You’ve probably heard half of all new businesses fail in their first year. That isn’t exactly true. The U.S. Bureau of Labor Statistics is quoted in Investopedia as saying 20% of new businesses fail during the first two years, 45% during the first five years, and 65% during the first decade. The article stated that only 25% of all new businesses make it to the 15-year mark. However, the point is the same: A lot of businesses simply don’t make it much further than their opening. What is the difference between a business that fails and one that doesn’t? Why do some succeed and some crash and burn?
Secrets of Successful Businesses
The positive thing about having so many businesses fail is that we know a lot about what they did wrong. Entrepreneur says these businesses fail to deliver real value to the marketplace. Investopedia says these businesses lack value because they failed to investigate what the market would handle before launching their business. The reality is that these reasons are really two sides to the same coin.
If you open a small business and fail to look carefully at the competition and consumer demand, you will likely end up in the wrong place at the wrong time. Ultimately, no matter how many loans you take out, your business will likely not make it. As an entrepreneur, your job is to find a market niche and weasel your way in. Finding the market’s unmet need is critical for selling your product or service. Investopedia says, “It’s a lot easier to satisfy a need rather than create one and convince people that they should spend money on it.”
Even prior to launch, companies that lack the value that the market needs should have had a big red stamp on their business plan. Many startups lack a realistic business plan that outlines achievable goals and a roadmap to getting there. A business plan should hold the market research that illustrates the need for the service or product. It should have rough financials and marketing and sales goals. Red flags for startups should occur early on if they start doubling spending or changing the strategies outlined in this plan. We’re not saying a business plan is a rigid document, but if your business plan is clearly inaccurate, it should be a warning sign that the idea wasn’t a good one.
Entrepreneur also points out that these failing small businesses often fail to create an effective sales funnel. Many small companies even lack the technologies that help them automate marketing, sales, and recruiting in ways that help them start and manage an effective funnel. This often means that these startup companies will not generate enough leads and fail to optimize conversions. Sales will decline in these cases, particularly if there is a lot of market competitor or the consumer demand simply isn’t there.
To give your small business a fighting chance, consider Exelare.
Our affordable online software-as-a-service model will provide you with the tools you need to track important key performance indicators for your business. We can help you recruit the best talent and track the metrics that matter for your business. Contact us today.