Common Reasons Small Businesses Fail and How to Avoid Them
The potential for failure in a business is just as real as the chance of success. Unfortunately, many businesses succumb to the many obstacles that inevitably hinder success. Though, many of these obstacles could have been navigated or avoided all-together.
Being aware of the common pitfalls small business owners can find themselves in makes it easier to navigate your way to success.
By recognizing warning signs early on and avoiding them with thoughtfully created strategies, you can give yourself a better chance at succeeding in your venture. These are the common mistakes small business owners make and practical approaches to mitigate the potential damage:
Not Clearly Defining Goals That Relate Back To Vision & Mission
Simply having a vision and mission written down or posted on your website is not enough if your goals don’t relate back to them. Falling into this pitfall can lead to underwhelming results, missed opportunities, or goals that don’t actually propel you toward success. You are burning energy and resources without a clear sense of direction.
How to avoid this mistake: During your strategic planning sessions, rewrite your vision and mission statements and refer to them when defining your annual Markers of Success or annual strategic objectives. Then, when you break down your objectives into quarterly or annual goals, you can ensure that the action items are related to where you want your business to be.
2. Underestimating Expenses
Your cash flow is your lifeblood and you need to feel as confident and consistent in managing it as a heart beat. Research shows that 82% of small businesses fail due to cash flow problems. It is easy to underestimate recurring subscriptions, how much networking coffees and lunches add up to be, the cost of materials, and other expenses.
How to avoid this mistake: Create a habit of reviewing bank accounts, expenses, and cash flow weekly. If keeping up with numbers and data is a sore point for you, consider a fractional CFO or financial coach/consultant that can regularly review your numbers with you and help set financial goals.
3. Taking On Too Much At Once
Taking on too many strategic initiatives, setting too many projects to high priority, and allowing your to-do list to constantly be backed up leads to overwhelm, burnout, and constantly missed goals. It can also lead to falling into Mistake #2 by not having the time to make thoughtful decisions because you always have to jump from one thing to the next.
How to avoid this mistake: Understand which action items move your goals forward and set priorities accordingly. Then determine which tasks and projects actually need your direct attention and which could be delegated. The Eisenhower Matrix is also a useful tool to determine areas of delegation. Consider hiring a team member, like a virtual assistant, who can support you and manage these tasks.
4. Underestimating The Value of A Marketing Plan
Not having a roadmap for your marketing activities can cause your business to easily become lost in crowded, saturated markets. It makes it harder to attract clients, which means your business is heavily dependent on your outbound activities which can quickly lead to burnout. Co-schedule reported that organized marketing plans make you 674% more likely to report success in your business.
How to avoid this mistake: Use a project management tool, like Monday.com, to lay out outbound and inbound strategies, content plans, and more to ensure consistency in your execution. Consider hiring a social media manager or marketing strategist to support you if this is a weak area for you.
With robust problem-solving tactics and strategic awareness of the mistakes to avoid, you can put your best foot forward in business. Take some time to analyze the current state of your business, re-evaluate your goals and tune up your plans accordingly.
If you want to explore support in these endeavors without committing yet, book a Possibilities Chat with us.