Whether you call yourself a hustler, entrepreneur, business owner or serial entrepreneur, we are all after the same thing: the American dream of running and operating a successful business. However, the truth is eight out of 10 businesses fail within the first 18 months of operation.
What are the forces that cause a business someone has poured their blood, sweat, and tears into to crumble? Why do businesses fail?
My first observation is business owners are not accepting responsibility. After all, when you’re in the CEO chair it is easier to blame slack employees, lack of consistent funding, and other excuses, rather than stepping up to the plate. Of course, a business can’t sink itself without the captain steering clear of safety first.
I’m putting on my Shark Tank hat to discuss why some businesses fail.
Challenges faced by entrepreneurs
Cash Flow Problems
Poor accounting can be the death of any business. You cannot run a business if you have no clue about numbers. You are flying blindly, and you will certainly crash and burn. Not having enough capital to cover monthly expenses and business operations. Using profits to pay bills. Paying on time, but your customers don’t. Robbing Peter to pay Paul. Using your personal funds to cover business expenses. These are all big no-nos. If you don’t have good accounting skills, invest in hiring an accountant. This will save you many sleepless nights and lots of headaches.
Serial Entrepreneur
Take it from someone who has a million ideas and wants to explore them all. Stay focused on what is making you a profit and then expand. Write down your ideas. You never know when the little black book will come in handy.
Fear of launching
Embrace the unpredictability that comes with being an entrepreneur and leap. You will survive the tough days. After all they aren’t forever.
No social-date life
At minimum a business owner should have at least three dates per month. Attend two networking events in your area. Speak about your business and network. Follow up with potential clients by having a coffee or tea meet-up.
Goalless
Your business goals vary based on the day or customer who is paying at the moment. There is no clear direction to your business goals, target base, or market. Create a business plan along with monthly and quarterly goals for your business with a targeted customer base.
Get out of your own way
Take what you do seriously and be effective; however, do not over micromanage where you become annoying. No one likes to work for or with a Mr. Know-it-all. Be open to opinions and criticism. Be pleasant and likable, but not over the top. You are here to make money, not become best friends with everyone.
Chaos and Dysfunction
Business owners who choose to work with family and/or friends can create a stressful and stringent working environment. Throw lack of direction, focus, planning, and vision into the mix and you have a recipe for disaster. Get on the same page as your business partners before you open the doors. When things get rocky, bring in someone with an unbiased opinion to help smooth things over.
Undervaluing yourself or your product
A huge and common mistake is to not know what to charge for your product or services. A good markup margin would be between 30 percent and 60 percent after your labor or hard costs. This is how your business will generate profit.
Social media doesn’t apply to you
Facebook, Twitter, Instagram, and Pinterest, just to name the big ones, are a major part of our society whether you want to accept it or not. There is no avoiding the presence of social media and how critical it is to your business and its survival. Start with one social network and grow as your business progresses.
Business talk is not your forte – You can bake, you can sew, you can design, you can do anything creative for your business. However, when it comes to talking profits and loss and sales projections your eyes cross and your knees go weak. Invest in someone who is a natural at handling the nuts and bolts of the financials or bring in a partner that can manage the business operations. This will lead to a load off your back.