As most prospective entrepreneurs know all too well, starting a business is a risky venture. According to statistics released by the U.S. Bureau of Labor Statistics, only one in four businesses manage to continue making sustainable profits for 15 years or longer. Up to 20% of new businesses fail within the first two years of their launch, and 45% will have failed within the first five years.
So, what are the most common reasons so many businesses are forced to close their doors? Here are the facts.
Not enough money saved up
Contingency planning is critical for every enterprise, whether it is large, medium-sized, or small. A big part of successful contingency planning is saving up a significant nest egg that can be accessed during times of strain or when an opportunity for growth presents itself. Unfortunately, those business owners who do not work to save up some extra cash over the years could find it difficult to recover from an unexpected financial knock or a dramatic dip in profits – just take COVID-19, for example!
The good news is there are other options available aside from wading through the red tape associated with taking out a bank loan. Business owners can also seek out a well detailed quick cash car title loans in Cape Coral, FL where they can borrow the amount of money equal to their vehicle’s market value. They then hand over their vehicle’s title as collateral before claiming it back again once the amount owed has been paid back in full. No credit checks necessary!
A faulty business model
Just because your business model worked well when you first launched your brand does not mean that it will continue to tick all the boxes as your establishment evolves and grows. In order to avoid crucial mistakes and to carry on providing a positive customer experience, you must take the time to continuously re-evaluate which processes are working and which are not. Always remain adaptable and in tune with your customers’ needs.
A lack of business acumen
Do you have what it takes to properly manage a business and nurture it along the right path towards success? It is extremely important that you expand on your business-related skillset before kick-starting your new enterprise. Alternatively, make certain that you have hired adequate members of staff who can take care of admin, sales, finances, HR, etc. on your behalf.
Not spending enough on marketing
When trying to cut costs, marketing is often the first aspect of a business to go. Unfortunately, without marketing, you won’t be generating any new customers, nor will you be ensuring that your brand remains top of mind when it comes to your existing ones. In short, a lack of marketing means that sales will inevitably decrease, and, subsequently, profits will too. This can prove difficult to recover from, especially since there won’t be any money remaining to increase marketing efforts again once the error in judgment is realized.
The great news is that you will have the opportunity to work on avoiding these mistakes yourself now that you know the common reasons most businesses fail. Best of luck going forward!