Data indicates that about 50% of small businesses struggle to stay afloat by the fifth year. While the statistics are staggering in the first two years, others defy the small business ‘curse’ and remain visible. Meanwhile, those that don’t make it begin to record a downward spiral from the third year to the fifth. Fortunately, you don’t have to wait that long to determine what might have caused the business to spiral out of control. Hopefully, these tips can steer your small business away from collapse.
- Marketing mishaps
Many small businesses undermine the significance of marketing. Perhaps, the main problem is the belief that small businesses do not require many marketing activities to thrive. Secondly, another mishap comes from the fixation on the cost of marketing campaigns. Undoubtedly, marketing comes with some costs. However, early planning and knowing the type of marketing specific to your small business can make the difference.
Waiting until the last minute to secure funds for marketing can cause tremendous problems. First of all, you might be tempted to divert money from another crucial business area to make up for your marketing shortfalls. While doing this can solve an immediate problem, the long-term repercussions for a small start-up can be devastating. Indeed, your business may not be a global conglomerate, but it doesn’t mean that unstructured marketing will work. Failing to acknowledge that can set your business on the path to failure.
- Constant interruptions to the business’ network
Regardless of the type of small business you’re into, having a stable network is crucial. Moreover, the 21st-century business climate makes it quite impossible to neglect the benefits of working with the internet. A stable network is crucial, especially for interacting with existing or potential customers on online platforms. For example, if you run an online retail business in addition to a physical store, the internet will be crucial for the former. However, if you are constantly saddled with interruptions to your network and do nothing to mitigate this, your business might suffer. Clients and customers may see you as unreliable, unprofessional, and high-risk to do business with. This explains why small businesses are encouraged to subscribe to time-tested internet providers who help grow their establishments.
- Poor financial management
A 2019 study identified poor financial management as a leading cause of small business failure. The research showed that 82% of small business owners had no idea how to manage funds. It also indicated that other owners overlooked the crucial parts of cash management. These errors often lead to business collapse. In other instances, the lack and mismanagement of funds prevented crucial business areas from remaining functional. Rising expenses, unpaid vendors, and the lack of public interest in the business were the results. Unfortunately, these are damaging enough to run a small business to the ground. When you have an entrepreneurial dream, you may want to get the groundwork solid. That way, you can minimize the chances of adding on to other failed small businesses.
