Everyone wants to share the upside of small business and entrepreneurship. It’s easy to find helpful hints and inspiring success stories, but what about the dark side – the real insight into entrepreneurship, the mistakes! Small business failures occur every day – actually about 50% of them fail. If you want to make it as an entrepreneur make sure you are well aware of these business blunders.
Small Business Failures
1) Venturing Out Alone
So often I find that business owners want to start and remain as a one-man show. Some entrepreneurs trust only themselves, a partner, or a spouse when facing key decisions. However, it is vital to avoid small business failures by having a team supporting you. Your team should include an attorney, a CPA and a financial adviser/banker, and most importantly a mentor. This team of advisors should be dedicated to helping you succeed and communicate with each other to accomplish this goal.
2) Wearing All the Hats
“A jack of all trades, is seldom the master of one.” One sure way to quickly hit the “small business failures list” is by trying to do EVERYTHING yourself. Cash-strapped startups often begin this way because it is well, cheaper. However, as your business grows, it’s essential to get help. Responsibilities such as responding to emails, setting up appointments, bookkeeping, etc. take up time you could spend serving your customers. Even more importantly, getting them wrong can be dangerous. Hiring a professional not only helps prevent errors, but shifts much of the risk to someone else.
3) Keeping Your Head Down
Business owners also need to make time to seek wisdom in the wider world. For example, some business owners may not be aware that there’s a fairly simple way to get their website ranked higher on Internet searches.If you are seeking wisdom every day this is the kind of useful information you will find. Research and planning for the future can’t seem like secondary concerns, especially when you’re not sure where to go for information.
Numerous small business failures occur because business owners aren’t willing to take advice. Whether your quest for knowledge includes online research, trade shows, Chamber meetings, or networking with peers, it’s important to be proactive about improving your business.
4) Running Lean on Cash
Keep at least three months of cash flow on reserve to be ready for seasonal fluctuations or the inevitable dry spell. It is often difficult to do so, especially if you have developed frugal habits when you just were getting started. Use automatic drafts to ensure your commitment to saving monthly. Think of it as a sort of insurance policy.
5) Avoiding Credit Applications
This small business failures tip is closely related to Step #4. Minimizing your debt may be a good goal for your personal life, but most businesses will require some level of borrowing capacity at some point. You have a fresh credit profile with your business, use it! In many cases, if you wait until you actually need credit it can be harder to get.
6) Combining Accounts
Not separating business and personal accounts may be one of the most common small business failures of all. Like any other situation, when it comes to banking, keep your business & personal life SEPARATE! If you are mixing funds, it is hard to keep track of your business cash flow. Build credit history in the business’ name, which can make it easier to secure financing in the future.
Do any of these sound familiar? To avoid small business failures take a long look at the way you work and follow practices that will keep you moving forward.
Remember, You Can Avoid Small Business Failures!