October 18th, 2019
You need only look at the empty retail outlets on your local high street, or cast an eye over business failure statistics, to know that not all business owners experience great success. You might experience worry as a consequence, in fear of what is in store for your business.
Could you become the next failed statistic?
We don't have the answer for you, but what we can do is suggest some of the reasons why many businesses face failure. Take a look below, and then follow our suggestions to improve your chances of survival in the business world.
Reasons why some businesses fail
#1: They don't set themselves apart from their rivals
Competition is fierce in the business world, and so to survive, business owners need to differentiate themselves from their rivals.
They can do this in a number of ways. Firstly, they can differentiate themselves with their branding. You need only look at the Ferrari Logo or the Apple symbol, for examples of this. You instantly know what business is being promoted when you see those iconic images, and because of the proven product quality attached, you can feel an affiliation with them. For those businesses neglecting this aspect of their business, they will start to see a downturn in profits when more recognized companies take the lead in sales.
Businesses can also create a better product, offer their customers fairer prices, and repurpose their business ideas for new demographics. On the flip side, if a business owner fails to differentiate themselves in such ways, they will quickly fall foul of the competition.
So, what should you do?
Well, we have already referred to the steps you need to take. Learn how to brand your business, and then push your brand everywhere until it becomes ingrained in the public consciousness. And then research your rivals, as by knowing more about them, you will then be in a better position to set yourself apart from them. Success will surely follow.
#2: They mismanage their finances
Some business owners run into financial trouble when emergency situations arise, and they don't have enough money to dig themselves out of hardship. This might be as a consequence of spending too much, or because they don't have the customers needed to make a profit. Other business owners spend too little, perhaps afraid of that last point, but by being frugal, they fail to make the purchases that could grow their business or that fall more directly in line with consumer trends. And many business owners are financially clueless, so they struggle to budget properly and make mistakes with their taxes.
The upshot of all of this? Business failure.
So, what should you do?
There is much you can do, and this begins with finding yourself an accountant. If you don't have a lot of financial know-how, your accountant will steer you on the right path. You should also create an emergency fund, set your business financial goals so you can save accordingly, and market the heck out of your business to ensure you make a profit. Check out these other small business finance tips and follow them as a means to keep a healthy cash flow within your business.
Will your business succeed? Maybe, but to improve your chances, follow our suggestions, and then research other reasons as to why businesses fail. By taking the right next steps, you might then step out of the shadows of those other businesses who have failed before you.
We wish you every success!