Seven out of ten businesses fail within the first ten years. If you own or run a business or you’re hoping to be an entrepreneur someday, that’s a frightening statistic. The statistic quoted above was from the study titled “Redefining Small Business Success” by the U.S. Small Business Administration. The study further notes that 50 percent survive at least four years, and just 40 percent survive six years or more.
Take a deep breath. Don’t be discouraged. As long as you know what the pitfalls are, your business can carefully navigate tricky grounds and make the right decision. Here are five of the biggest mistakes businesses make:
Not Conducting Effective Market Research
Many people dream of starting a business because they’ve seen and read the success stories of entrepreneurs. However, it’s not all rosy. Some start businesses on a whim, thinking that their ideas would become the next “Facebook” of the world.
However, those are the wrong reasons to start businesses. The only reason you should start a business is to solve the need of clients. Without a doubt, a business exists only as long as there is a need. To know the pain points of the people you want to serve, start with useful market research. Read this article to know more about undertaking market research.
Lack of Leadership and Teamwork
Once you enter the entrepreneurial fray, you’re up against experts and experienced professionals who are good at what they do. Most new entrepreneurs thrive on passion and intuition, but that won’t cut it.
Jack Welch, a former CEO of General Electric, once remarked, “No matter the innovations and changes in the marketplace, the one thing that hasn’t changed is [that] the team who fields the best players wins.”
Build the best team you can find and invest in them. As the leader of the business, find courses or mentorship opportunities to become a better leader. The best organizations have the best company culture.
Failure to Create Systems
As much as you may want to create an environment that allows for innovation, structure, and systems are critical. For instance, if a business does not have a proper and functional sales funnel, it runs the risk of losing customers and not optimizing conversions. From CRM systems to financial audit systems, put guides in place so that your team knows what to do.
Not Being Open to Innovation
Be open to innovation
The list of companies that have collapsed as a result of being dated is endless. Many companies, once they become successful, are not willing to listen to new ideas and concepts that may disrupt the status quo.
For instance, if you want to go global and function in countries such as Japan and Israel, you’d have to be open to learning about digital faxing with solutions such as eFax. You can read more about how eFax works.
Business failure is widespread across all sectors. To sustain your business for a decade takes a lot of hard work and innovation. It also requires knowing the mistakes that failed companies have made and how to avoid them.
In this article, we have explained some of the reasons most businesses fail. Learn from them and make your business one of the success stories.