5 Reasons Businesses Commonly Faily
Updated: Jul 18
Running a business is not for the faint of heart. Entrepreneurship can be risky and stressful, but if you are smart about running your business, it can also be extremely rewarding. However, no matter how rewarding running your business might be, a lot of businesses fail and this is something that you need to prepare for (to avoid). In fact, the unfortunate fact is that most new, small businesses have a better chance of failing then succeeding. In order to prevent becoming a statistic with your business, you need to be very intentional with planning and execution.
Here are a few reasons businesses commonly fail + tips on avoiding falling into the traps yourself:
5 Reasons Businesses Fail
A poor business plan
While some businesses do succeed without a plan, I always live by the phrase, “fail to plan, plan to fail.” Because of this, I believe that coming up with a business plan is essential - it is your roadmap to success within your business and it should project the next 3-5 years ahead and outline where you want to go with your business in the future, as well. Before creating your business plan, do a bit of research on it. On your market, on your products, where other similar businesses are (and have come from), where you see it going, and what other business plans look like. From here, you will have a good idea on what to include and not to include in your long-term business planning.
Customer service is lacking
I’m almost positive that if I asked you about a time when you had a bad encounter with customer service, you would immediately begin to rattle off 10+ instances to me. As a consumer, you want and need good customer service. In reviews online, people definitely highlight great customer service encounters (and bad ones, too). Nobody wants to call a business and end up being passed around to 5+ different people, while waiting an hour or more just to try to get a refund or an update on shipping time. This is precisely why customer service is a huge factor in a successful business - ultimately, it is the heart of the entire business because without it, you will fail. Small businesses stand out to me because most of the time, their customer service is superb. It is a known fact that if you have great customer service (along with a good product), you will succeed. The benefits you will reap from great customer service are never-ending.
Too much high-interest debt
I know that this past year has been very rough for a lot of business owners, but in order to avoid business failure financially, it is important to note that having too much high-interest debt can be detrimental for your business. Having some debt is not a terrible thing (although the idea to become totally debt-free is obviously ideal), however, you do need to be very smart about it. If you need a small business loan after this rough year, or if you need help tackling your high-interest debt, a business to consider reaching out to in Atlanta might be Chapes-JPL. While they focus on Johns Creek GA pawn loans, they also buy valuables outright, and they have small business loans, as well, that are low-interest, and based on collateral. The great thing about Chapes-JPL is that they have amazing reviews and all of the business you do with them is safe, confidential, and in private financial offices. Like I said, having some debt is not terrible, but you do want to be smart about the debt that your business does have and after a tough year or two, you should definitely do research on the options you do have.
Not knowing what your customers really want
This is a good one. So frequently, I see business owners who do not know what their customers really want at the end of each day. They assume they have a great idea because it appeals to themselves (as a business owner), but nobody else really takes to the idea...and they have no idea. To avoid this common mistake, all it takes is a few things. 1) research. Look at other similar businesses. How are they doing? What can you do to stand out? How can you make the product or experience even better for your customers? And 2) Branch out by asking questions and taking advice and opinions! You need to get the opinion of a lot of people with a lot of different backgrounds and in a lot of different areas before you start a business. This will ensure that you have a good market for your idea(s) going forward.
If you hadn’t already seen this, LinkedIn puts communication as a skill on their platform and there is a really great reason why they do this. It takes patience, skills and a lot of hard work to have good communication skills, but it always pays off - especially when it comes to your business and managing people. If you are starting a business or if you already own your own business (or even if you are a manager within another business), you have to have great communication, or there will be a lot of setbacks due to misunderstandings, delays, and unorganization. A few ways to improve your communication skills are to stay involved and stay organized. Always keep a checklist on what you need to do, get to know your employees, and always roll with the punches.
Are you doing any of these?