Do you ever wonder why many start-up entrepreneurs fail or close down their business within six to twelve months? This can be very frustrating for many people who took the risk of investing their hard-earned money or applying for several loans for their start-up capital. Before setting up a business, you need to make sure that you avoid the common mistakes that many people make.
Nobody who starts a business does it with the aim of being unsuccessful. They always want to take the risk in the hope that they will be able to create an asset, which delivers value. However, modern businesses have become complex and require expertise that businesses did not require probably a decade back.
The advent of technology has both, helped businesses streamline operations, as well as added to many problems. What kind of automation, software and tech a business uses should help it move forward. It should never drain the business in terms of human resource or financial expenditure. In this article, we look at some probable reasons as to why many businesses, especially start-ups fail.
If you are able to eliminate some of the reasons that we are listing in the article, you might be able to turn around your failing business. Remember that prevention is always better than cure and here are some things that you should avoid and at the same time keep in mind.
Keeping themselves busy with different things
Many business owners tend to feel overwhelmed when running their business. They end up spending too much time tracking orders, doing inventories and other tasks that prevent them from interacting with their staff and clients. It would be best if you remember, that time is of the essence by working efficiently. It is a good thing that different software companies are selling several applications like mobile inventory, which makes your daily workload much more manageable. You can do several tasks remotely and still manage to address your employees and clients at the same time.
Micro managing a business is never a good idea. In fact, it shows that the owner or higher management does not trust its employees. Most owners feel that by keeping a close watch on everything, they can remove wastages and control employees. This is an ancient and outdated managerial style. An owner should spend most of his or her time growing the business and looking for new opportunities. If you really want to see the operations, you can dedicate one day a week to it. The rest of the week should be devoted to finding new businesses, innovating, developing new products and exploring newer markets.
They do not know what they are getting into
Before deciding on what kind of business to have, you need to know what you are doing. However, there are business owners who still take the risk of doing something that they are not familiar with. Do not allow your excitement and emotions to cloud your judgement. If you decide to take the risk, then you can lose much money. The worst-case scenario is you could go bankrupt, and the relationship with your business partner can suffer.
This is where you need to understand how a business works. Just because you are passionate about pets, does not mean that you are going to open a pet shop. A better idea would be to work for a couple of years in a brand that you would want to start some day on your own. This will give you a good idea of how it works, challenges, problems and how you can deal with them. Do not start something if you have not been a part of that as a worker or an employee. No matter how promising it looks from the outside, every business comes with its own set of challenges.
You are not taking the time to listen to other people
Talking and talking without listening will get you into big trouble. Many new business owners love to talk because they claim that talking about their achievements will boost their ego. This is somewhat true, but it would also help to listen to what others have to say. Remember that there are people who have more experience than you. It is a good idea to ask for tips and advice from time to time.
Business owners tend to be arrogant when it comes to taking advice from seniors or others in the industry. This arrogance contributes to their downfall many times. If you are in the business for three years, remember that someone else has been doing it for more than thirty years. With experience comes learning; with learning comes foresight. You should always network with business groups and ask them for suggestions. Every industry has an association or a body. Even if you have some troubles with regard to taxations or licensing, it is your association, which will come to your aid.
Money becomes the number one priority
If you decide to go into business just because you want to earn money and get rich, then you are bound to make a huge mistake. People who become greedy by focusing on the gains are in for short-term success. Remember, there are many factors why a business will succeed, or not. Aside from the money, you should also take into consideration your employees and your clients. You need to work hard and establish a good relationship with them.
Money is never an end in itself. A business should always be about creating value. The day you start thinking only about yourself and your family, and not your employees or consumers, you are going to fail. You might start a business with your own investments. However, growing a business is dependent on the ability of your employees and the willingness of your vendors and consumers.
Lastly, avoid being too complacent about things around you. Many owners start to spend less time on their business once sales become stable. Do not entirely rely on your staff to manage your business every day. You might be surprised to discover that you are losing more money than you are earning.