While it is true that a large number of small businesses fail within the first few years of establishment, what is not true, even in any business environment, is the impression that more than 80% of them fail within the first 3 years. Certainly, there are some that survive for 4, others for 5 years and more.
Small businesses sometimes fail because of sheer negligence on the part of the owner/operator. While in some cases, it is simply as a result of some management pitfalls or environmental factors.
It is possible to avoid any failure in any small business if the owner/operator keeps these points listed below in mind:
- Don’t make any attempt to build a small business meant to appeal to everyone. You must note that structuring a business to appeal to the widest possible range of customers is a good thing, but could end up creating a business that will be weak in several areas rather than strong. “As you like it, sell where you can for you are not for all markets.” -Shakespare.
- Don’t start unless you are sure of the availability of the minimum cash requirements. Alternatively, you must have arranged a credit or done a proper projection of revenue and expenses concerning a reasonable period of time.
- Do not fail to design a means of detecting bad credit risk early so that you can take steps to avoid credit problems ahead of time.
- Don’t use pricing to scare your customers away or destabilise your business. No matter what situation your business may be facing, you must strike a balance between your firm’s need to make profit and your customers’ search for value.
- Never postpone savings of the company’s earnings. Do it now; possibly set out a percentage of the earnings to be kept in the business and do it religiously.
- Do not be “a- one- man- squad”. Seek advice from experienced people and professionals in your field.