The first few steps you take as a small business are crucial to establishing a solid business footing. Even though you’re small enough to experiment and make room for mistakes, you also put your company’s well-being at risk by making just a single error in your decisions.
This can be pretty challenging considering that, as a small business unit, you are still in the process of setting up. A good amount of stamina and personal discipline is required to keep up with the demands of the business—especially when faced with the most common small business problems.
According to a 2017 report by the Small Business Administration, a fifth of start-ups fail in their first year. Only a third survive for a decade or longer. What could be the reasons most businesses fail in their initial stages of establishment?
Limited Access to Capital
So many applications for financing and loans for small businesses are denied as more financing companies became risk-averse in the past few years. This is due to the fact that small businesses are often more sensitive to small changes in the economy, they have high failure rates, and they usually have limited assets to secure the loans. That’s why underwriters slap hefty interest rates even to the smallest business loans.
Fortunately, a bank loan is far from the only option available to you. As more entrepreneurs flock the market, financial capital sources have expanded in nature to offer financial products that meet their needs.
These include business lines of credit, personal loans that are intended for business, business credit cards, crowdfunding sources, private investments, and even grants. Internal sources include your own personal savings, as well as money borrowed from or gifted by family and friends.
These are worthy and legitimate options to explore should you have a problem with cash flow or funding for your business.
Poor Market Research
As a business, your job is to deliver a solution to a need. But the challenge does not stop there. You also have to be realistic about the quantity of your produce and its marketability to your audience.
These all demand on a solid market-research data. A good market data should lay down the ground reality that you have to work with, such as whether your target demographic is as big as you think it is or whether the product price is feasible and competitive.
A good market research data is the backbone of smart business decisions, so see to it that you have a reliable source. This guide from HubSpot takes you through the process of doing an efficient market research.
Lack of a Good Business Plan
When it comes the navigating the realm of business uncertainty, only one strategy is guaranteed to help you keep your ground when the going gets tough: adequate planning.
The basic purpose of a plan is to reach a target in the most efficient way. A good plan is also necessary for loss mitigation. At its core, a good plan is a blueprint of execution. So how do you create a successful business plan?
First, talk about opportunity. What need is being fulfilled by your business? Why does it matter? How is it different from currently existing models or products that provide for that need?
Next is to draft your market strategy. How are you going to expose your products and services? What tools are you going to use, and how do you evaluate these strategies to measure its viability?
Another important aspect is financial planning. Determine where you intend to get your capital, both for getting your business off the ground and maintaining its operations for a set period. Make sure your plan is based on adequate market data.
And last, lay out a summary of your goals and objectives. This should provide an overview of what you envision your business to be in the future and how you intend to attain it.
Failing to Transition Online
In the age of the internet, establishing a strong online presence should be every entrepreneur’s priority. While the traditional store setup still works for some folks, there’s little doubt over the power of the web to help (especially new) entrepreneurs reach their target demographic in a quick and cost-effective way. If you fail to adapt to this change, you’re missing out on the great opportunities that the digital sphere offers when it comes to helping you save your business.
One of the best ways to start opening your business to the web is by building a website. For example, if you’re selling clothes, building an e-commerce website makes sense. Not only does an e-commerce site help you receive orders; it also helps you track them; provides fast, real-time responses to customer queries; and uses market analytics tools to help you evaluate whether the strategies you choose to employ actually work.
Another important step to transitioning online is to create social media channels for your brand. When used wisely, social media channels can route traffic to your online shop and increase exposure for your brands.
Lack of Reliable People
Behind many successful businesses are people working tirelessly to achieve a unified goal. If your staff is incompetent, overlaps in responsibilities, or is inherently unmotivated, your business may be at risk.
While motivation is something that can be worked on, competence is something only a select number of people really exhibit in the workplace. So when hiring your staff, see to it that you get the best among each required skill set. Together, everyone can work in synergy toward one focused goal.
It’s also important for a team to practice a free flow of communication. Each member of the staff should have an open and welcoming environment where his or her opinions are taken with weight and where the culture of problem solving is practiced and encouraged.
Solid market data, good planning, a virtual presence, and a competent team are all necessary to build a robust market standing especially in the first few years of your company’s establishment. While there may be hoops to go through, the solutions are attainable.
Make sure you’re equipped with the right buffer for the challenges ahead. Incorporate these tips into your small business practices.
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