What Causes The High Rates Of Small Business Failure?
Around 20 per cent of UK enterprises fail in their first year, rising to 60 per cent within three years…
Even when a company is well established, SMEs are especially vulnerable to failure, while making a considerable contribution to job creation and economic progress.
❌ Flogging a dead horse — while poor management, in general, can eventually cause a business to fail, it is sometimes the failure to adjust and pivot that causes the greatest harm. Testing whether an idea is economically feasible or not may be done faster than many business owners realise… and it doesn’t have to require pricey prototypes and hiring experts right away.
❌ Short runway — in other words, insufficient finance to allow takeoff. Unsurprisingly, many new companies fail in their early phases because their owners do not produce enough money or simply run out of start-up funds.
❌ Not customer-centric — Being customer-centric entails more than just developing trust, and delivering. It is about having a thorough grasp of consumers’ demands and how to effectively meet their needs.
❌Cash flow — Whether the problem is due to weak internal controls, poor planning, under capitalisation, a strategic issue, or anything else, negative cash flow can quickly destroy a business.
❌ Awareness — Many small businesses will struggle because not enough individuals who require their products or services are aware that they exist. Or, if they are aware, the whole marketing mix is ineffective.
❌ Excellence — too much time may be wasted emulating the competition or peering over one’s shoulder to see what everyone else is up to. Yes, trends are essential but doing what you do, having a genuine personality, and doing it as effectively as you can be more important than emulating what others do.
