And What You Can Do To Succeed In Business

Why do new start-up businesses fail? I hear you say to yourself. Often business failure isn’t something you want to think about when you start up your new business. But if you want your business to succeed, you need to know and avoid a few common mistakes people often make.
Roughly 20% to 25% of business start-ups fail in the first year, with almost half of all start-up businesses failing within five years of setting up. By year 10, only about 33% of these manage to survive.

Why business start ups fail and what can you do about it
How to succeed in business and not to fail

These statistics are not a reason to be cheerful, quite the opposite. Add to this and you have an even bigger worry because of covid global pandemic related decline in sales.
While there are many varied reasons that can end in a business failing, often the reasons small businesses fail is because they make one or more common mistakes.
Here are the top most common reasons for business failure and how you can try and avoid them.

Why Do start-up Businesses Fail?

  1. Are You Starting a Business for All the Wrong Reasons
    The reason for business failure is often linked to the very reason the business owner first started the business. Is your main reason for starting your own business the desire to make loads of money? Do you believe that if you run your own business that you will end up having a lot more time with your family? Or perhaps being your own boss appeals to you and won’t have to answer to anyone else? While those are most definitely the advantages some successful business entrepreneurs manage to achieve after years of hard work, they should not be the primary driving force or reasons to start a business.

OK, so what are the right reasons for starting a business? – some helpful reasons that are more likely to lead to building a successful company include these:

You have a passion and love for what you are doing and also strongly believe — based on the best of your educated research — that your product or service would fulfil a real need in the marketplace, “demand” is the keyword here. Either there is a demand for your product or service or you work bloody hard to promote the reasons why there should be a demand in the marketplace and diligently work hard to fill that gap.
You have the drive, determination, patience (yes, I can hear some of you thinking patience, it really is a helpful virtue in the world of business), and an overall positive attitude. When others throw their arms in the air and make lots of noise, you become even more determined than ever.
Failures don’t get the better of you. You learn each and every time from your mistakes, and use these lessons as useful business tips to help you succeed the next time around. Studies of successful business owners have shown they attributed much of their success to “building on earlier failures;” and using those failures as a “positive learning process.”
You thrive on independence and are skilled at taking charge when a creative or intelligent solution is needed. This is especially important when under strict time constraints.
Show genuine honesty and integrity when interacting with others. You get along with and can deal with all different types of individuals, even those awkward ones, we all know which are those ones don’t we now?

2. There Is No Market or Too Small of a Market
Niche Market is an apt phrase here. A niche market is a focused, targetable portion of a broader market in which specialized products or services can be sold. Establishing a niche market helps businesses gain competitive advantages. Here at Affinity Wholesale, we have been highly successful as wholesale and dropshipping suppliers to both B2B wholesale and dropshipping customers with niche market products, who themselves have gone on to successfully retail them to the end customer.

That said, the best of business ideas will flail and flounder if there is no market at all for what you sell, or if the market suddenly collapses and vanishes because of economic changes or disasters natural or otherwise, think Covid and global pandemic here!. While you cannot predict disasters, before you start a business you need to determine if there’s a market for what you plan to sell and if that market is big enough for you to be profitable. Keep in mind, that “everyone” is not a market. The market must be an identifiable group of customers you will be able to reach out to with your available marketing euro and resources that you will have.

Good business start up ideas
A Good Example Of A Business Niche Product Display That Works-Wholesale products supplied by Affinity Wholesale

To avoid business failure after you start-up, business owners need to keep their eyes peeled (as my grandma used to say “keep your eyes peeled you never know whats around the corner”) and also do your uttermost best to keenly connect with the marketplace and any of the customers’ changing needs on a constant and ongoing basis.

  1. Bad Business Management
    Often compiled reports on business failures cite poor management as the number one reason for failure. New business owners frequently lack the relevant business and management expertise in areas such as finance, purchasing, selling, production, and hiring and managing staff. If the business owner doesn’t recognize what they don’t do well and seek help, the company may fail and go under. To remedy the problem, small business owners should tuck away their pride and educate themselves on skills they may lack, hire skilled employees, or outsource work to any relevant competent professionals if you have to.

Neglect of any business can also lead down the slippery path of downfall. It’s important to regularly study, organize, plan, and properly manage all activities of your business. This includes the continuing study of market research, sales, footfall or website metrics and any other customer data that is necessary, an area that may be more prone to disregard once a business has been established.

A successful business manager is also a good leader who creates a positive work environment that encourages productivity. He or she has the skills at hiring competent people, training them, and is able to delegate. A good leader is also skilled at strategic thinking, able to turn a vision into a reality, and able to meet head-on changes, make transitions, and envision new possibilities for the foreseeable future.

