Every year thousands of businesses launch. Every year thousands of businesses fail. In fact, business experts say that one in five businesses will fail within just a few years of launch. The actual numbers are probably quite a lot higher. You don’t want to fail. You want to succeed. When you know why entrepreneurs fail, you can properly prepare for success. Here are the top reasons why entrepreneurs fail.
#1 Lack of research – It’s vitally important to make sure there’s a market for your business before you launch. You have to research both demand and supply. Who is providing the same products or service? What problem are you solving for people? Who are your prospects?
The research phase of launching a business is one of the most critical. Without proper research into supply and demand, you’re not going to be able to position your business successfully. Very few businesses succeed without solid initial research.
If you’re unsure how to research your business idea, talk to an expert. Get help. Speak to other entrepreneurs you trust. You don’t have to share your idea with others, but rather learn how to research your idea.
#2 They don’t understand their market – This also relates to research but it’s a different kind of research. Before you launch your business, it’s vital that you know exactly who you’re marketing to. Why? Because you need to position your product or service to meet their needs. If you don’t understand their needs, you may miss out on profits.
#3 They don’t understand cash flow – Cash flow is essential to survival. Actually, poor cash management is perhaps the most common reason for business failure. Entrepreneurs must create a budget. They have to be realistic about how much they expect to earn. And they must have a tight rein on their expenses. In order to pay the bills, you need to have cash coming in on a regular basis. Cash flow is essential to survival.
#4 An inability to market – Not everyone is a marketing genius. It’s important to realize that marketing is essential to success. If you don’t have a solid marketing plan, your business will not thrive. In business, the old “if you build it they will come” mentality just doesn’t work. If you don’t like or understand marketing, then hire someone who does.
#5 No business plan – Many people believe that a business plan is only necessary if you’re seeking funding. This is not true. In order to achieve your goals, it’s important to plan how you’re going to succeed. Your business plan is your road map to success. Don’t skip this important step.
Take heart and think positively. While one in five businesses fail, the others succeed. Research, plan, and understand your market. Commit to marketing and manage your accounts with solid accounting and cash flow management. You’re destined for success!