By Evan Vitale
It’s a well-known fact that most small businesses fail within their first three years. In fact, years 3, 5 and 7 are the most difficult. Once you make it past year three, you’re not home-free. Hiring more employees; handling additional expenses and more sales, clients, customers, etc., build up over the next few years and for some business owners, it may all be too much to handle.
Here are some of the top reasons why businesses fail:
(1) Lack of Financing. This is usually the primary reason why businesses fail. Many business owners under-estimated the amount of capital needed to get their business off the ground and, as a result, funds run out before the business opened its doors or within the first year.
(2) Poor Business Management. While some entrepreneurs have a great idea for a new business, they may not be strong in other important areas such as day-to-day business operations, marketing, purchasing, selling, planning, hiring and managing employees. As a business owner, you’ll find there’s a ton of additional work that needs to be completed on a daily basis.
(3) Started A Business For The Wrong Reason. Sometimes, people start a business out of necessity (i.e., they got laid off from their current job) or they see a successful business and feel the need to copy what they think is a good idea for a business. Just because someone else is successful, doesn’t mean you’re going to be able to mimic the same success.
(4) Business Location. You’ve heard this before: One of the most important pieces for a business is location, location, location. You might have a good business, but it’s not in the proper location for success.
(5) Business Growth. The failure to handle business growth is also a factor in why some businesses fail. If you take on more customers and more client projects, you need to make sure you have the resources (including staff) in order to provide the same high-quality products and services that captured your customer’s attention. In addition, don’t spread you and your staff too thin so that you’re not properly handling the needs of your initial client base. They will quickly notice the difference in quality and service levels.
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