Throughout history, there have been plenty of instances where an individual or a group of individuals come up with the idea of starting a small business and so they act upon it. To their surprise, their business makes huge profits and after a few years this ‘small business’ no longer remains small. Such instances include famous businesses such as Apple – which was started in a garage by Steve Jobs and Steve Wozniak – and Facebook – which Mark Zuckerburg started in his Harvard dorm room in 2004. But have you ever wondered why thousands of people start small businesses but somehow, we get to hear only a few success stories?
According to the Bureau of Labor Statistics, 20% of new businesses fail during the first two years of their initiation, 45% fail during the first five years, and 65% fail during the first 10 years. However, only 25% of these new businesses make it to 15 years or more. Surprisingly, these statistics haven’t changed much over the years. Some people believe that lack of education is the reason behind their failure while others hold the opinion that lack of capital or funds causes the downfall. The truth is, it is much more than that; there can be several reasons for this.
But before we discuss the reasons behind the failure, let us focus on why people start their businesses. In today’s world, employees tend to escape the pattern of their regular “9 – 5” routine, they want to live on their terms, achieve financial freedom, and work in a space where they are much more comfortable so they come up with ideas which can help them achieve this desire, one of the most common ones being earning through providing services to people aka starting a business. Some of these employees or individuals include passionate young people while others may be in their late 40s but it’s not the age that matters, it’s the actions, mindset, habits, and knowledge that they apply, that are crucial.
When a person or a group of people start a business, they usually come across challenges. A few common ones include:
Inadequate Business Plan. A business plan is the basis of your business. If one does not produce a structured and organized business plan and further abide by it, that is when they mess up.
Insufficient Funds. New businesses (especially those on a small scale) usually don’t invest a significant amount of money or have a low budget as they might not make any profits or receive clients as per their expectations. This may also occur due to poor financial management.
Poor Marketing. For a business to thrive, it needs new clients continuously. But that can happen through favourable marketing strategies which can attract, persuade and engage new clients. Some marketing methods include online advertising, cold emailing, connecting with local businesses, and partnering with influencers.
Poor Team or Staff. Having a team where all the members have a structured relationship with one another – that is, their relationship is built on support, understanding, and cooperation -is an essential part of a business. Failure to respect and comprehend each other’s views or opinions often results in disagreement thereby causing the members to adopt dismissive behaviour which then holds members back to work diligently towards the aims of the business.
Disconnected from the Market. After establishing a business, it is essential to keep up with the trends in the market and explore the opportunities out there. A business plan needs to change along with market trends. In such cases, a business must strategize and come up with various approaches and evaluate which ones might suit them.
There may be numerous other obstacles, but these obstacles keep changing too. This can be due to the cultural, political, and economic conditions of the country or region in which the business operates. In the end, what a business needs to do is study the market and other businesses that are thriving and further strategize cleverly to strive. Anyone planning to start a business in 2023, must be aware of the forthcoming challenges, think wisely, and plan accordingly. Following are some of the challenges which you can prepare for and focus on.
- Analyzing economic trends such as inflation, labour shortages, supply chain problems, and high energy costs.
- Attracting customers by publishing blogs and well–structured content that not only reflects a positive image of the business or company but also allows the customer to acquire knowledge about how the business operates. This may even assist in customer loyalty.
- Contrive distinct marketing strategies that can reach huge audiences and capture their attention. This will create more awareness and bring in more potential clients.
- Building a cooperative and supportive team that continues to work hard and use its maximum potential even in times of crisis. For example, if the business does not do well in the market initially, a member should not retreat if it does not bring him/her any profits.
- Maintaining cash flow management and proper bookkeeping, paying any bills if there are any (Don’t get caught up in debt), keeping track of cash reserves, and finding ways for collecting funds – for example, finding an investor or partnering with another business.
At the end of the day, it is all about the mindset, perseverance, discipline, and the desire to acquire knowledge but more importantly, how one comprehends the knowledge and applies it, is what truly matters because this is how people like Steve Jobs, Steve Wozniak and Mark Zuckerburg were able to expand their business and ended up becoming role models.