The number of small business failures is staggering. Around 30% fail in the first two years, and this increases to half in the first five years. By ten years, over 60% of small businesses shut down. This should not however discourage anyone, because the way to success is built over failures.
Doing too many things, or trying to succeed with diverse ambitions is a strong negative factor that leads to failure. Lack of business and managing experience is a similar hurdle. Small business owners should actively take interest in and learn the basics of fields such as finance, sales, HR, production, etc. The business plan too should stay focused on a fixed number of ideas.
Stubbornness and trying to stick to ideas and products one does not feel strongly about is another cause of failure. Entrepreneurs usually have a passion or are dedicated to some pet cause or service. One way to overcome this hurdle is to be very open minded and listen to others.
Planning is a topic that gets a lot of attention. A small business should consider putting in place several plans related to the overall business, finance and marketing. Some owners are afraid of marketing, but that can be overcome by choosing the media or form one is comfortable with.
Underpricing or overpricing products and services deserves serious second thoughts. With low prices, one is forgoing revenue and devaluing one’s worth, and overpricing can make a business uncompetitive. Being objective and confident are two ways to overcome these flaws.
Splurging on a new business just because one has money can end up with an unviable business sooner or later. Instead of the best furniture and equipment or the best office interiors, one can act prudently at the start and settle for moderate to minimal expense. However, not spending on things that are important to business outcomes, such as a critical software, is also a mistake to avoid.
Finally, lack of funds for operations can easily grind a business to halt. Cash flow is of prime importance, and one should not underestimate the amount of money needed to run a business. One way to raise funds is through financing for purchase orders.