There is always something in this world that we are afraid of. Whether it’s another person, a situation, or some thing or event that has yet to happen.
One of the biggest fears I’ve seen most of in business, with myself and other women, is fear of business failure.
I don’t believe anyone who says they are not afraid of anyone or anything. That’s just not realistic. However, I can understand the fear of failure in business. Here are the 2008 numbers from the Small Business Administration:
Small Business Survival Rates
Small Business Openings & Closings in 2008:
There were 627,200 new businesses, 595,600 business closures and 43,546 bankruptcies.
Seven out of 10 new employer firms survive at least two years, and about half survive five years.
Findings do not differ greatly across industry sectors.
Those are sobering numbers. But it does not mean that your business is doomed to fail.
As women, we don’t want to fail in any area of our lives or appear less than competent in the things we do. I could tell you to feel the fear and do it anyway, but let’s look at how you can overcome your fear of your small business failure. We’ll do this by looking at the seven most common reason businesses fail according to Businessknowhow.com.
1. You started your business for the wrong reasons.
If this sounds like you, then you know the feeling. Wrong reasons include entering an industry because it’s popular, joining an opportunity because your friends are doing it, or just being desperate to find something to help get you out of the corporate rat race.
Whenever you start a business, be sure that you are selling a product or service that you love so much that you would do it for free. Do what you are passionate about and it won’t feel like work. That makes the business easier to work on each day. When you lose your passion for the business, it may be time to close shop.
2. Poor management.
Regardless of whether or not you have employees, management of all aspects of the business, particularly the finances, is key to having a successful business. If there are aspects of business management that you are unfamiliar with, take a couple of classes at the local community college to get your skills up to par. You can take these classes for credit or non-credit.
3. Insufficient capital.
The capital for your business is not only what you need to start the business, but also what you need to keep the business going on a monthly basis. Although this goes back to management or resources, before opening your business, even if you’re the only person running it, be sure you know how much it takes to get started and what you need on a monthly basis to keep the business going. If you’re unsure of what that is, talk to people in the industry to get an idea. Having sufficient capital also means being able to keep the business going during the early times when there is little to know income coming in.
4. Location, location, location.
This is the biggest issue facing those of you who are opening a traditional brick and mortar shop or service. The location you eventually pick will be determined by your target customers (and where they shop and live), your type of product or service, and your budget.
Although a “bad” location is not the death of your business, it does you no good to sign a lease for a place you cannot afford based on what you think you will make. You need a location based on what you can afford now. That will take some of the stress out of finding a good location. Also, when your business does better, you can get a new location that you can afford.
5. Lack of planning.
Business plans are not just for businesses seeking outside financing. It is also meant to keep you on track and see what your mission and goals are for your business. It really defines where you are and where your business is heading. Keep in mind that a business plan is a fluid document. It should change as your business changes. One of the great things about putting together a business plan is that it also forces you to do the other things mentioned above, such as the planning and ensuring you have the capital to run your business. You can get one on one help with your business plan from places like the Small Business Administration and classes at the community college. But be sure to do one.
We all want our business to be a big success. However, if you are not ready for the expansion if it hits you heavy, then you could be out of business as quickly as you started.
A great example of this is when a small business is featured on Oprah. Once you’re on Oprah, your business has the golden stamp of approval. However, there are stories of companies that have been so flooded with orders and business after an appearance on Oprah that the business almost shut down because the owners could not keep up.
Short of an appearance on Oprah or another big name TV show, plan for expansion but do it at a reasonable pace that allows you to continue to provide great products and excellent customer service. It’s okay to grow slowly.
7. No website.
There’s no getting around the necessity of a website. You can start with a blog until you can get a site designed that can incorporate your blog. The website is important so that people can find you when they want to find you. If you want to sell your products and services online as well, then don’t delay with the website as it will give your business another stream of income. Of course, if your business is entirely online, make sure you investigate all e-commerce options before spending money on a solution for your particular products and services.
With some careful planning and good management, you will be able to overcome the pitfalls associated with business failure. As women, we are great planners and there is no reason this cannot carry over to your business endeavor. As you go through the process of starting a business and do your planning, you will be able to feel the fear and do it anyway. Remember to learn from your mistakes and take advantage of services out there for the support of women in business.
SCORE: Small Biz Stats & Trends
Business Knowhow: The Seven Pitfalls of Business Failure
Kim Duke, The Sales Diva