Owning your own business can be exciting, but it can also be a very nerve-wracking experience. U.S. Census Data has found that about half of all small businesses started between 1977-2000 fail within five years.
Although failure doesn’t have to be the end of a project, it can definitely put a damper on your life for a little while. However, you can know what to look out for and avoid as a small business owner. Venture capital database CB Insights analyzed over 100 startup failure post-mortems and found the biggest reasons why small businesses fail. Here’s the top five reasons listed below.
1. No Market Need
Having no market need is the biggest reason why business startups fail, coming in at a whopping 42 percent of individuals. As a small business owner, one needs to serve with their business, not just tackle problems that are interesting to solve. If you’re unable to solve a market problem, your business is going to fail. Startups are successful when they are able to fix things that need fixing. For example, doctors don’t want help on how to run an efficient office, they want more patients.
2. Ran Out of Cash
Money and time are finite and have to be properly divided and kept track of. The question of how you should spend your money plagued 29 percent of individuals who had a failing business. Running out of cash is the one of the biggest issues a company can have, putting a halt in your daily business. A U.S. Bank study found that 82 percent of small business owners experience cash mismanagement. Without cash, people can’t get paid, buildings can’t be leased, and products can’t be purchased to sell.
3. Not The Right Team
It won’t do you any good to not have the right team backing your business. 23 percent of business startups that fail cite lack of a diverse team as a big reason for their failure. Make sure to hire competent employees that are both motivated and knowledgeable. Having a team that harbors many different skill sets will help push your small business forward.
4. Too Much Competition
Never ignore competition. Failing to be aware of your surroundings has resulted in 19 percent of business startups failing. While you don’t want to be obsessive, it’s always good to know what’s going on with your competition, especially if the market you’re in is hot.
5. Pricing/Cost Issues
It’s important to know your prices when delving into a business. Pricing is a dark art, with startup post-mortems highlighting the difficulty in pricing a product high enough to cover costs and make money, but still be low enough to bring in customers. Pricing issues make up about 18 percent of business startups that fail.
No matter what industry your small business is a part of, make sure that you have a business insurance package policy for your Glen Rock small business. These polices will provide the protection that you need while minimizing your costs.
About David G. Sayles Insurance Services
At David G. Sayles Insurance Services, we strive to protect the investments of homeowners like you. Our comprehensive policies are customized for you to provide the exact coverage you need. For more information, contact us today at (855) 977-1842.