You might find a disturbing small business failure report by SBA that about 20 percent of the new businesses fail in the first 1 or 2 years and that percentage increases to 45 percent in the following four years. It’s terrible. But there are always tons of reasons that so many new businesses fail so early on.
Not all of those reasons affect all new businesses, although some primary reasons lead most small businesses to failure.
But there is fantastic news for you that I want to pass on. It’s pretty easy to avoid all those primary reasons and run a successful business.
Suppose you have recently started your new business or have just planned for it, and you’re researching primary reasons that so many new businesses fail so early on. That means you have taken the first step against all those reasons which cause failure.
I am pretty sure about your small business’s success because the top reason that leads so many small businesses to fail is lack of knowledge. And you are about to pass on it. Even many kids run businesses with appropriate knowledge.
Now let’s dig deep into the top 5 reasons that don’t let new businesses grow initially.
Top 5 reasons businesses fail
Among all the primary reasons that so many new businesses fail, the top primary reason that so many new businesses fail is lack of knowledge.
Here is why.
Lack of knowledge
I said that lack of knowledge is the primary reason that so many new businesses fail in the first few years. Here knowledge means looking at every possible aspect of your business to make it happen successfully. It demands much research, and that’s what new business people don’t.
We human beings are always in too much hurry. We don’t want to waste time, stopping by and exploring something deeply. We simply want to get results, which becomes the most significant reason behind small business failure.
We don’t rely on research in our routine life; we believe in the information we get from anywhere without authenticating the source, but this doesn’t work in the business.
Business demands you to look at everything that belongs to it. Your business growth is just like human growth; if you don’t find the right growth hacks, the right food, and the right atmosphere, it can’t be healthy. Indeed, it will suffer a lot in the upbringing. Isn’t it so?
So to build a successful business that doesn’t fail in your life until you turn it off, you should give it time researching it even before starting it.
Your research will become the pillars of the building you’re constructing.
Now the question is, how to start your research? Here are some must-to-know questions that you should explore before starting your business so that it doesn’t fail.
- Why do people succeed in this business?
- What are the top reasons some of them couldn’t follow?
- How much space is there in the market?
- Why would people prefer your product?
- Can you provide something better at cheaper rates?
- What exactly do you want from your business? Build Brand, double your money, or what?
Once you’re done with these questions, with sincerity, then you’re far more secure than 60% of the new businesses start along with you.
If you don’t have much time for all that, it’s better to take advantage of external consultants who will research and will provide you a strategy for your business growth.
Lack of support
Appreciations and support play a vital role in your business success, so if you don’t have a supportive atmosphere around you, it will surely be a challenging one.
Support can be of any aspect; it could be those who have no concerns with your business (your friends and family) and those belonging to your business (your teammates). You need support from both sides.
Sometimes when we are starting something entirely new, most people resist it. Your friends and family won’t believe in your idea, and hence you won’t get the support you might need in the challenging early days.
It was also too challenging for me when I started my blog until I started making money.
And if you lack support from your teammates, then how can you expect something good?
In any case, you should find people who could believe in you, encourage you, appreciate you for what you have done, or at least start it with much passion because passion helps us keep running.
If it’s magical or illogical for you that moral support plays a vital role in your business success, keep in mind we are humans, we are actually emotional animals, we need emotional satisfaction for something we are working on so that we could keep working on.
Otherwise, if you couldn’t get results in the early days that you shouldn’t even expect, you might change your mind and quit your startup.
This is what happens with many of the new businesses.
Lack of a business plan
If you don’t have a business plan, you can’t succeed; at least you will pay more for getting less.
Most startup owners claim that they have their business plans in their minds, which actually means they don’t value their time and business too much.
If you don’t have time to make a road map for something you want to run for long, you’re not supposed to be sincere with it.
The other benefit of a written plan is that it saves your 10% effort. That’s not over. When you have a written plan for something, you are far more precise about everything than a dusky plan in your mind.
Your business plan is a roadmap to monitor everything. You can practically watch what you had expected and how things are going? But if you don’t have it, you can’t measure your success or failure; you can just suppose it to be running fine.
You also face many other troubles that can result in a significant loss.
For example, when you don’t have a well-defined financial plan, you can’t decide how much money you should spend on each department to let it run smoothly. Otherwise, while preparing a perfect business plan, the planner keeps the significance of each department in mind.
Lack of finances
It’s among the top reasons that new small businesses fail in the very early years. If you don’t have the required finances in your pocket, you can’t feed your business, and as a result, it won’t yield anything.
In most cases, especially for small businesses, people don’t keep the required money to start a business in their pocket.
For example, according to “The Small Business Bible“, you should keep 6 months’ expenses of your new business as a budget to start it and shouldn’t expect anything in the first 6 months.
Still, in most cases, new startup owners plan to make profits from the very first month and they keep that hypothetical profit as a part of their budget. But when things don’t go the way they expected, maybe, because of the lack of appropriate knowledge or because of any other reason, they suffer a significant loss.
Lack of patience
Patience is a pillar of business success.
Let me give you an example for a better understanding. The majority of the bloggers who join blogging don’t make money from it and quit it quite sooner because they don’t understand that blogging takes time. Blogging depends on SEO, and SEO is something that takes up to 6 months to get your results. In blogging, things don’t change overnight.
The same is true for every business; when you just started a business, it always takes time to become a part of that market. People’s minds change pretty slowly. You might have to wait for years to become a brand. But most of the new businesses are in a hurry to get results as others are getting. They don’t see the effort someone made to get that position.
If you don’t have the patience to work on it for long, you shouldn’t expect something great because those in a hurry make more mistakes. So it’s a pillar of business success to work with passion and patience.
There are many reasons that so many businesses fail, and the top reason that so many new businesses fail so early is a lack of knowledge. For example, someone is a developer and started a software startup but didn’t learn how to manage a company, which would cause business failure.
There are tons of other reasons, but it can guarantee one to run the business long if someone avoids these key reasons.