Did you know that there are over 500,000 new businesses created every day? And as optimistic as we want to be, we all know that a huge percentage of those businesses are likely to fail: 20% in the first year and up to 80% by the 10th year. Yikes.
If you’re like most entrepreneurs, you didn’t walk into these statistics blindly. And you’ve spent a lot of time making sure you are one of the success stories: you’ve crunched the numbers. You’ve read about a million books and blog posts. After weeks of agonizing over it, you finally settled on a name—one that was specific enough to describe your current business, but also allows for the future growth and direction of your company. You’ve registered your business and set up the right business and financial structure.
And yet, what sets those who succeed apart from the slew of business that will fail? There are lots of reasons new businesses fail, but the most common reasons are related to cash flow and inexperience.
Here are 4 of the top pitfalls you can avoid when you start your new business:
- Money problems
You must, you must, you must be realistic about your financial estimates. Use tools widely available (like on the Small Business Administration site). Knowing that lack of cash flow is the number one reason businesses fail should act as a warning to you to be very aware and very honest about how financially smart you need to be. Get help with this from the beginning—don’t wait until the ship is sinking. As hard as you are prepared to work, you cannot outwork no money for very long.
- Being overconfident
You’re probably a reasonably smart person with some drive and ambition. That’s great! But the sooner you bring along some people on your team who are wiser and smarter than you, the better. You can find some free help at your local Chamber of Commerce and there are programs that match successful business owners to entrepreneurs. Find people who are successful in business to talk to. And then LISTEN to them. Your friends and family might be great cheerleaders, but unless they own thriving businesses, they are probably not the best source for business advice.
- Poor leadership and management
You cannot do everything, even if you own and operate a non-employee business (which constitutes the majority of businesses). Hire out what you are not good at—accounting, social media, whatever. If you are building a company, make sure you bring people aboard who have strengths where you are weak. Be honest about what you need—ego kills budding businesses almost as fast as no money does.
- Cyber-security problems
This is a huge problem for startup businesses because when it comes to the bottom line, you don’t know how important a robust cyber-security system is until you’ve been hacked. Spend the money upfront to protect your company, your data and client information. You’re trying to build a solid reputation as a company that can be trusted. So be one that can.
Here’s a new business bonus tip:
After you’ve selected your company name and secured the domain name for a website, get it for all the social media outlets: Facebook, Instagram, Twitter, Snapchat, YouTube. Even if you don’t think you’ll use a certain social media, you don’t want someone else to have the name, either. At best, it’s confusing to future customers if they try to find you on a particular outlet, and at worst, whoever has the name has some control of your company image.
Yes, starting a business is hard. But people do it, and to it successfully, every day. Those people have likely taken the time to examine why businesses fail and do everything they can to learn from those problems.
You can do it. Be smart, work hard, make sure your cash flow is there and surround yourself with wise people.
Now, go get ‘em!