Mistakes that can bring a business to its knees (& how to avoid them)
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Last Updated on by Noni May
It’s a well-known fact that within the first 12 months of launching, around 40% of startups fail, with a further 20% failing in the 12 to 18 months after that. This equates to more than one in two start-ups failing within the first three years of launching – that’s a scary statistic, isn’t it?
With so many businesses failing so quickly, a lot of new entrepreneurs feel anxious about their success and wonder what the main causes are behind business failure. What it’s important to understand is that there is no one reason that causes businesses to fail. Usually, it’s a combination of different ones.
There are some mistakes that can bring a business to its knees and can impact that company’s chances of success. If you are keen to ensure that your venture doesn’t fall foul to any of these mistakes, it’s vital that you do whatever you can to avoid making them.
To make the process of doing so a little easier, below is a guide to the most common mistakes businesses make that have the potential to lead to failure, and tips for how to avoid making them. Read on for everything that you need to know.
Not having a business plan in place
Time and time again, business owners are told that a business plan is a vital tool, and yet, half of all business owners don’t have a plan in place. Or, don’t follow their business plan. This is a mistake that you don’t want to make as if you fail to have a business plan in place, you won’t be able to effectively goal set. Goal setting is a crucial part of running a successful business as it allows you to meet both your short and long-term objectives more easily by breaking them down into smaller and more manageable targets. By not having a business plan and goals in place, it’s impossible to know how to effectively drive your business to ensure that you are meeting your targets, achieving the profits that you need to stay afloat, and taking steps towards growing your business. To prevent business failure, a well-structured business plan with achievable goals within it is vital.
Spreading yourself too thin
The chances are, if your business concept is a good one, a lot of fantastic opportunities will come your way. It’s tempting to take them all, after all, you should never turn down business, should you? However, if you make the mistake of spreading yourself (and your team) too thin, this can damage your business. If you spread yourself too thin, your business will suffer as a result. Sure, it’s important to take advantage of every opportunity that comes your way, but not if that means your business will end up suffering as a result as you won’t have the time to focus on each aspect of it as you should do. If you want to prevent your business from going under, you can’t neglect any part of it, so spreading yourself too thin isn’t an option. Instead, cherry pick the best opportunities and take full advantage of them.
Failing to take out adequate insurance cover
Let’s be honest about it; accidents can happen anywhere at any time. That’s why as a business owner it’s vital that you have adequate insurance cover in place so that whether someone slips on the steps at your business premises or injures themselves with one of your products, you are covered. Instead of simply taking out any old insurance policy, it could be worth using a risk management strategy to find out new information from Equify LLC about which cover offers the best protection for your business. If there’s one thing that brings a business to its knees, it’s a court case and a lack of funds to cover the cost of the case and any payouts that need to be made because of it. So without a doubt, it’s vital that your business has adequate insurance cover in place that will be able to effectively cover every eventuality.
Treating your business like a hobby
Far too many new entrepreneurs make the mistake of treating their businesses like a hobby – something that they can dip in and out of. Your business is your career; it’s your baby – you have to make a success of it, and to do that you need to put plenty of time into it. Schedule set working hours – aka a non-negotiable time to work each day – so that you can ensure that every task that needs completing is completed on time. If you don’t take your business seriously, how can you expect others to do so? Treat your business like a business from the get-go, and you will be much more likely to succeed – that’s a promise!
Not being clued up when it comes to the numbers
One of the most common reasons businesses fail is because they are not clued up when it comes to their accounting. You can’t just presume you aren’t overspending and are making a good income – you need to know exactly what’s coming in and going out. Otherwise, your business is likely to fail. So it’s vital that you take your accounting seriously. If you don’t have the time or knowledge to deal with it yourself, it’s worth outsourcing the task to an accountant. Your accounting isn’t something that you want to mess around with – taking it seriously is vital because money (or a lack of it) is the number one reason why businesses fail.
So there you have it, a guide to all the most common mistakes that have the power to bring businesses to their knees. Take note of these, and the tips for avoiding making them, and you can help to ensure that your venture doesn’t fall foul to these kinds of issues. Running a business is no easy task, which is why it’s important to take advantage of all the help that you can get as this will help to make running your business easier.
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