By: Laura Cowan
It’s no secret that a large portion of entrepreneurs and aspiring business owners fail. Studies have shown a full 20% of small businesses fail in their first year, 30% in their second year, and 50% by year five. A full 70% of small businesses don’t make it past their tenth birthday.
As a new entrepreneur getting ready to start a business, there is a lot of uncertainty ahead of you. You are probably being reminded by family and friends how unlikely it is your endeavor will succeed.
However, when we look at the trends, we tend to see the same mishaps over and over again. Armed with this information, your odds of having a profitable endeavor increase significantly.
Here are eight common reasons small businesses fail.
1) No vision
Successful businesses owners have a clear vision of their purpose and mission. Your vision serves as a roadmap to help you see where you are today in relationship to where you want to be tomorrow. Your business plan serves as the mechanism that will get you there.
When you don’t have a clear vision, it’s like taking a road trip without a map. You don’t know where you are going, so you end up wasting a lot of time, money, and energy trying to get on the right path. A well-defined vision will help keep you on track.
2) No niche
One of the most common reasons for business failure stems from having a poorly-defined niche. A niche refers to a target market or area of specialization. If you try to make your business attractive to everyone, it will end up being attractive to no one.
It’s better to specialize. The narrower your market, the better your odds of speaking to the very people you want to serve. Market yourself as an expert in a specialty while showcasing yourself to the narrow market that can benefit most from your services.
[Related: Forget Passion: Find Your Schtick]
3) No business plan
Your business plan is your strategy. It details your business niche and target market, your marketing plan, financial projections, staffing, and the features of your products or services. It is your business plan that provides the strategies you need to move you from where you are today to where you want to be.
If you don’t have a plan to follow, your chances of achieving success are greatly diminished. Plans have a way of becoming reality. Craft your plan carefully and use it to guide your progress going forward.
4) No marketing plan
A marketing plan outlines the steps you intend to take to sell your product or service. As one component of the overall business plan, it identifies your niche and the marketing strategies you’ll employ to reach your target market.
You should have a defined marketing plan identifying how you plan on reaching your target audience. You should also have a marketing budget and a way to calculate your ROI for each marketing method employed.
5) No action
Taking action is the foundation of progress. You have to get things done. Some business owners get so caught up in process they are unable to make decisions. Others are perfectionists who don’t implement ideas because they think they aren’t good enough.
Neither are acceptable. Anything that prevents you from moving forward will lead you down the path to failure. At some point you have to decide and move on. It’s better to make a decision and risk an outcome you might not desire, than to mull over the options indefinitely.
[Related: How to Make a Hard Decision]
6) No commitment to learning
There is no place for complacency in an entrepreneur’s world. Successful business owners are constantly looking for new and better ways to get clients, as well as to serve the ones they already have.
They are aware of the latest trends. They are constantly innovating. They learn about and implement processes that increase the effectiveness of their day-to-day operations. By committing yourself to learning and innovating, you’re committing yourself to success in all parts of your business.
7) No follow-up
Business owners that don’t follow up with clients and customers are perceived as inattentive, uncaring, and unprofessional. Lack of follow-up is a surefire way to lose clients and ensure you won’t be referred any new ones.
Whether it’s returning phone calls, responding to e-mails, or delivering a product or service to the client as promised, make sure that you complete these tasks in a timely manner. Following up is fundamental to creating long-term customer relationships. Not only does it show you respect your clients, but it is a standard of excellence among business professionals.
8) No consistency
Consistent action is one of the most important habits to cultivate if you truly desire business success. You must be committed for the long-term, because it’s going to take time to build your business. You have to grind on; grit is a quality of every successful entrepreneur.
Each day, commit yourself to taking one action that will increase your visibility or credibility. You’ll be surprised at how quickly these little steps build into much larger successes.
Laura Cowan is an attorney, CPA, and entrepreneur. She is the founder and owner of the Law Office of Laura Cowan, a boutique trusts and estates law firm based in Midtown Manhattan. She is also the founder and CEO of She’s Having a Business!, a consulting firm providing entrepreneurs with the tools, templates, and education they need to run a legally sound business.