4. Insufficient Capital And Cash Flow

A common business money mistake for failed businesses is having insufficient operating funds to continue. New business owners often don’t understand cash flow or underestimate how much money they will need to get the business off the ground and started. As a result, they are forced to close before they have had a fair chance to succeed. They also may have an unrealistic expectation of what their revenue from prospective sales may be.
It is of vital importance to ascertain how much money your business will require. You need to know not only the costs of starting your business but the costs of staying in business. It is important to realize that many businesses take a year or two and then some to get going with enough momentum to keep going. This means you will need enough capital funds to cover all costs including the unforeseen ones where possible until sales can eventually pay for these costs.

5. Lack of Planning And ineffectual Business Plan

All seriously minded businesses should have a business plan. Many small businesses fail because of underlying shortcomings in their business planning. It must be realistic and based on any accurate current information and educated projections for the future.

Breakdown Of A Bussiness Plan

  • Description of the business, vision, goals, and keys to success
  • Market analysis
  • Workforce needs
  • Potential problems and solutions
  • Financial: capital equipment and supply list, balance sheet, income statement, and cash flow analysis, sales and expense forecast
  • Competitive analysis
  • Marketing, advertising, and promotional activities
  • Budgeting and managing company growth
  • In addition, most banking institutions require a business plan if you are seeking to secure additional capital for your start-up company.

6. Overdevelopment

Leading causes of business failure, overdevelopment often happens when business owners confuse success with how fast they can expand their business. Focus on slow and steady growth, which is the optimum target here. Many bankruptcies have been caused by rapidly expanding companies.

At the same time, you do not want to repress any growth. Once you have an established solid customer base and a good cash flow going, let your success help you with the relative speed of progress or change. Some indications that an expansion may be warranted include the inability to fill customer needs on a timely basis, and employees having difficulty keeping up with production demands.

If expansion is warranted after careful review, research, and analysis, identify what and who you need to add in order for your business to grow. Then with the right systems and people in place, you can focus on the growth of your business, not on doing everything in it yourself.

7. No Website and No Social Media Presence
And the magical number 7, if you have a business nowadays, you need a website and often a social media presence. Period.

Every business should have a professional looking and well designed website that enables it’s users to easily find out about their business and how to avail themselves of their products and services. If you serve local customers, your website should include your address, phone number, and hours of operation, and should be listed in Google My Business so it will show up when shoppers search for what you sell by location. You need a website so potential customers can research your business before they call you. If you don’t have a website and your competitors do, you’ll lose out, it’s as simple as that.

Create social media profiles on the services your clientele is most likely to use for the very same reason. If you don’t, you may not look professional and will lose business to competitors who do at least have profiles on popular social media sites.

If you have products that can be sold online, or you can take orders online, that’s an added benefit. Great, go create your ecommerce website or use Affinity Wholesale website designers to set one up for you. But at the very least, you need a website that lets customers know what it is you offer and how they can benefit by doing business with you.

When it comes to the success of any new business, you “the business owner” are ultimately the “secret” to your own success. For many successful business owners, failure was never an option. With perseverance and a positive attitude, these individuals view any setback as only an opportunity to learn and grow. Most self-made millionaires possess average intelligence, not as you may think any more than the average IQ. What sets them apart is their openness to new knowledge and their willingness to learn whatever it takes to succeed.

“That which does not kill us makes us stronger.”

— Friedrich Nietzsche

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2 thoughts on “7 Reasons to Not Be Cheerful, Why Your Start-Up Business May Fail

  1. Sean says:

    Hello Sarah, Can you tell me how much profit per year can I make by selling products in a niche market in Ireland? Is it difficult to set it up? There seem to be very few players in this at the moment. Thanking you for the article and anticipated reply.
    Much regards Sean

  2. Sarah Doyle says:

    Hello Sean,
    Thank you for your question on how much you can make in the Irish niche market? Basically, it is all down to:
    1. The products or items if you prefer to use that word that you have to offer,
    2. How much your profit margin is on each item between how much you buy it for and how much you sell it for.
    3. Your total overall business running costs.
    You are best working out these projected figures over a period of time, say six months, yearly or over a couple of years. Without these metrics to work with it is a bit like asking how long is a piece of string? And the answer to that is of course a quantitative answer dependent on your business setup and running costs.

    At this moment in time the products as an example, that Affinity Wholesale have to offer to the niche market in Ireland and the rest of Europe are in incredibly high demand compared to previous years. This is despite the effects of covid on the consumer growth market. For sure traditional brick and mortar shops and businesses have taken a giant step or two backwards due to covid, while online trading has leapt forwards and generally prospered. The consumer market demand with those niche markets will only keep growing due to peoples perceptions and expectations wanting better made, individually made, and ethically traded goods. One thing is definite for the foreseeable future and that is these perceptions and expectations of peoples consuming habits are fast becoming the new normal.

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