Avoid these pitfalls

Don't let your SME fail

Think about some of the most prominent companies in the world right now. At some point, they all started out as small businesses. This fact alone will give hope to small business owners that anything is possible, and you can grow your company to be something special.

However, there’s no hiding from the fact that the majority of small businesses fail. For every success, there are multiple failures. It’s far easier to fail than it is to succeed, and this comes down to all the things that can go wrong when running an SME. Bearing that in mind, here are five common reasons for small business failure:

Here are 5 ways that small businesses fail - don't let yours be one

1) No proper business plan

The great thing about an SME is that you can start one whenever you want. It’s something that can be done on a whim after you have a great idea. The issue is that this doesn’t lay the foundations for a successful business. If you want to succeed, you must have a detailed business plan.

Most small business failures stem from a complete lack of planning. They don’t have a good enough business plan, and they’re not listing goals or aims. This gives you no direction to move in and nothing to work towards!

If you don’t have short-term plans, then you can’t get your small business off the ground and reach a settled place. Then, if you don’t have long-term plans, then you have no vision of the future. Ensure you spend time devising a thorough business plan where you take everything into consideration, so your business has a solid framework and a direction to follow.

2) Owners try and do everything themselves

In a bid to try and cut down expenses, small business owners are prone to taking on a lot of work themselves. They shoulder too many burdens, which ultimately ends up running the business into the ground. They’ll try and manage the business, handle the marketing side of things, make sales calls, deal with all the admin, and so on.

One one hand, this saves money by not needing to employ other people, which helps your profit margins. The problem is, it’s just too much for you to take on. You end up with no time to focus on your primary role because you’re running around doing everything else! As such, your company never achieves what it should, and you end up failing.

As a solution, small business owners should look at outsourcing to companies like Virtual Office Melbourne for things like telephone answering and virtual assistant services. It’s nowhere near as expensive as hiring full-time employees, and you lighten the load on yourself. So, you can focus on what you’re best at and let your business flourish!

3) Lack of profits

If your business isn’t making a profit, then it will rarely find a way to live for a long time. Profits let your company grow as you can invest some of the money you make back into the business. Around a third of small businesses are actually losing money, which shows there’s a serious profit issue here!

This issue mainly stems from your product/service and how you sell it. You have to create ways of making your offerings seem tantalising to consumers - make them feel like they need to buy what you’ve got. Work on boosting your sales, and this will help increase your profit margins.

Alongside this, think about your overheads. We already touched upon outsourcing as a way to cut down on employment costs, but think of other ways to reduce what you spend without damaging your product/service. Spend less, make more, and you’ll improve your profits.

4) No unique selling point

Every successful SME has a unique selling point. This is what differentiates the business from others that are similar. As such, most small businesses fail because they have nothing that sets them apart from the rest. If you can’t offer something unique or different to your rivals, then why will anyone come to your business over ones that are already established?

People assume this point means your idea has to be entirely unique - that’s not the case. For example, you can start your own coffee shop and still compete with the likes of Starbucks. All you have to do is ensure you offer things they don’t - perhaps drinks that aren’t on their menu, homemade baked goods, or even something as simple as cheaper prices.

The same applies to any other small business; work on ways of making your company stand out from your rivals. If you don’t, then there’s nothing different about you, so why will people come?

5) Owners are too stubborn

This final point covers a lot of different things. Being too stubborn means that the small business owner wants to do things their way or has a specific idea that they’re determined to go through with. There’s nothing wrong with having a vision or a goal, but you have to be flexible and think about changing things if necessary.

For example, an owner might be adamant on marketing their company in a certain way. They get outside advice that says this won’t work, but they’re too stubborn to change. The same goes for pricing - they believe the product should be a specific price, but other people advise them that it’s way too much and they’re pricing out their target market. You could even look at the business idea itself; sometimes, you find that your initial idea isn’t working and needs to be altered. But, stubbornness stops you from doing things, which means you keep pushing something that clearly isn’t working.

A stubborn business owner will miss opportunities to steer their ship around and end up heading straight for the iceberg in front of them. Approach your SME with flexibility; be willing to listen to other voices and consider different ideas!

If you run a small business and want to avoid failure, then pay close attention to the five things listed above. Avoid making these errors, and you just might be able to run an SME that ends up enjoying a lot of success.