10 Reasons you could fail in business
Being a success in business is much the same as being a juggler in a variety show. You have to keep all the balls in the air at the same time. Drop one, and the whole act falls apart. So what are the things that have the potential to cause your business to fail? Here’s a lightning tour of the top ten…
1. Lack of business skills. Being good at doing something isn’t the foundation on which to build a business. You’re going to need other skills as well. You’ll need to know about, in no particular order, cash-flow, employment law, contractual obligations, how to negotiate, packaging, credit control… the list goes on.
2. Failure to understand costs. Don’t think only about cost of materials; you must factor in professional fees, utility bills, expenses, all kinds of taxes, bank charges, loan repayments, advertising, marketing, and insurance. All of those have to be paid before there’s anything left for you to take as a salary.
3. Wrong product. Or maybe you have the right product in the wrong place. Doing market research amongst potential clients is vital to assess the potential demand and what people might be prepared to pay for what you have to offer. Remember, just because you find your hobby rewarding doesn’t mean you can build a successful business on it.
4. No unique selling point. What makes your product different from, and or better than, the competition? If nothing does, then modify the product, or think of something else.
5. Poor pricing policy. If the same or a similar product is available down the road at a lower price than you can manage, you won’t sell enough of your goods to keep your business afloat. Revise the product, sell it where there’s no cheaper alternative, or seek to establish your product as high-quality or niche, and market aggressively on that basis.
6. Poor credit control. Don’t allow creditors to make your business a source of free credit by waiting for weeks until they pay you. Bad debt kills small businesses
7. Saturated market. No-one needs another supermarket chain. Enough said.
8. Lack of commitment. Just because it’s a sunny day doesn’t mean you can have the afternoon off. People running businesses always have something they could be getting on with. Having a business is like caring for an infant. Just when you think you’re in control, the infant – or the business – will cry out for your attention.
9. Shabby shop window. Perhaps it’s a physical shop, or perhaps it’s your web site. Both need to be attractive to draw clients in. A physical window with faded signs, cobwebs in the corners and dead flies at the bottom shouts: “We don’t care, don’t shop here.” Your web site needs to be attractive and easy to navigate. Don’t have it created by the son of a friend who tinkers about on the web in his bedroom. Sure, you’ll save a few pennies, but the lost business will be worth thousands of times what you saved.
10. Overextension. You don’t need a swanky office suite on Day One. Think of what product you’d have to sell to cover the rent. Start small, build carefully and sustainably. And don’t buy more raw material that you can use. Small and often is kinder on your fledging finances. And on the subject of raw materials, are you getting the best possible price? The only way you can be certain is by negotiating. There’s no harm in asking for a lower price.