Why Do So Many New Businesses Fail? Articles | Entrepreneur

By: Matthew Hick

Nearly 600,000 new businesses are started every year in the United States. Unfortunately, thousands of them also fail! How can you ensure that your new business won’t be one of them? Safeguard that new business venture against failure by first acknowledging some of the mistakes many new entrepreneurs are apt to make. Then, take the necessary steps to learn the basics before you set up shop.

Just because you have a great idea for a new business, doesn’t mean that you have the skills necessary to actually make it a success! Failing to acknowledge that you aren’t equipped with the knowledge, or the skills to do everything yourself, may mean closing up shop before your new venture ever had a chance. Some of the main mistakes failing business owners make every day include:

Poor Planning.
A good business plan is an essential tool to ensuring success. Every stage of a business’s growth needs a new and different approach. What works for a start-up will not work for an established business. The tools needed to keep an established business running smoothly may not be helpful when it’s time to expand. Assess your business every few months, taking note of successes and failures in all departments. Constantly be on the lookout for ways to improve customer service and marketing, as well as new trends and customer interests. Never stop planning for the future. Constantly ask yourself where you want your new business to be in six months, or six years. Then implement strategies to get you there.

Poor Management Skills.
Every successful business needs a strong leader with the vision to see what it can become, and the know-how to get it there. A good manager is able to excite his/her workers and get them to reach for what may initially seem to be unattainable goals, while at the same time being able to keep a tight control of every aspect of the day to day running of the business. Without this ability, failure is almost guaranteed.

Poor Marketing.
Success depends on a solid marketing strategy, and the ability to implement it. Marketing isn’t just about advertising. It’s about finding unique ways to get your customers to view your product or service as a necessity in their life. Without that, sales will be weak, and success out of reach.

Poor Sales Techniques.
Not every entrepreneur is a good salesperson. But every business can not survive without one. Whether you’re trying to sell a product, or a service, convincing the buying public that only your company can offer them what they want and need is essential to success. Failing to hire qualified salespeople can be a fatal business mistake, especially for the new start-up.

Poor Financial Management.
One of the top reasons why new businesses fail is a lack of sustaining funds and poor financial planning and management. Be sure to set aside more than enough funds to get through the first 12-18 months of business (including salaries, rents, utilities, inventory, etc), before ever opening the doors in the first place. The initial year can be tough on the bottom line. Expenses almost always exceed income for months. Be realistic with your calculations from the start, and you won’t find yourself in financial straights before your new business has a chance to get off the ground.

Not Acknowledging When You Need Help.
Everyone can’t be good at everything. While it’s important to do as much as you can yourself in the first few years, it’s equally as important to recognize when you lack the skill sets to do it yourself, and to find someone who can. Whether it’s hiring an accountant, a new salesman, or an office manager, successful entrepreneurs know when they’re in over their heads, and get help before it’s too late!

Starting a business from the ground up takes perseverance, knowledge, and a lot of hard work. The odds of success may be slim, but if you follow these simple rules, you just might have a chance.