Friday, September 22, 2017

8 Out 10 New Businesses Fail, But Why?

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If you aren’t aware, Forbes has a statistic which says that 80% of startups fail within the first year. For entrepreneurs, it’s a daunting task trying to be apart of the 20%. However, it isn’t an impossible target to hit as long as you know why new companies fail. Once you have the knowledge, it’s a lot easier to steer the organisation in a new direction. 

Below, then, are the main reasons eight out of ten startups fail and what you can do to be different. Good luck.

#1: No Love Or Passion

There is an attitude in the industry that is killing new businesses. It’s the need to make money at any available opportunity. As a result, entrepreneurs get into sectors in which they have zero knowledge. If they do get past the initial hurdle of a lack of info, there is the passion factor. A person who doesn’t love the work won’t put their heart and soul into keeping the firm alive. At some point, the fact that the money isn’t rolling through the door will cause them to quit. To avoid this, try and take an interest in the company. Whether it’s a genuine love or you learn to love it, there needs to be something which keeps the magic alive. 

#2: Underestimate The Budget

A friend who is a peer tells you the cost of starting a company. As soon as the figure leaves he/she’s lips, you think you can do it for less. There isn’t a businessman or woman alive who doesn’t believe that they can cut costs and stay in the black. So, when it comes to the budget, the coffers are dangerously low. Of course, in the end, a shortage of revenue is the ultimate nail in the coffin as new companies don’t turn a profit. At least, they don’t for the first six to twelve months. Always add an extra 10% on top of your budget to ensure hidden costs don’t cause a shock.

#3: They Aren’t Lawyer-Friendly

The firm doesn’t need an attorney, right? Let’s face it – you’re a small fish in a small pond. A legal team isn't necessary for because the chances of legal action are small, or so you think. In truth, a startup needs everything from a personal injury attorney to a business lawyer. For one thing, lawsuits come out of the blue and from every angle. Not only will the competition use them to bleed the firm dry, but employees will file too. Also, setting the business up wrong is a terrible way to start. If someone sues, you might be liable depending on the type of business. Lawyers cost money yet save a fortune in the long run.

#4: Mismanagement 

Sorry, but the boss is the person to blame in this circumstance. Owners think they know everything, but the opposite is true. The people who aren’t flexible and open to ideas are the ones who fail. From outsourcing to save money and increase standards to delegating power, a boss has to lead by example. Otherwise, the entire company will suffer. 

The above have one thing in common – you. Ultimately, the boss is the secret to success.

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