Monday, January 9, 2012

6 Reasons Why New Businesses More Often to Fail

A newly established businesses are usually very vulnerable to failure, especially in the first one to three years. In fact, according to the Small Business Association (SBA) as much as 30% of new businesses fail to reach its second year.

While 50% failed to reach its fifth year, and 66% did not succeed until the tenth year in operation. The results of their study also showed only 25% of businesses that managed to survive until more than fifteen years.

Nevertheless, should not be a business failing for granted. With a plan, appropriate funding and flexibility, a business has a greater chance of success. For that reason you should know the six mistakes that can destroy a business.

1. Did not conduct a market research

Suppose you intend to open an ice cream company, all capital is set up and your intention was unanimous. But you can not see the fact that the current rainy season, when people need a warm meal and not the opposite. In addition, with many brands of ice cream out there, your competition becomes increasingly severe.

Mistakes like these that make you lose before competing. You should be able to find what is required by the market, not to force your product into the market. It would be easier to provide something that is needed rather than having to create something new, and forcing people to spend money on it

2. Business plans that are less mature

A solid and realistic plan that is absolutely needed a business. In that plan, you must load a reasonable target, how to achieve these targets, the prediction problem to be facing, and how resolve the problem.

In achieving these targets, you need a lot of research and surveys. The plan must also contain the cost to business and operational strategies and schedules. You must run the entire plan as well. If you try to deviate from the initial plan, for example, increase spending or change the strategy, you can lead to failure. Unless you find a problem that could kill your business, if not, stick to the original plan.

You should also be able to quickly change the decision. If there is a problem looking for a solution soon, if spending swelled immediately downsize. More and more problems would mean higher the potential failure of your business.

3. Do not have access to additional capital

If you've just opened a business and did not go well, much less capital drag and its business was on the verge of death, you are in a position that is not good to seek a loan.

To prevent it happening, from the beginning you have to be realistic, use existing capital to be able to achieve the targets that have been determined so as to make your cash flow continues to flow. Too much thinking about borrowing for capital in opening a business is not a good start.

4. The location is bad, does not exist on the internet and the lack of sales promotion

The location is bad, of course, be a negative factor for businesses, especially those that rely on customers of pedestrians. But, currently there are more important, namely the existence in cyberspace. The existence of your business on the internet and social networking as important as the original location in the real world. That way, customers will find your business quickly so it's easier to get customers really need in your business. The next step is to start serving them.

The existence is similar to a sales pitch. Not only must you be sure these promotions to customers, but also have the right customer. Make sure you do a sales pitch to people who are interested in your business. Make other people not only like your business, but need and want your business is. Thus, you will be forming a line of loyal customers.

5. Be lulled by success

Once you formulate a plan, running a business and get a customer base do not be too satisfied with the results. It may be that it is too early to feel satisfied. Continue to monitor the market situation and find out whether you should change your business plan.

Being in the position most needed to make you have plenty of time to maintain the strategy so that it can remain successful. Do not feel satisfied if you can not change the world.

6. Too fast to expand

If your business has begun to run well and headed towards success, it's time to expand. But, how you expand the business to be the same as building a business from scratch. Do not be hasty and too confident in opening a branch for your business.

Make sure you find the right markets and regions to expand. If you are planning to diversify its products, not to deviate from the initial business lines, or you will be stuck in forming a new business like starting from scratch again.

If a business grows too fast and did not follow some of the above points, such as market research, strategy and business plan is good, then the business can quickly drown.


Although the average new business, usually small and medium businesses, rarely last long does not mean your business will fail just like that. Through planning and flexibility, you can avoid these mistakes over and become part of the 25% that survived more than 15 years in business.

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