Running a successful business is hard and statistics say that about 85% of businesses fail within a year of operations.
There are numerous reasons why businesses fail, which cannot be exhausted in a single article, ranging from socio-economic, political, strategic, to psychological reasons, amongst others. However, this article will dwell more on the factors that are under the control of the business owner.
While there isn’t a tailor-made or foolproof plan to attain business success, there are several mistakes that must be avoided by SME owners to avoid failure.
Poor customer insight
An SME owner who does not conduct surveys frequently in order to understand his customers’ tastes and changes in behavior will find it difficult to sustain his business in the long run.
Poor customer service relationship
Great customer service goes beyond just smiling at your clients when they walk into your office. It involves working around the clock every second of the day to ensure service availability to your customers. It involves not arguing with customers, picking phone calls, replying to emails, and resolving issues as fast as possible.
Focusing on only one client/customer
Failure to diversify client base results in revenue loss when that client leaves.
Underestimating competition or poor knowledge of competition
Business owners who do not understand that their competition goes beyond just other businesses that sell the same products as they do, will not succeed. Failure to know what competitors are offering will make the business owner unable to ensure that his own products stand out, neither would he be able to respond to rivals with better initiatives.
Hiring the wrong people
A business is as good as the people running it on a daily basis. A business owner who hires based on who he knows and not based on competence will see a poor result in execution of his directions from staff.
Bad hires will find it hard to execute tasks, which will result in an unhappy team and upset customers. The final result will be a loss of revenue, which will kill the business.
Building a website nowadays is cheap, and the fastest ways for customers to find your products is through Google. Marketing is broad, but at a basic level, failure to have a website and decent social media presence can ruin your business.
Overspending and Underspending
Overspending on things that add no value to the business and underspending on things that add value to your business will kill it.
Failure to improve on products/services
Competition is fierce, hence business owners must be one step ahead by improving on the quality of the product or service delivered to customers or risk failure.
Lack of reserve capital
Business revenues are cyclical. There are times when things will be rough. SME owners who refuse to prepare for the rainy day run the risk of missing out on the opportunity to survive through tough periods and lackincash to expand the business.
Failure to read and research on happenings and trends in your market
A business owner who doesn’t constantly read and update himself on recent happenings and trends in his business will see competitors outsmart him.