A recent report revealed that an estimated ninety percent of new businesses fail on the market within the first year. Researchers examined this issue in more depth. They then suggested the problem was far more serious than this. They claim that ninety-seven percent of new businesses will fail. Surprisingly starting a business online also makes the possibility of failure far more likely. It seems that new entrepreneurs do face an uphill battle when trying to reach success.
However, in many ways this is understandable. The market is competitive, and an alarming number of new businesses get set up every year. There is always going to be more losers than winners. Successful companies are constantly going to be considered the exception. Others will be forced into bankruptcy, pushed out the market or never find a demand base. As a business owner, though, this probably means very little to you. You’re just interested in finding out to make sure your business isn’t one of the failures. Most companies fail because the owner makes one or two serious mistakes. If you want your company to succeed, all you need to do is avoid these pitfalls. On this post, we’ll look at the mistakes in depth and the problems you could encounter running your company.
Cutting Costs In The Wrong Areas
It does make perfect sense for business owners to want to cut costs. The cheaper your business is, the easier it will be to stay afloat in a rough economic climate. You do want to make sure that your business is efficient and cheap to run. However, that does not mean that you should be cutting costs in every area of your business. In particular, you should not dismiss a sector of your business completely unless you are sure you don’t need it. There are two areas that spring to mind here immediately. As a business owner, you may not think that you need legal or accounting services. Legal is only needed when there’s a problem and accounting is paying someone to count your money, right?
Both these sectors are vital parts of your company that cannot simply be forgotten about. While it is true, you will only need legal when a problem arises, you don’t know when that will be. If you don’t have the legal team on call, you won’t be able to fix the issue. At the very least, you should have a company on the payroll to help you with any legal problems that arise. Accountancy is a similar issue. You may not need it, but it will certainly make life easier for you. With accounting, if you have a team, they’ll be able to manage your money for you. That’s a valuable service because they will find money in your funds that you didn’t even know existed.
Marketing is another area where businesses love to cut costs. One of the biggest mistakes you can make is thinking that after your company is up and running, you no longer need marketing. Of course, you do need marketing for the entire time that your business is on the market. You might think that you have a wide range of customers that know about your business. However, if you don’t constantly remind them that your business exists they will lose interest. They will move onto another company that has stayed in the spotlight.
A rolling stone gathers no moss. Your business must evolve if you want to keep the interest of consumers. We can look at a single product as an example of this. Pokemon Go soared to popularity last week breaking records as the most popular free app in the world. It’s expected to make over five billion in profits and is an incredible occurrence. Yesterday, though, tech analysers revealed that the popularity of the app was already dwindling. In short, the product had peaked and was already facing a downward slope in demand. That’s why it came as no surprise that the developers were already announcing updates in the future. This is what you need to do for your business.
You should not continuously sell one or two products. You need to increase production and design new products for your customers. Or, offer different services to your clients. You can create different sectors of your business and expand in various directions. Of course, the issue here is the danger of expanding too fast, too quickly. It’s an issue and one that you’re wise to be aware of. If your business simply stagnates it will quickly be forgotten, awash in a sea of new businesses.
Don’t forget that one of the easiest ways to expand a business is to attract the interest of new investors. Investors can provide your company with the funds that you need to expand. If you can gain their interest, you won’t have to pay for your expansion out of your pocket. You can rely on them to fund it for you. To get their attention, you need to make sure you have a structure for expansion. Investors are looking for business owners with five-year plans, rather than a schedule for next month.
Falling Behind The Curve
This is perhaps another way that business owners often try to save money. They try to keep their business as cheap as possible by not upgrading or updating it. This is why there are companies on the market today that are still not using IT support. This is such a dangerous decision because without IT support your systems could crash, and you won’t be able to fix them. You will struggle to get your business up and running again. Without an IT support team, it can take weeks, even months to get your systems back online. That’s why you should recruit a chief information officer. They’ll make sure all of your systems are working effectively and that there is never a serious issue on your networks. Don’t forget that the best IT support companies will set everything up for you. Due to this, they know exactly how to fix it, if anything goes wrong. Of course, IT support is just one of the modern services you should be investing in.
You may also want to look at investing in new technology for your business. It should come as no surprise that buying new tech can make your business more profitable. With faster tech, you can deliver a stronger output at a far more rapid rate. By doing this, you will be able to attract the attention of new customers and win clients over from your competition. In particular, you may want to look into upgrading your computer systems. Faster processing units will mean that your employees can work more efficiently, particularly online. Or, you could look into upgrading to a cloud-based system. Using a cloud based system, you can share information instantly between customers and clients. This is the type of tech that you need to be looking into.
Damaging The Brand
Finally, one of the last major mistakes you make is accidentally damaging the brand of your business. If your business brand is damaged, you won’t be able to get new customers to buy from your business. You will also struggle to get old customers to stay with your company. There are several ways that you could ultimately damage your brand.
You could deliver an inferior product. A lot of businesses have made this mistake, thinking their brand was essentially too big to fail. As it turns out, there’s no such thing. If your business starts to deliver an inferior product, your customers will notice, and they will stop buying. Even bigger brands such as Disney and Apple have had this problem before.
Your employees can also damage the reputation of your company. You need to think about what customers take into consideration when they judge your business. Usually, it’s the people working for you because these are the ones that they will be interacting with the majority of the time. As such, if your employees treat your customers poorly, it is going to damage the reputation of your company. You need to be particularly cautious of using outsourcing services. An example of this is a delivery service. If you’re outsourcing deliveries, you can’t guarantee employees are going to be polite. Again, this will reflect poorly on your company.
Your business brand is important. It is how you spread positive ideas based around your business. It is also how you attract new customers to your company and increase demand. You need to think about ways to repair your brand if you have damaged it. One possibility is to show that your company supports charity. You can do this by setting up an event or establishing your own charitable organisation. This is sure to give you some positive word of mouth and ensure customers continue to support your company.
If you avoid these mistakes, you’ll be able to beat the law of averages and make your business a hit.