Most businesses fail. There… we’ve said it! Now, how can this be avoided?
Well firstly, it’s useful to know what to do. Secondly, it’s beneficial to understand the mistakes other business owners have previously made that were ruinous to their business interests; this way, you can avoid them.
Here are 4 mistakes that small businesses make that can doom them.
Not having enough capital to start and run the business is a common mistake by inexperienced leaders. Getting a business loan through a company like AdvancedPoint makes it possible to get some much-needed capital injected into the business.
Once moving forward, the positive cash flow will begin to happen making it possible for the company to see a light at the end of the tunnel. When having too little money at the start, it handicaps the business right out of the gate.
Trying to Grow Too Quickly
A popular business book in the last few years was “The 10X Rule” by salesperson and real estate investor, Grant Cardone. His big pitch in the book was that you should multiply by 10 any plans that you have. Ten times your business income, ten times your sales, ten times everything…
Unfortunately, while Cardone’s enthusiasm is positively infectious, there are some risks trying to emulate this in business. Expanding too quickly when the business isn’t ready for it leads to major problems. The cashflow often cannot keep up with the investment requirements when scaling that fast.
Also, leaders who could handle a business that is doubling or tripling in size every year cannot always deal with growing the sales revenue, expenses, office size and staff requirements by 5-10 times in the same timeframe. Growing too fast has put many businesses right out of business because they couldn’t cope with it.
Recruiting the Wrong People
Recruiting either carelessly or too quickly also leads to another mistake which is employing the wrong staff for the business.
Whether there’s a cultural clash, a personality conflict or just simply that they’re ill-equipped to either do their job or handle the rate of change; when they’re wrong picks, it’s a disaster.
The cost of recruitment isn’t cheap either. The loss of momentum and new problems that the wrong staff bring to the business aren’t minor. But certainly, the cost of recruiting a second time for the same position is painfully obvious.
Failing to Pivot from Bad Ideas Quickly Enough
When a business idea looks good on paper but isn’t working in the execution, it’s up to the owner or the CEO to ascertain what the root cause is.
Is the failure down to poor execution, the wrong strategy or does the business idea simply not work? When it’s poor execution or a bad strategy, these may be fixable. However, when the business model or basic business idea is wrongheaded, it’s necessary to pivot to something else as quickly as possible.
Failing to move on quickly enough costs time, drains financial resources and exhausts the staff who know when something isn’t working right.
When you avoid these four mistakes, you’re much more likely to succeed with your business. However, if you find yourself with one of these problems, navigate carefully.