Why Many Small Businesses Fail And How to Avoid It
March 19, 2018
According to a recent statistic published by the US Small Business Administration (SBA), 79.9% of small businesses survive their first birthday.
This may not look so bad at first, but the report adds that only 50% of small businesses are still in operation five years later, and only 33% are more than a decade old. The rest of them fail.
This isn’t great news, especially since this very same statistic shows that 99.7% of all US companies are indeed small business operations.
Only 50% of small businesses are still in operation five years later, and only 33% are more than a decade old
Read on to find out how to keep your business in business, and how Veem can help.
There are many reasons why businesses fail. But, it’s far from inevitable. Here are the most frequent reasons why small businesses have trouble, and how to avoid it.
A bad location for your business can doom you to failure before you even open up shop
Although the internet often replaces physical shopping, your location still matters (unless you’re doing something that doesn’t require your clients to pop into your store). A bad location for your business can doom you to failure before you even open up shop.
How to Avoid It
When choosing your location, think about the following:
- Who is your target audience? Are you as close to them as possible?
- Is your store accessible via public transport? Is there sufficient parking?
- Where are your competitors?
- What’s the neighborhood like? Does your business fit in? Are there any incentives (e.g. loans from the municipality) for starting a business there?
Management is a science, and failing to acknowledge it may cause your business’ early demise. You may think you’re a born leader, but managing a business (and leading your employees) requires knowledge, diligence, and lots of planning.
How to Avoid It
Learning essential management know-how should be a priority. Take an online course, read a book, or ask the advice of a management professional.
In addition, create a business plan outlining your goals and your vision. Include a careful market analysis along with opportunities and challenges, a marketing plan, and HR needs. This will give you a clear picture of where you are, where you want to be, and what you need to do to get there.
Learning essential management know-how should be a priority. Take an online course, read a book, or ask the advice of a management professional
Even if you’re familiar with the concepts of management or have some prior experience, deepening your knowledge is always advisable. Avoid overconfidence in your management abilities.
No Digital Presence
Pictures or it didn’t happen. In our decade, this phrase could be translated to “what’s not online doesn’t exist.”
Although the internet is ubiquitous in many parts of the world, some business people still haven’t taken advantage of its importance and potential.
If you’re not online, it will cost you opportunities, customers, and maybe your business
Today, the digital world dominates commerce. If you’re not online, it will cost you opportunities, customers, and maybe your business. Don’t risk failure, build an online presence as soon as possible.
How to Avoid It
Create a website complete with a blog. Write SEO optimized content and advertise your business both on and offline. For a little help with that, read our article 7 Tips for Building a Successful Online Store.
Social media is a very powerful tool for getting the word out about your company. Make sure you have an effective social media presence and run regular campaigns to attain and reach out to customers.
Coming up with a sound financial plan is crucial for any business. It’s not an easy task: you have to budget for costs you can’t be sure about in advance, including unforeseen events and circumstances.
In addition, your business may not take off for a while (probably even a year). This means you may not have sufficient income from sales for a considerable time and you still have to cover your operating costs.
How to Avoid It
Don’t take budgeting lightly. If you’re not comfortable with financial planning, ask the help of an expert.
Cash flow is another important factor to consider. Planning for cash flow is more than just money traveling in and out of your account. Timing is a major factor.
When are your invoices due? When is your money coming in? Make sure these two dates are consolidated with each other. If they aren’t, you may run out of money
When are your invoices due? When is your money coming in? Make sure these two dates are consolidated with each other. If they aren’t, you may run out of money and find yourself in a dark, unheated store. At least, until your payment comes in next week.
If you have international business partners, you need to budget extra time for international transfers to reach their destination. If you go through your bank, you may even have to wait for over a week until your money arrives.
Not to mention the cost: due to hidden fees and unknown exchange rates, you’ll only learn the amount you receive once you’ve got it. That’s pretty unfair.
Why wallow in uncertainty? Try Veem instead.
Veem allows small businesses to send and receive international transfers quickly, easily, and securely.
Thanks to Veem’s unique tracking service, you’ll know exactly where your payment is, and when it’ll arrive. Plus, Veem creates a direct connection between sender and receiver. No hidden fees or unexpected delays.
To top it all, Veem offers competitive foreign exchange rates. You’ll know the exact amount of money you (or your counterparty) will receive, at the moment of sending it.
What’s not to love?
Sign up for a free Veem account and enjoy convenient international payments.