Around 20 per cent of UK businesses fail in Year 1 and the number is 60 per cent within 3 years…
And even once a business becomes established, SMEs are particularly susceptible to business failure, despite making a hugely significant contribution to job creation and economic growth.
❌ Flogging a dead horse – although poor management, in general, can ultimately cause a business to fold, sometimes it’s the inability to adapt and pivot which can cause the most damage. Testing whether an idea is commercially viable or not can be completed more quickly than many business owners realise… and doesn’t have to involve expensive prototypes and buying in expertise at the very beginning.
❌ Short runway – in other words, a lack of sufficient funding to enable take-off. Unsurprisingly, many new businesses fail in the early stages, because their owners don’t generate revenue quickly enough and they simply run out of start-up capital.
❌ Not customer-centric – being focused on the customer is more than just about creating relationships, building trust and delivery. It’s about having a deep understanding of your customers’ needs and how you can best satisfy those needs.
❌Cash flow – whether any issues with cash flow stem from insufficient internal controls, poor planning, under capitalisation, a strategic problem, or something external, negative cash flow can kill a business fast.
❌ Awareness – many small businesses will suffer, because not enough people who need their products or services, even know they exist. Or if they’re aware, the overall marketing mix isn’t working properly.
❌ Excellence – too much time can be spent copying the competition or looking over one’s shoulder at what everyone else is up to. Yes, observing trends is important, but doing what you do, having an authentic identity and doing it as well as possible can be more important than imitating what you see others do.