There is nothing more exciting and exhilarating than starting your own small company. Of course, there are lots of risks that come along with starting a small business, but there is no reward without risks. However, no small business owner wants to have to file bankruptcy after a few years of just opening for business. Unfortunately, the sad truth is that it happens more than you could ever imagine. According to recent studies and research, only two-thirds of small business make it past the first five years, and only 50% make it to the 5-year mark, while only one-third are able to make it 10 years.
You might be surprised to learn that a lot of these small businesses are failing for the same reasons, and as long as you are aware of these reasons and know how to avoid them, you might be able to get your business on the road to success.
Poor Accounting
You would be surprised at how many businesses fail, because they can’t keep up with their books. Without knowing how much money you are spending or bringing in, you are pretty much just flying blind. You won’t even know if you are making more money than you are spending. It is not that small business owners don’t try to balance and maintain the books. It is usually that they become overwhelmed and make errors or forget things that lead to major financial mistakes. The best and only way to avoid this is to hire someone and make him or her primarily responsible for your books.
Not Enough Cushion Cash
Sometimes small business owners put all their eggs in one basket, which is almost the same thing as living from paycheck to paycheck. If you are always depending on that one great customer or that big sale, what happens when that customer or sale falls through? You always need to have cash stashed away for emergency situations, because bad things will happen over time. Whether you lose your star employee, customer, or have a huge competitor move in next-door, bad things can happen from time to time and you need to be prepared for them. Simultaneously, hiring an attorney can be very wise and can help you prepare for unexpected hurdles.
Expanding Too Fast
Just because you have worked your way up to a slow and steady profitable income does not necessarily mean that it is time to go out and expand. What happens when the market drops back down and you are left with an abundance of stock or additional employees that you can’t put to work? However, at the same time you never want to deny your success or chance at growth. If you are going to expand, you need to make sure that you do it smart and plan accordingly. Identify the areas where you need to expand and expand in those areas rather than increasing everything all at once.
Maintaining A Social Media Presence
In the world of technological, just owning a website is not enough to get your small business noticed. You need to hire an SEO expert, so that he or she can implement strategic techniques that will keep your site ranked high and growing on the search engines. Marketing your business online can help you avoid an untimely bankruptcy!