This time of year, ghosts and ghouls aren’t the only things that should be sending chills down your spine. As an entrepreneur, you need to be aware of how very real and serious the potential for small business failure is.
“My business is fine,” you think, and that might be true. Yet, consider: does anyone ever really expect their business to fail?
The data may fluctuate, depending on the study, but in general, about 50 percent of small businesses fail in the first five years. After all your hard work to launch your business, is that something you really want to happen?
Small business failure is sometimes preventable. If you know what to look for, you can avoid scary pitfalls like the following:
- A paranormal lack of planning
It’s such a simple thing: when you start a business, plan for where you want to take it. Have a direction to move in. However, many small businesses don’t bother with a business plan. Whether they’re intimidated by the idea of creating a monster of a document, they don’t know where to begin, or they’d just prefer to wing it, this lack of effort can cost them their business.
Now that you know this is a major cause of small business failure, you can absolutely prevent that from pulling you down into the quicksand. Write a business plan! It doesn’t have to be 1,000 pages; just keep it simple and focused on the core offerings of your brand, as well as how you’ll reach customers and where you want to take the business as it grows.
- A deadly desire to DIY
You’re self-sufficient and are probably capable of fantastic multitasking, I’m sure. But there comes a point in a business where doing it all yourself simply isn’t feasible if you want to grow, or even if you want to stay above water.
Having a stubbornness against hiring help will cause certain demise. Instead, start with one single task you need help with. That could be writing content for your blog, managing your financial accounts or answering the phones. Hire a part-time employee or freelancer to begin, and as that effort pays off by freeing you up to do other things, you’ll be able to add to your staff.
- A bloodcurdlingly bad business budget
When I ask you how much your monthly business expenses are, can you answer? Many entrepreneurs feel like accounting “isn’t their thing,” and so they don’t bother with creating budgets for those expenses. Heck, they might not even use accounting software to keep track of them, which is to their own detriment.
A successful entrepreneur has at least a basic grasp of accounting principles, even if he hires an accountant to manage the company finances. Understanding what’s coming in and going out of your business will help you ensure that you only invest in necessary and revenue-driving expenses.
- Corpselike customer service
This is not a hard concept to grasp: customers come first! So why do so many small businesses not consider customer service to be a worthwhile investment for future growth?
It starts, of course, with having quality products that your customers don’t want to return and don’t need to call you to figure out how to use. But it’s essential that you do have a customer service team available any time someone needs answers.
The more channels you use to connect, the better, so look at chat, social media and email as additional lines of communication beyond telephone. Also: respond promptly. There’s nothing more irritating than a customer emailing a brand only to have that email fall into a black hole.
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- A menacing marketing strategy
Look, Snapchat isn’t for everyone, and you might not “get” it personally, but if your customers are there, you need to be using it (or whatever marketing tool fits the bill) to connect to them. I’ve talked to so many business owners who just didn’t like whatever marketing tool I encouraged them to use, and I always tell them: it’s not about you. Marketing is about using the channels your audience uses to connect with them.
So suck it up. Either learn to embrace that dreaded marketing tool or hire a company that can use it for you.
Knowing that these five causes lead down a path of destruction should keep you on the straight and narrow in the other direction. Just be aware that you’re just as susceptible to small business failure as the next guy, and do your part to ensure that those zombies don’t suck you in.
This article was originally published in 2016.
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