The Number One Reason For Business Failure!
Ralph Waldo Emerson said, "Build a better mousetrap, and the
world will beat a path to your door."
But when you're starting your own business, there's no guarantee
that your "mousetrap" is going to survive, especially in today's
fast-paced business world.
Nearly half of all small businesses fail within the first two
years of operation. The number one reason for business failure
is inadequate planning. The second reason is
under-capitalization.
So before you mortgage your house, or go into debt financing
your business, you need to know if your business is going to do
more than survive -- you want to know if it's good enough to
thrive! Here are three things successful businesses that have
stayed in business for five years or longer have in common:
1. The idea. A successful business start-up always starts with
an idea. Something that makes your business stand out from all
the rest. So how do you know if you've got a good idea?
You've probably got a good idea if you can answer yes to any of
the following questions: Does your idea provide the solution to
a significant problem for your target market? Does it satisfy a
need or want? Does it create an opportunity?
The most successful businesses either fix problems (either real
or perceived), or they increase your customer's pleasure. They
create a repeat need for a product or service among the target
market.
2. The market. Your chances of survival are better if you can
answer the following questions with a yes: Is there already a
market for your product or service? (It's much easier to fill a
need than trying to create an entirely new market.) Can your
target market afford to buy your products or services? (If they
can't afford it, it doesn't matter how great it is, you won't
sell any!) Will your target market perceive your product or
service as valuable? (If they want it, but don't think it's
worth what you're selling it for, you won't make any sales.)
3. Your ability. Do you have the people, the resources and the
knowledge to be able to consistently provide your products or
services to your target market? Can you maintain a competitive
advantage? Do you have enough manpower? Can you purchase the
supplies and materials you need over the long run?
Your first step always is to create a solid business plan. Your
business plan is more than an essay on "Why I deserve to get
funding for my idea" however. Don't spend all the time creating
a business plan and then toss it in the bottom drawer of your
desk. Your business plan should be a living, breathing roadmap
that helps you make sure you're on course and reaching the goals
that you set for your business.
The second step to business survival is getting enough
financing. Although the term "bootstrap entrepreneur" describes
most small business owners, having enough capital to be able to
keep your business afloat is vital to your survival.
When you're creating your financial analysis of your business,
make sure you're being realistic about costs and expenditures,
so that you give yourself the cushion you need to succeed.
If finding financing is a problem, either because you don't have
enough credit or equity, or there are other problems, take the
time to look into the resources that are available in your
community. There are a wide variety of grants and loans
(including microloans) for entrepreneurs, if you know where to
look.
Some great resources will be: -The Small Business Administration
-Local Small Business Development Centers -Women's Organizations
-Local University or Community College -Chamber of Commerce
-SCORE (The Association for Retired Executives) -Nonprofit
organizations that work on economic development in your area
Use other successful business models as a guide. When you're
getting started, look around. What businesses are successful?
Why? What is it they're doing that is working? What attributes
do you admire, and why? You stand a better chance of succeeding
if you're modeling someone who is already successful.
Find a mentor. Most entrepreneurs have great skills and
abilities, but no one does everything well. You probably already
know what your strengths and weaknesses are. (If not, there are
many resources and tools that can help you figure it out!)
Rather than ignoring your weaknesses, find a mentor who can help
you either build your skills in your weaker areas, or offer
advice for getting what you need.
If you take the time to plan to succeed, you could be creating a
legacy that will be enjoyed by future generations, and that
other entrepreneurs will look at as a model for building their
own businesses.
About the author:
Hans Hasselfors is a successful home business entrepreneur and
internet marketing consultant. Get the net working for you. Join
a community of like-minded authors and publishers and make your
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