The Reason Why Most Start-up Businesses Fail

Making money isn’t always a reason to celebrate. Look at your business challenges and overcome them before celebrating.

Each and every single day a large number of businesses fail for a number of reasons. According to Industry australia, a big percentage of failed small businesses end up failing within the first two years of operating, simply because of the lack of knowledge and experience handling day to day challenges in the initial stages of business set-up. The preliminary phase of your business is key to success, and at this point is where you can make your business succeed or fail. Some known causes of failure in the start include:

Not enough preparation: Carefully planning your business start-up and launch is very important. Many entrepreneurs are very eager to launch their venture that they skip over some critical steps which can include developing a business plan. A plan, even though it’s on paper has much more value than you think. Your business plan should not only describe, but should illustrate the success of your business before the launch. It will act as a road map to success of your business, and outline all of the challenges and how to overcome them before they happen.

Not enough funds: Not having enough money to start-up your business is a problem that can be avoided by obtaining funding from the banks, credit cards, investors or the Australian government. But underestimating how much funding you need for a successful launch, and operation can be the reason why your business fails. It is better to over-estimate then under.

Having a bad marketing strategy: Not every business owner is skilled as a marketer, and thinking that they are can be the reason why your business fails. Spending more money on marketing and advertising doesn’t always bring in results, and this is the mistake most entrepreneurs seem to make. A proper marketing strategy should be outlined in your business plan and you should lead with it. If you notice poor results, it’s time to change the strategy before it’s too late. Advertising is a vital part of your company’s success, and if you as an entrepreneur aren’t able to properly do it, take into consideration help from a professional.

Not having the right employees: Hiring help is one of the largest expenses for small business owners, and that being said, a company owner should carefully consider each employment applicant that comes through the door. Don’t just take the first person that walks in and says “I’m in need of work”, instead consider everybody equally, and even pay more for the top qualified candidates. Hiring the right employee will prove very effective and worth the investment.

Bad or No company reputation: Bad reputation is not a good thing to have, but no reputation can sometimes be even worse. A company’s reputation is very important for the success of your business. Some issues that may ruin your reputation include: customer service, employee professionalism, prices, qualify of goods, follow-ups..etc. Fixing your reputation before it gets damaged is very important for any small business. And improving your “no reputation” status is even more important.

Rapid growth: How can rowing too fast be a reason why business fail you ask? Well growth is not a bad thing, but growing too fast can be a problem especially when the business model is still fresh. The biggest reason is that the company owner, staff and the overall process has not yet had time to grow – but the business has. Rapid growth results in massive amounts of money being invested, but most business owners are so focused on the money part of the business that they forget to think of the hundreds of other little things that make up your business that haven’t yet grown and are falling behind.

There can be hundreds of reasons why business start-ups in australia fail, and the above are just a few of the popular ones. Every business owner should be aware of these reasons and view these company challenges as an opportunity to learn and grow as entrepreneurs. They should also address these matters completely and do whatever is necessary for their business to succeed.