According to the U.S. Small Business Administration (SBA), approximately half of all new businesses will fail within the first five years, and only one-third will survive for 10 years or more. Starting your own business is not just a major financial investment, it’s also a personal investment, more than likely involving your blood, sweat and tears. It’s a stressful and strenuous event, fraught with the possibilities of failure and pitfalls, but that doesn’t mean that you shouldn’t go for it. At Zinman & Company, PC, we have years of extensive experience with helping entrepreneurs just like you to properly navigate the startup process. Today, we’re using that experience to help you understand the biggest problems you will encounter when starting your business.
- Poor Planning: Many startups fail because of fundamental flaws in their business planning. Think of your business plan as the roadmap to your success; if something is missing from the roadmap or there aren’t sufficient directions or strategic plans, you will never make it to your goal. Our business planning services can help you with strategy, tactics and much more, so if you begin to feel lost, just give us a call.
- Inability to Adapt: Business startups don’t end at the grand opening ceremony, as your business grows, so will your problems and opportunities. If you are not prepared to adapt and grow with your business and industry and not understand the benefits of CRM (because customers are everything), your startup is guaranteed to become part of the failure statistics. Remember that this isn’t a race – your starting point is not your ending point, and if you’re not willing to put in the continual work, then someone else is. The startups that survive are the ones that can change their product, image or market until they find success.
- Insufficient Insurance: Many entrepreneurs neglect two of the most important insurance policies available to them: personal liability insurance and disability insurance. Sole proprietors are personally responsible for the business claims filed against them, so just one lawsuit can destroy your startup and your personal finances (contact professionals at Ortiz Law Firm for details). On a similar note, one debilitating illness or accident can do the same to a small business owner. Don’t get caught with insufficient insurance coverage – make sure you have personal liability and disability insurance to protect your business.
- Unrealistic Ambitions: The adage, slow and steady wins the race, is a great mantra to adopt when starting a new business. Trying to capitalize on success too quickly brings a guarantee of failure. Overexpansion can lead to bankruptcy if you don’t have the necessary funding or a proper plan in place. Perform a business analysis that considers the demand for your product, your ability to fill it and your available cash flow.
- Market, Financial and Management Risks: Current market conditions, industry trends, property locations, potential competition and product pricing decisions can affect new businesses. If any of these risks are unaccounted for, your business can fail miserably. The same goes for inadequate financial planning, budgeting and goals. Entrepreneurs need to consider their living expenses until the startup takes off, as well as the business’s overhead cost and needs for inventory, equipment and marketing materials. Furthermore, many businesses fail due to poor management. Whether it’s because business owners try to take on all of the duties themselves, without the necessary experience to do so, or because they hired inept managers in the rush to fill their rosters, poor management can break a business faster than many other risk factors. At Zinman & Company, PC, we provide administrative, financial and business planning services; we’ll help you create a marketing analysis and plan, formulate a business plan to get the funding you need and find, hire and retain efficient help for your business.
- Lack of a Website: We’ll keep this one simple; if you don’t have a website for your business in this economy, your likelihood of failure goes up exponentially. Consumers are turning to their smartphones when they have a need to fulfill, and the majority of them are starting their purchases by conducting these online searches. Don’t get left in the dust, get a mobile-friendly website today.
By no means did we cover every potential problem or risk that your startup could encounter, but we hope that we helped give you a better understanding of what you’re getting into. If you need more information or advice about how to avoid these risks, don’t hesitate to call us. No matter the type of business or industry you are looking to start, we can help alleviate the overwhelming logistics associated with your investment.