When I came up with the idea that later became my first small business, I spent lots of time searching the Internet for articles for successful businesses. One year later, when my business had failed, I found myself asking Google “why did my business fail?” How I wish I had read these articles first! If you are just starting out in business, rather than thinking whether you are doing all the right things to make this work, you should ask yourself “am I making too many mistakes that will doom my business?” So here are 5 reasons why your new business could fail:
1. You have invested too much or too little money on it
Be very stingy with your money, even if you have a lot. For example, lots of people ask business experts how they can improve their Google Adword campaigns, saying that they have spent hundreds or thousands of pounds on them and got nothing back. Why did they end up spending so much money? Because they had it in the first place. If they had been constantly evaluating and tweaking their ads, this would not have happened. On the other hand, I have heard people saying “As we are a new business we have little money for advertising. Well, what’s the point of having a really good business idea if your potential customers will never hear about this? Thanks to technological advances, you can make your own website or design your advertising material, and lots of new business owners choose to do that as it saves them valuable cash, but, believe me, your customers can easily see it’s not the work of a professional.
2. You choose a business area that looks interesting and fun, which you have very little experience or knowledge in
Stupid as it sounds, lots of people (myself included) have done this. I have friends who want to open a coffee shop or a florist shop but are not willing to spend any money on training or time to work for a coffee shop or a florist! In order to have a successful business you need to know you are the best in your industry. Your customers will notice if you are not and they won’t be coming back!
3. You don’t have a business plan
You would be surprised at how many new businesses do not have a business plan. Remember: Thinking of a business plan but not writing it down does not count. A business plan that took you less than two to three weeks of hard work to write does not count. A business plan written by a professional or copied from another business in the same industry does not count. You will be surprised at how many things you will learn while writing your business plan. And if you cannot take these two or three weeks to write it, maybe you are not serious enough about your business.
4. You over-rely on advice that is not given specifically to you or your business
I am aware this could backfire, but perhaps the Internet and some so called “serial entrepreneurs” should not be the go-to point for advice and business ideas. For one thing, what has worked for someone could be disastrous for someone else. For example, promoting your business via Twitter and Facebook is mentioned so often among the online business experts that I convinced myself it would be worth a try for one of my businesses. Although I was never interested in Twitter before, I decided to open an account and give it a go. You can guess what happened next, right? If you really know your sector you should know what works there, without relying on general, oversimplified advice online.
5. If you stop trying too early, your Business is Doomed to Fail
More than one in two businesses fails within a year in the UK. And this makes me wonder: Why do these entrepreneurs stop trying so soon? Could it be that if they kept trying, their business would succeed? Remember that you cannot go from nothing to everything in such a short space of time. Start small and if things don’t seem to flourish keep trying and tweaking your business plan. Consider taking a break in order to accumulate some savings and then start again.