Why Do So Many New Businesses Fail?
Why Do So Many New Businesses Fail?
You may have noticed it in your own town or city, a new restaurant, shop, store, one day it is there, and the next day, where did it go???
In my own city someone recently opened up a camera shop, selling digital cameras. Which on the surface sounds like a safe business. However, if you look deeper, the camera and photo business has been changing for years.
With high quality digital cameras on our mobile phones, we are not purchasing that many new and expensive digital cameras.
Just as the great photo company Kodak.
Once a leader in photography, now they are reinventing themselves using Blockchain technology.
So obviously being in touch with not just technology, but the fickle buying public is important if you want to succeed in business.
And there also is a little luck. The right place at the right time.
There can be hundreds of reasons why a business may fail, these are just a few. But if you look at the “fail rates” for sole traders and other businesses, it is high. 60% failure rate for some.
Location, Location, Location
In some businesses, foot traffic is essential to bring in the business. Restaurants and some shops rely on foot traffic, so where they are located is important.
That is not to say some business thrive and they may be off the beaten path. There can be other reasons why they do well, word of mouth, exceptional service or quality of goods, either way, people find them.
It is no coincidence that there are High Streets, business centres, malls, and shopping districts. They attract shoppers, and shoppers know where to go for what they want.
If the mall or a huge store like many of them we have doesn’t have what you are looking for, you don’t need it….or you can get it online.
For may business, having an online presence is necessary if you want to thrive.
This can be anything form a web site, to online sales, to just a simple page telling people where you are, location again.
This also means social media.
Social media is a way to reach out to people, a lot of people, and also create a community for your service or products.
However, there can be some downsides to this, social media can also ruin a business.
Bad reviews, fake reviews, hackers, all can spell trouble in the social media world.
Social media is quick, customers can post good or bad reviews quickly. And if they are bad, they need to be dealt with quickly.
Experience: Doing What You Know or Do You Know What You Are Doing?
Many business fail simply due to lack of knowledge and experience of being in business.
Taking what you know and expanding on it to create a thriving company is a good way to succeed.
Trying to start a business because it is a dream of yours is all fine and good, but you may need some help to keep it going.
Some may say “I always wanted to own a pub”.
It sounds great, drinks there all the time, social events, people coming and going, being the centre of the community.
However, the reality is much different.
Serving drinks all evening, ordering supplies and having deliveries during the day, constantly cleaning, being a Publican is a hard job that requires long hours.
Doing what you know as a business can help in succeeding.
Many businesses fail in the first few years due to running out of money. They did not have a sound business plan or business model, that took into account the real time it would take to be profitable.
For some business the start-up costs alone are a small fortune. If you want to be in a product based industry, you need the products in to sell, meaning either you purchase them first, or buy as you sell, all of which costs money.
Clothing stores need to have clothes and outfits in stock, and of various sizes. All of which cost money, money you may not get back quickly.
It is easy to see why many businesses fail, but even more difficult to see how some succeed. Again, luck, knowing what you are doing, having a sound business model, and the money to sustain the company till it is profitable is crucial.