Why Do Some Businesses Fail While Others Succeed? Many people have a dream of owning their own business, and in today s world it s easier than ever to get out there and start one up. With so many free tools and online resources available, your small business could conceivably almost run itself, so why do more than half of the new businesses fail? They didn t plan properly To be successful, you have to know where you want to go, and how you are going to get there. Not planning out your short and long-term goals can hurt the growth of your business. PThe first step to becoming a successful business is to develop a sound business plan. They tried to take on too much at once It s great to know how many locations you want to open, but if you try to open them all at once before your customer base and demand can support it, the upkeep is just going to bleed your cash flow dry. Taking it one step at a time and cementing your foundation firmly before building up will give you the stability you need to stay successful while others overreach and fail. They didn t manage their cash flow properly Knowing the difference between simple cash flow and positive cash flow is crucial to any business. Your revenue keeps you afloat but your profits help you grow. Some people think as long as they have enough coming in to cover the bills they re in good shape. This is true, but in the long run if you don t make more than you put out then you ll never have the capital to grow your business.
They didn t know their customers It is difficult to start up and sustain a successful business if you dont understand your target market, or fail to listen to the customers you do have. When you don t ensure that you re keeping your products relevant to your customers and addressing concerns, how do you plan on keeping those customers? PInvesting time in researching your target market and getting to know your existing customer base will go a long way towards maintaining a successful business. They didn t manage things properly Whether it was marketing, inventory, finances, or the overall running of the business, they failed to ensure that these areas were being managed properly. No marketing means no new customers, however too much can put people off. If you have no inventory, what are you selling? On the other hand, if you have too much, well, that s lost money. Mistakes in bookkeeping can throw everything off. Lastly, taking care of your employees is just as important to the success or failure of a business. PNot only ensuring that your employees are happy, but also meeting your obligations to your employees as an employer, such as superannuation and workers compensation. to find more tips on how to make your business a real success.
Why do some small businesses fail, others barely survive, and yet others thrive through recessions? Here are a few insights: There is a common myth that entrepreneurs are big risk takers. But most studies show the exact opposite: successful entrepreneurs avoid risk wherever possible.
But they do take calculated risks all the time. They develop new products, enter new markets, pull out of existing markets, change their product packaging, form new strategic alliances, etc. But they never jump in without looking to see if there is any water in the pool. When business slows down, the first thing most businesses cut is marketing and sales. They view marketing and sales as overhead, not as an investment. This is the exact opposite of what most successful entrepreneurs and business owners do: they. In some cases, that means a move away from БtraditionalБ marketing (print, yellow pages, etc. ) toward Internet marketing and social media (LinkedIn, Facebook, etc. ). In other cases, it can mean cutting ties with unprofitable customers and strengthening ties with the most profitable ones. The result is usually an increase in market share and improved customer loyalty, at competitorsБ expense. It seems pretty obvious that the world is changing faster than ever before. Successful companies donБt just react to change, they anticipate it. Then they either flow with it or they drive it. Companies that resist change are more likely to fail, or at best, barely survive. The entire U. S. auto industry is an example: GM, Ford and Chrysler all spent decades lobbying against improved CAFE standards and emission controls. If they had instead embraced the fact that most Americans want clean air, improved gas mileage and safer cars they could have out-maneuvered Toyota, Honda, and others.
Successful companies make decisions carefully, but once they make a decision, they act quickly. GM is, unfortunately, another example of what not to do. Until they restructured, GM was so slow and unmanageable that a typical initiative was reviewed by at least 60 managers before it went anywhere. The usual result was that most initiatives were either killed outright or took so long to get through the system that they were effectively dead anyway by the time they emerged. Since coming out of bankruptcy,. They have dramatically streamlined management and internal decision-making, and even brought in some outsiders. Small companies have the ability to act swiftly. If your company is small but major ideas and projects take years to bubble up to the surface, you have a problem. Successful companies listen to their employees, their customers, their partners, and even their competitors. They are good at Бthinking bigБ, but they also pay attention to details such asб employee morale, paying invoices on time, customer service, marketing consistency, sales training, etc all of which. No matter how large or small your company is, make sure you are not just gathering data, you also need to analyze and act on it. This should happen at all levels of your company, not just in management meetings and strategic retreats.