Why 8 out of 10 small businesses fail and how you can avoid becoming a statistic
Despite the glamorous way in which small business ownership is portrayed, a staggering 80% of businesses fail in their first 18 months. However, a high percentage of these failures are avoidable. In this blog, we'll go through five of the biggest mistakes small businesses make so you can avoid them:
1. Failure to connect with your customers
Most small businesses fail to link their success to their customers’ wants, needs and behaviors. This disconnect means that you’re not only blind to your customer but also oblivious to how best you can help solve their problem. You need to address consumers’ pain points to connect. Have real conversations using surveys, focus groups, straight up phone calls – not just the occasional exchange on social media.
2. Inability to optimize conversions
Without making money, no matter what you do, the business will fail. You should address conversion issues early on and make sure you have a positive ROI. Focus on income-producing, conversion-optimizing actions so you don’t struggle with a crumbling business.
3. Business plan issues
An effective business plan indicates realistic business goals, possible problems the business may run into and their solutions. It also outlines strategies, costs and inputs, and even timelines to implement decisions. If you are already running into problems, review your initial business plan and make it more robust and realistic.
4. Lack of strategic and effective leadership
Most small businesses suffer from self-sabotage. With the little experience gained in the business world, newcomers regularly struggle with the overwhelming decisions and demands placed on them. That’s why it’s imperative for any kind of business to possess seasoned advisors and for small business founders to seek mentors if they wish to stick around.
5. Inadequate financing
It’s often difficult to ask for a business loan when things are already in the deep. Most businesses fail because of this. If you attempt to stretch your finances right at the start, your business may never actually get off the ground. If you’re new to the market, you still have a chance of securing enough working capital that can push your business to the next level. Small business loans are available and can boost your cash flow at least until your existing business is up and running.
LVRG is a small business funding company that provides working capital solutions to U.S. small businesses. Contact us today if you wish to take your small business to the next level through business lending.