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Tips to Avoid Business FailureTip! Talk to anyone that has been deeply and personally involved in a real business failure, and they will likely tell you that things became very clear near the end. There is nothing like winding down a business after catastrophic failure to help you step back and really understand the big picture with remarkable clarity. According to the Small Business Administration, over 50% of small businesses fail in the first year and 95% fail within the first five years. This is further supported by Harlan Platt, author of "Why Companies Fail, who claims that a business fails every hour in the United States. It's a harsh statistic but a reality for many new entrepreneurs. The numbers are not meant to scare you away from starting a business, but underestimating how difficult it can be to start and run a business is one of the largest obstacles that new business owners have to overcome. Businesses tend to fail because they have:
An unrealistic or inadequate strategic plan
Many new business owners fail to develop a strong strategic plan or to set realistic business goals. Be sure to create specific goals that include deadlines and a formalized plan to achieve them. Revisit your business plan on a regular basis. Poor customer service
Customer service is no longer a benefit. It is an expectation. Failure to provide a strong focus on customer service can easily spell doom for your business. This is particularly true for fitness providers that are service-oriented businesses. Take the time to educate and train your employees to provide great customer service. Tip! An analysis of the reasons for business failure suggests that over 60% of all business failure is due to poor management practices. Insufficient Marketing
Advertising, promoting and selling to potential customers is an on-going commitment. A marketing and advertising campaign must occur year round in order to prove effective. Poor Employee Training
Under trained or poorly trained staff can frustrate customers. It's a no brainer to assume that frustrated customers leave and go elsewhere. Invest the necessary resources and time in training your staff. Excessive Spending
Evaluate your expenses and ask yourself some hard questions. For example, do you need to purchase the newest equipment or can you buy used? Also consider developing some type of control system that will track and monitor your expenses. No Cash Reserve or Working Capital
When times are going well for your business, set aside some of your resources for a rainy day. Consider investing your spare capital in a money market or mutual fund. That way it will be there when you need some working capital. Tip! A complete business plan helps you get financing and includes a marketing plan, which addresses lack of marketing and insufficient financing, two more often cited reasons for small business failure. Poor Financial Record Keeping
Ultimately, it is your responsibility as the business owner to know how much money is coming into your operation and how much money is going out. Maintaining detailed books and an appropriate financial statement of your business is necessary. Always keep your records current and detailed. Tax Problems
Whether you want to or not, you are going to have to pay taxes. So, follow the rules and pay on time. Getting behind with Uncle Sam can only result in unnecessary government pressure, penalties, and late fees. Over time, this can become an overwhelming amount of money. A Lack of Business Knowledge
Operating a business involves more than just sales and great customer service. As a business owner, you owe it to yourself to become more knowledgeable about operating a business. Take the time to read books, take courses, and seek professional advice whenever needed. Tip! Many business writers. business consultants and business coaches attribute business failure to a lack of strategic planning, a lack of leadership, a lack of vision, a lack of processes, the list is endless. So, ensure you heed the advise of the many businesses before you as to not end up one of the statistics. Tom Perkins is a business solutions coach and certified personal trainer. Send an email to thecoach1-140208@autocontactor.com to receive the Essential Business Success Checklist.
Or visit his website at http://www.fitnessindustrysolutions.com.
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