8 out of 10 business start-ups fail. With long odds like these, you might be wondering how your start-up could succeed. The best thing you can do is arm yourself with knowledge about why your start-up could fail, so you can take precautions. Here are three reasons why your business start-up will fail.
1) You Didn't Plan Well Enough
It takes a lot of meticulous planning to get a business off the ground. Hard work is important, but if you do not know what you're doing, or where you're going, then your business is going nowhere. You need to do a lot of planning, including but not limited to:
- market research
- researching the competition
- market price and cost to make product
- your budget
- your marketing needs
- potential problems and solutions
2) You Started for the Wrong Reasons
If you started your business just because you want to make lots of money, have more free time, or because you don't want to answer to anyone, then most likely you're going to fail. Starting a business is a lot of hard work and is very time-consuming. The beginning months often bring little to no reward as well. Reasons that will keep you working through the hard months include:
- you have a passions for your work
- you strongly believe your product will help others
- you thrive working under strict time constraints
- you are never give up at the first sign or failure. Or the second. Or the third.
3) Overexpansion
This is a leading cause of business failure. Many owners equate success with expansion. While expanding smartly can be a sign of success, expansion does not mean success. And over-expanding can kill a business quickly. Instead of expanding too much at the beginning, you should:
- encourage slow and steady growth
- expand only when you have a steady cash flow and you have the demand to support expansion
- only consider expanding after a lot of review and analysis of your business, including if you are having difficulty keeping up with demand.
If you prevent these 3 pitfalls for failure, then your business is already stronger than many others.
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