It’s common knowledge in the business world that small businesses “fail” the most. One in five small businesses don’t even last a year, and only 35% of small businesses that start today will be around in a decade.
These statistics may frighten the burgeoning entrepreneur, but they don’t have to. Every business closure happens because of unique circumstances that may not affect you.
Also, as Alex Hormozi says, a massive part of doing the right thing is simply avoiding the wrong thing. So sit back, relax, and consider these five business pitfalls you should avoid if you want to build a successful business.
1. Bad Marketing
Marketing is learning what your customers want and letting them know you have it (once you’ve made it). Your business cannot grow without a good marketing strategy and product.
The first big thing your marketing plan needs is a way to distribute information to potential clients. The second is a way to take their feedback and visibly improve your product. That’s the strategy around which you use all the little marketing tactics.
2. Hiring the Wrong People
So many companies hire employees who get paid more than the value they add. Don’t only hire for qualifications. They may look impressive, but you also need employees with good character.
Optimize your interviewing to look for honesty, integrity, and teamwork skills. These soft skills are often worth more than a qualification.
3. Having Insufficient Experience
You will only make a breakout impact in an industry if you’ve worked there for a while. Consider apprenticing with someone who’s been in the industry for longer before you start a business as a rival in the space.
The other way to build up experience is by doing courses, studying, and starting small. If you stick to the grind, you’ll learn what you need to as long as you don’t quit.
4. Low Reserves
The only businesses that survived the lockdowns were those with sufficient liquid reserves (cash, gold, stock, etc.). If you don’t have many assets you can sell for money, you’re at the mercy of government shutdowns, climate catastrophes, plagues, and so much more.
5. Leaving Debts Unprotected
Many businesses go through a period where their receivables ledger is their biggest asset. People think this is an unbeatable asset because it can’t be stolen or lost, but that’s wrong. Your debtors can go under or disappear, leaving you with an empty asset.
The two ways you can defend yourself is by having debt insurance or a good lawyer on retainer. For instance, having account receivable insurance in California is vital because of the State’s turbulent business climate.
The Best Protection Against Business Pitfalls
When you start your business, it may seem like the entire world is colluding to close it down. You’ll need to work every day putting out fires in addition to running your operations, which is why you have to avoid these business pitfalls.
Bad marketing, the wrong employees, and lack of experience can all lead to sub-optimal performance. Having low cash reserves and uninsured debts can also lead to cash flow problems.
The best protection against these and other pitfalls is having more information. Find the information you need by reading the rest of our business blogs.