You know that you have a great product or service, and you’ve poured tons of time, energy and heart into making your business work – but it just isn’t thriving.
That’s not uncommon. The U.S. Bureau of Labor Statistics (BLS) says that 20% of new businesses don’t survive the first two years of operations, and only one out of four will make it long-term. That’s been true since the 1990s, which makes it possible to have some insight into why the statistics seem so dismal. New businesses commonly fail because of the following reasons.
It’s harder than most people realize to run a business
Entrepreneurs are a creative lot, but it takes more than creativity and great ideas to run a business. Inexperienced leadership, difficulty delegating authority and trouble understanding either the “soft” (people-side) or “hard” (financial and legal) aspects of a business can be a recipe for failure.
Insufficient capital can be a problem for almost anybody
Young companies seldom have access to ready cash, and running out of money will definitely bring a new business to its knees. Many startups underestimate the amount of capital it takes to cover their initial costs and operational expenses, and they don’t always keep enough liquid reserves as a buffer against unforeseen challenges.
It can be difficult to get the marketing right
Even a top-notch product or service won’t find its target without effective branding and good marketing. A lot of startups get so excited about what they’re offering that they launch without fully understanding the market trends, their target audience or their competitors. Weak branding and the inability to fund a robust marketing strategy to build brand awareness and attract loyal customers can be a real problem.
Sometimes new companies forget they have to adapt
When you’ve barely gotten your business off the ground, it doesn’t seem like you should have to pivot in new directions – but that’s sometimes the reality. Adaptability is the name of the game when business landscapes evolve. Even major companies (like Kodak or Radio Shack, for example) can fail to spot early shifts in consumer attention and preferences or get fixated on their initial business models to their own detriment.
If your business has developed financial problems, seeking legal guidance can help you assess your options and handle the situation in a way that gives you – and your enterprise – the best possible chance of benefitting from a favorable outcome.