4 in 10 small businesses in the UK fail within the first 5 years.
Just imagine ploughing 5 years into your business, only for it not to succeed.
That would be horrific.
To help you avoid going through the same stress, Purple Yak have created a list of some of the major mistakes small businesses make…
Fail to plan, plan to fail
It is vital that you have a plan in place to guide your business as it grows.
What is it that you want to do?
Where do you want to take the business?
What is your plan to get there?
You might think you have all of these things worked out in your head however it is so lcrucial that you write this down and measure yourself against it regularly. Having clearly defined goals and a cleverly constructed plan about how you’re going to reach your targets will help you deliver a business that has longevity. Naturally, there will be challenges along the way therefore revisiting your plan will allow you to change and adjust accordingly.
Poor, indecisive leadership
It might be you or maybe it’s someone that you’ve hired but bad leadership can be detrimental in any size business.
Poor leadership comes in all shapes and sizes, from leaders who want to be friends with everyone and enforce zero discipline, to managers who create mini dictatorships and have everyone running scared. Your leaders should be empowering, inspiring individuals who make your employees better and more productive. People should want to work for them.
You might be able to make your own website, have the eye for marketing and a social media whizz. Being a business owner you need to be honest with yourself, if you can’t do any of these things, then there is no shame in admitting it.
Don’t struggle managing these tasks if you don’t have the knowledge just to save some money. If you cut corners, it will have a detrimental effect on your business in the long run.
If you don’t invest in your business it won’t grow but make sure you’ve consider the business decision in the right way. Consider the following...
What would be the best case scenario by investing in this service/role?
What would the worst case scenario of investing be?
You wouldn’t let an amateur submit your tax returns on your behalf, would you? It’s better to bite the bullet and invest in people who know what they’re doing rather than be of detriment to yourself.
Ineffective money management
Do not spend every penny you make, sounds basic but this is one of the leading reasons small businesses fail. Make sure you take a wage from your profits but reinvest the rest of it into your business.
If you don’t need to invest the extra cash on top of your current budget then leave the extra money in a bank account for a rainy day. On the flip side, don’t go into scrimping mode and keep all your money in the business without re-investing it to grow.
Selecting the wrong business
Poor market research or misunderstanding the target market can lead to small businesses failing in areas where the market is already saturated or there just isn’t enough demand.
It goes without saying that a single bakery in a village is going to do well, but three bakeries in the same village are likely to struggle when they’re sharing limited customers between them.
Plan carefully before you launch and make sure there is a real need for whatever it is you’re providing and make sure that your knowledge of the industry is strong.
Not hiring when it’s needed
Taking on everything, thinking nobody can do it like you can is great when starting out but you must replace yourself to grow your business.
Spend some time and hire someone who is just as smart and tenacious as you and let them help you. You’ll either burn out or your business will fail to grow if you don’t. Nobody works to their best ability when they are burnt out or too stretched to do tasks to the best of their ability.
Hiring friends and family
Recruiting people you don’t know, sounds like such a great idea but it’s not. Friends and family are much more likely to either skive at work, tell you they can’t come in and call you out if you try to discipline them. When you go from family member or friend to boss, people will start treating you differently.
Leaders have to be willing to sever relations with people who don’t work correctly for them. It is tough to do that if your personal relationship transcends a working one.