4 Most Common Reasons a Small Business Fails

Despite the support and efforts most small businesses failed in their first year. Business failure has been a common phenomenon in a developing economy and it has been discovered over time than large scale enterprises although the latter have their own challenges, business failure starts gradually and if the owner is not aware of the early sign, it may have devastating effect on the survival of their businesses, below we are going to look at some of the most common pitfalls facing young entrepreneurs to guard against persistent failures.

Lack of objective in decision making
Most entrepreneurs are subjective about the way they respond to the people, circumstance and events in their individual lives. This is because they care so much about other people’s opinion rather than what is right. Caring too much about what people think may lead to disappointing and unfulfilling life. When such people look back on their life, they feel very terrible when they realise that most of the choices they made were strongly influenced by the opinions and judgments of others instead of their preferences. Business owners at times get too emotion in their decision making and take critical business decisions subjectively rather than basing them on facts. When they start their businesses, they employ over five to ten members of staff which some of them out pity, eventually when the business operations don’t go as planned, they have no other choice but to lay off some of the staffs in a bid to reposition their businesses back. PAY ATTENTION: 4 Ways that Poor Cash Flow Can Damage your Business

The same staff who employed out of emotion still challenge companies to pay their outstanding salaries when they are being sacked even when it is clear that the company ran at a loss throughout the period in question. They should also be ready to fire any employee that is consistently under-performing; be ready to move their account if bankers do not deliver reliable services; be ready to change a supplier if he or she is not giving them a competitive rate. The best decisions that favour the company most be taken at all times.

Wrong parameters for measuring business success
Most entrepreneurs are under pressure to succeed, this is partly driven by the pressures their families, colleagues and friends directly or indirectly put on them. There is a myth that once you work for yourself you must ride a very big luxury car to show for it and if this is not the case, your business is not doing well enough. Unfortunately these business owners key into this psychology. They do everything to live big even at the expenses of their businesses. They just need to give the impression that business is good even though things are not working well for them, even if in the real sense it is not. Entrepreneur should reflect in all decisions as regards investment life and other areas not just in business. Every single dollars spent must create value. The fact that your colleagues who are still in paid employment now drive bug cars is not enough reason why you should strain your business in order to get one.

I want to grow fast syndrome
If a business grow too quickly or expands too much, it can experience financial, legal, staffing, resources and supplier problems. For business growth to be successful it should be sustainable. To guard against this pitfall, businesses should grow organically. When you pursed growth by all cost, it simply puts pressure on the finances of the business. PAY ATTENTION: The Top 10 Reasons Small Businesses Fail – And How To Avoid Them

Common Business Management Mistakes To Avoid
The eagerness to storm the market and make money from a business idea often leads many entrepreneurs trying out many different strategies to gain people’s recognition and patronage. The fast pace of the business environment should not lead to rushed decisions as they need to take precautions before implementing them. Globalisation has led to the invasion of foreign and conventional strategies, every new and existing business is eager to try them out without analysing the readiness of their businesses for such strategies. When veterans mentor and other business owners using their real life examples of their experiences in business, the mentees are able to learn and avoid such mistakes. Experts have also discovered that the pitfalls are often repeated due to lack of proper guidance from those who have treaded the same path initially. Every idea and business strategy is a great one but it should be analysed for its potential impact on the business implementing it.

Excessive capital input
When entrepreneurs identified some financial imbalance in their business, they need to take some certain decisions that can eventually make little impact on the business. When you notice a drop in sales, don’t think it’s because of poor inventory and focus all your energy on improving the inventory. You need to first of all try to identify the problem and then analysis to improve the business. Sometimes it could be better by understanding the market and how to take inventory properly and learn more about product promotion.

Implementing an unstructured idea
Developed a bright idea you see on other business owner adopt and went ahead to implement it on your business without considering its relevance might hurt your existing business strategies. In order to create awareness for your business you might decide to have a road show which will create a different impression of the kind of business you runs in contrast to what it really stated otherwise. While trying to expand your business to increase profit, it is important to partner with business owners who are also doing the same business as you.

How to Attract New Customers to Your Small Business
Your inability to get enough loyal customers should not discourage you from doing the business. There are various business techniques to adopt to find more customers and increase sales. Entrepreneurs in the small-scale enterprise category often face with the challenge of low customers patronage. According to analyst, what you required is how to generate new sales lead as this is an important skill for every entrepreneur. There are variety of age staple techniques and thanks to technology with their new innovations, new tools are now available you can use to find new customers and potentially increase sales. It is best to understand your choices as this will determine which may work best for your business to reach new customers. As an entrepreneur you should note that newspaper readers may not be moved by internet based sales techniques, similarly, business people who are accustomed with hiring only people they know may be better swayed by meeting you at a chamber of commerce meeting than accepting a blind invitation to connect on social network. It is your call as an entrepreneur to know the best means through which you can reach your target market.

Sales and marketing are the engines of entrepreneurship. Entrepreneur must have both skills if they want to grow their business and increase their customer bases. Having these skills alone is not enough, you must be an expert in your ability to sell and market your products effectively especially if there are intangible products. It is important as I stated above that you conduct market research to understand your target audience and their needs. You need to also know how to determine which lead generation techniques are best to broaden your sales horizons and how to increase sales by following several strategies to sell additional products or service to your existing customers. Below are additional steps to take that will help you find more customers and boost sales for your small business.
Networking

You can employ the old fashioned method of networking which require you to get involved in community organisations such as chamber of commerce or attending business functions such as trade show, webinar or book show, etc. this can lead to potential businesses. These are important ways of networking to find new customers. You can take advantage of social networks like; LinkedIn, Facebook and Twitter to grow your customer base. PAY ATTENTION: 6 Best Practices on How to Succeed in Managing a Business

Encourage your loyal customers
Your loyal customers are the champions of your products, you should encourage from time to time by giving the right attention and care, as whatever treatment they receive from you will be publicised. You should be able to use your business contacts who are happy with your products to help generate references and referrals. Once you have sold to them, they can help you sell to others by offering positive testimonials and leveraging a refer-a-friend campaign created by your business. This technique also employs word-of-mouth marketing help customers to help you by giving them the ammunition they need to tell your story to others. Don’t be afraid to ask if there is someone else you can talk to and also help with your services. As an entrepreneur learn to use every legal strategy to boost your sales and increase your profit.

Partnership with other like-minded business persons
Affiliate marketing is also crucial in your bid to grow your customer base, this is another gainful strategy to employ. You should look at other non-competitive products or services that are reaching out to the same audiences to see if there are ways you can collaborate through shared outreach efforts such as newsletter, mailing both online and offline or co-branding opportunities. You probably can uncover a handful of like-minded products or services that are talking to your customers. It is always advisable to suggest to these business owners ways your business can support each other.

Advertise your business
This is one tool that requires spending; it is not out of place to spend money while trying to boost sales and productivity of your business. Business owners are encouraged to spend three to five per cent of their revenue on advertising but a small business needs to make sure that advertising is effective to their business before making the decision. You can also carefully pick your markets for advertising to make sure you are reaching your target audience. You have to define your demographics before you develop your advertising or marketing plan. Remember good advert attract customers to businesses so ensure yours is carefully done. Increase sales to existing customers.
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