Why most small businesses fail
According to several studies carried out in Europe and the US, an average of 50% of small businesses never really takes off and is forced to close down within the first 5 years. What starts with enthusiasm and passion often ends up with big debts, frustration, lost self-esteem, and sometimes even with burnout and broken marriages.
We have been working in the area of business development for over 10 years, and found that the most common causes for small business failure include:
1. Lack of a clear strategy
Entrepreneurs are often driven by great ideas and passion, some by ambition or by a practical need for money. In many cases they don’t take the time to look at what they ultimately want to get from their business, who they will be really working with, how they expect customers to give them the return they want. They often spend too much money on things that will not bring them any real benefit, while saving on investments that could bring them long-term returns.
2. Lack of effective systems
Entrepreneurs often work around the clock and don’t have time to look at their processes and at systems that could simplify their work, keep their financial situation under control, save them time, considerably improve the quality of their service and increase customer retention.
3. Lack of an empowering mindset
While many entrepreneurs have a hard time selling their products and services for fear of being “pushy”, many others are indeed pushy and miss seeing the person on the other side. In both cases, they do earn something, but not enough to build and maintain a profitable business in the long run.
4. Lack of a good work-life balance
When the focus is all on developing the business and making money for the business to survive, the rest is often postponed: rest and relaxation, healthy nutrition and sports, fun, quality time with the loved ones, etc. This becomes even more critical for entrepreneurs working from home. In the long run this has a very negative impact on work performance and business success.
5. Lack of support
Most entrepreneurs believe they must do it all, and that they do not have the money for a business coach or for professional assistants. So they end up being the leader, the marketing manager, the salesman/woman, the technician, the secretary, the book-keeper and even their own board of advisors. This decreases the quality and effectiveness of marketing and sales, leading to poor strategic decisions and lower profits.
What financial opportunities are you missing out on because you are too busy dealing with problems?
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