It's never a full gone conclusion that you're online business will be a success. In fact, it is estimated that at least eight out of ten small businesses fail within 18 months. This translates to a whopping 80% of small businesses
So, what could be the real reason behind the failure of online businesses in such early stages of their growth? Many perceive that it's only lack of finances that lead to failure. This is quite a narrow view of a very big picture, there are other issues that can lead to failure and this is what a good entrepreneur must aim at understanding before you establish your small business.
Lack Of Understanding Of finances
Well, it is rather obvious that finance is the foundation to the growth of small businesses. Many small businesses fold because the boss has little grasp of the costings and general day-to-day finances of the business.
The second challenge is understanding that there are better sources of financing for small and startup businesses. According to HMRC research, last year 23% of small businesses used payday loan services to cover short term cash flow. HSBC however stated that loan or overdraft requests from small businesses were in decline, and that 80+% of similar financing from them would have been approved, in many cases with little interest being applied (compared to 750% APR from some payday loan companies). The same is said by many big banks in October 2016. This is considered a shocking statistic considering the willingness that big banks have in supplying finances to small businesses.
Chances are that most small business runners do not have a clue on how to link up with banks and get loans. Also, the business runners may not be interested in borrowing finances on grounds of refraining debts. Either case is a major contributor to the failure of businesses at early stages.
Lack of team building activities
It’s great when a workplace is filled with a positive vibe. This is why there needs to be frequent team building activities for work. This builds strong bonds, enhances professional relationships, and helps in keeping workers focused among other benefits. When everyone is supercharged and energised, they look forward to going to work and this will reflect positively on their output.
Team building activities are very important for any business to adopt. Even as a one-man-band online business, going out socially with customers, distributors and suppliers is a huge icebreaker, cementing a personal relationship and making you a human being and not just a number on a sales ledger.
Lack of Contact With Customers
It is one thing to spot a gap in the market, it's another deal entirely to engage with prospective customers in terms of dialogue. According to Forbes, most small business owners never take ample time to engage in dialogue with their clients. In this case, it is not just a matter of talking, but deep dialogue.
The customer is always seen as the prime determinant on how well a small business will progress. Lack of deep dialogue and engagements, therefore, will lead to warranted failure. The primary aim is to convert your prospects into long-term clients.
Lack of Differentiation
The question that is always asked is: how different are your products as compared to those of your competitors? Differentiation is something that most entrepreneurs seriously overlook and this can amount to serious problems.
When everything matches what your competitor has to offer, the aftermath is a Cold War like battle of competition and poor sales. However, when you present everything differently, chances are that you will catch the attention of your prospects. However, differentiation must not be equated to substandard products. Rather, differentiation should mean uniqueness and higher quality. Only then can a small business reap better sales.
Lack Of Communication
Now that you have eventually discovered what makes you different, there is something additional that must also come - communication. Failure to communicate what makes you different to your prospects and existing clients is a recipe for failure for any small business.
The solution to this is rather simple and implementable. First, you must make sure that you communicate any new developments to your prospects and clients. Secondly, make sure that your communication is concise and in a compelling fashion. Don't just blast a bland, mass e-mail at 11pm and hope the message sticks. Try Video, infographics or a Twitter GIF.
Ask yourself if the manner in which you communicate the developments is enough to compel clients to make even more purchases.
Lack Of Change
We are now living in a world of radical changes. This has been made possible by the modern technology we now carry everywhere. Failure to embrace modernity is one of the reasons why a small business may be headed for the bin. It is unfortunate that quite a large number of small business entrepreneurs fail to acknowledge developments in technology.
According to Microsoft research, companies around the world will be operating solely on the basis of technology by 2025. As such, small businesses today should also find a way to embrace technology. Whether this is one of a growing number of Balance Sheet Apps, Smartphone Credit Card Devices or wireless shipping label printers for when you're out of the office. Automation has already made way into the business world, and this communicates how seriously it should be taken by small and big business.
Your small business cannot fail if the right strategies are planned and deployed. Flexibility is, in a nutshell, the main factor that matters in driving any small business forward. The old military maxim "The battleplan never survives the first engagement with the enemy", holds true that the plan must be flexible to meet new challenges. Any small business runner must be ready to embrace change and welcome anything that has the potential to grow the business.