According to the US Small Business Administration (SBA), 30% of new businesses fail during their first two years, while 50% fail during their first five years and another 66% close their doors after their first 10 years.
Fortunately, there are several steps a company can take to ensure their business doesn’t join the above statistic.
To ensure your brand’s longevity and growth, read the below advice on how to avoid business failure.
Develop a Strong Business Plan
While no budding entrepreneur enters a business field to fail, a poor business plan could lead to their company’s downfall.
To give your brand the best possible chance of success, you must develop a strong business plan that will provide an outline for your venture’s success.
There are seven core elements to a business plan to follow:
- Executive Summary
- Business Description
- Market Analysis
- Organization Management
- Sales Strategies
- Funding Requirements
- Financial Projections
It is important to be realistic when estimating investment fees, revenue and profit, which could help your business to stay out of the red and could attract many investors to inject a lump sum into your business.
Take Tight Control of Your Cashflow
One of the primary reasons why many small businesses fail is due to a lack of profitability.
A recent study found that 40% of small businesses made a profit, 30% struck even, while another 30% lost money. If you want to avoid cash flow issues, you must maintain a tight grip of your finances.
Not only must you aim to maximize sales, but you also must reduce your company’s overheads.
For example, you could:
- Utilize video conferencing over face-to-face meetings
- Negotiate a lower rental fee
- Change utility providers
- Outsource tasks
- Invest in automation
By maintaining a firm grip of your cash flow, you will be able to identify if your company is facing a financial downturn, so you can take the appropriate action.
Steer Clear of Debt
Multiple loans, credit cards and other varieties of debt can be a double-edged sword for startup companies.
While they can help to inject a lump sum into your business, the amounts will need to be repaid over time, as well as any associated interest rates.
If you are spending most of your company’s cash flow on debt repayments, it can make it difficult to inject money into the business and can reduce your company’s flexibility.
As a result, you could fail to keep up with your industry rivals and you’ll be forced to close your doors for good.
Study for a Diploma of Business Online
Many obstacles will come your way throughout the lifetime of your business, and it’s your ability to react that will ensure your brand’s longevity.
Even if your business is hitting every sales target, you must remember that no company is secure against the unexpected. After all, the economy could crumble, a natural disaster could strike, or you could become the victim of theft or a cyberattack.
To ensure your business can handle every potential challenge that comes its way, study for a diploma of business online, which will cover everything from global business to project management.
You will ultimately develop the knowledge, skills, and confidence to direct your business out of uncertainty.
Develop a Competitive Nature
Every new company must adopt a competitive mentality to secure new customers and boost revenue.
Your venture’s success will be dependent on your company winning battles along the way, which means developing the best social media campaigns, reaching the number one spot on Google for your desired keywords, and encouraging customers away from your rivals.
You can guarantee your competitors will happily fight you to the top, and it should be your goal to stop them.
Lead Your Team
Rather than sitting behind the scenes, providing little or no direction to your employees, you must focus on leading your team to greatness. Behind every successful business is a successful leader who creates a plan of action to help a company achieve its goals.
So, motivate your team each day to work harder and better, reward them for their efforts, and offer clear, concise instructions to prevent confusion or inefficiency.
Look After Your Customers
Your customers are the heart of your business. Without them, you will have no choice but to shut down your website, pack up your belongings and close your doors.
It is imperative to treat your customers like they are kings and queens, which is why you must make customer service a primary focus. If you are attentive to their needs each day, you could retain their brand loyalty and encourage word of mouth.
Grow Your Sales with Powerful Marketing Campaigns
Make your customers aware of your brand, products, and services by developing powerful marketing campaigns, which should blow your competitors’ strategies out of the water.
Before you start developing posts and ads, find out who your customers are and their needs, so you can effectively promote a product or service to them.
Study Your Industry Rivals
As mentioned, you need to develop a competitive nature in business, but you will not be able to do so by disregarding your rivals’ campaigns.
Instead of ignoring your competitors and pretending they don’t exist, put time aside in your diary to study their moves. It will help you to identify where they are excelling or falling short in their sales and marketing tactics, and you can use this knowledge to power your own strategies.
For example, do they hold the top spot for your desired keywords in Google? Identify where they have secured their third-party backlinks and aim to publish higher quality articles on the same websites.
Conclusion
While you might not like to consider business failure, it is sadly a reality for many entrepreneurs.
You must, therefore, take the reigns when it comes to your company’s cash flow. Plus, you should develop forward-thinking, competitive marketing campaigns and customer service strategies that will help you to exceed your industry rivals and increase your revenue.
