what Produces Current Revenue. The service you provide, and the product you sell brings you actual revenue. All your equipment, inventory and real estate are what you need at the beginning to pay close attention to this segment of your business.
2. Business Development is what Ensures Future Revenue. Businesses do not last without a growth. Their customers move , or start to use competitors, or simply stop using the products or services. The companies without marketing plan simply are out of business, but most of the time their owners start to realize this fact too late.