Small Business Success: Top 5 Reasons Most Businesses Fail And How To Avoid Them

There is no agreement among experts on the percentages of companies that fail. Recently, Forbes estimated that 80% of companies fail, while Fortune claims it is closer to 90%. According to the Small Business Administration (SBA), about 50% fail in the first year. Of those who survive, the SBA goes on to tell us, only about 66% survive the second year.

Whatever the number, most small businesses don’t survive the first few years. Why is the survival rate so low?

Starting many businesses myself and working with small business owners as clients, I have come across five surprising reasons why small business owners struggle and fail. In this article, I will point out these reasons, and by knowing them, you can avoid these pitfalls.

Reason # 1 – I don’t know what product they are selling.

It’s hard to believe that most business owners don’t understand what product or service they are selling. They say “People are coming to buy me flowers,” “I’m offering insurance,” or “I’m selling cupcakes.” But the truth is that they are not selling a product or a service, they are selling a feeling or an emotion.

Shopping habits are based on feelings and emotions and are only justified through the use of logic. Let that sink in. People buy based on feelings and emotions and then defend it logically.

Let’s say you have a flower shop. People can buy flowers from many different sources these days. Supermarkets have flowers as do some convenience stores. Why should they buy from you?

What feelings or emotions can you promote that will set you up for the success of your business?

Reason n. # 2: I don’t know who your ideal customer is

Many business owners will say that they don’t care who their customers are. As long as they have customers, they will be happy. They just want to have clients.

The truth is that it is essential for you to know who your ideal clients are, and this has many benefits. When you work with your perfect client, you do your best work because you enjoy working with them. You will be more inspired and satisfied with what you do. You will connect with your customer on a deeper level and are more likely to recommend you to others.

So who is your ideal customer?

Reason # 3 – I don’t know what makes them unique.

I meet many business people who believe they will be successful just because they open their doors, have a website, or hang a sign that says they are open to the public. They think that the product they have will sell itself. Sometimes this can happen. However, it is rare.

In this increasingly confusing world, information and products continually bombard your customers from all sides, and you need to stand alone to stand out. To do this, you must be unique from all other companies doing the same thing as you. Being unique, your client will recognize you and come looking for you.

What makes you unique in the market?

Reason # 4 – I don’t know how to promote the business.

When a business doesn’t know what product it is selling, what makes it unique, and who its ideal customer is, it has a hard time promoting your business. If you are trying to please and appeal to everyone, your message is too broad to appeal to anyone and you waste a lot of time and effort marketing.

If a company is clear about what it is and who it is, the promotion is simpler and more direct. Advertising becomes more targeted, and because of this, its success rate is higher.

In light of this, how can you promote your business now?

Reason # 5 – I don’t know your end goal.

So what are you playing at? Many of the companies I come across answer this question by saying they want to be successful. But what does it mean to be successful? The answer is different for everyone. A company that doesn’t know what its ultimate goal of being in business is, doesn’t have a direction to work in, and because of this, it falters and never achieves its goals.

Know what your end goal is to provide you with a direction in which to work. Is your end goal to eventually sell your business for a profit? Or maybe it’s to provide a comfortable life for you and your family? But understand that if it is the latter, what does comfortable mean to you? What salary do you want to earn? Or do you want to spend more time with your family? Knowing the answers to these questions gives you a direction and a goal.

So what is your end goal?