The Top 6 Reasons Why Traditional Businesses Fail
So many new businesses sprout up every year, determined to make a mark on the world and their chosen industries. But, so many of those businesses end up failing, making entrepreneurship a risky roll o the dice that many aren’t willing to take.
To improve your chances of success, it’s recommended that you understand why so many traditional businesses fail. What are they doing wrong? Is there anything they can do to counteract these grievous mistakes?
In this article, we’ll walk you through six of the biggest mistakes traditional businesses make and show you how you can avoid falling pretty to them.
1. Lack of funding
The first major mistake that businesses make is a lack of funding. They launch too quickly without the investors and startup capital needed to weather the slow times.
Being realistic about your business at the beginning can help you get a fair loan, but if you wait to ask for a better loan until your business is bleeding green, the offers you’ll get aren’t likely to be favorable.
Don’t try to stretch your finances too much in the beginning. It will leave you in the dirt while still owing a lot of money. Carefully plan and project your finances at the start, so you’ll know exactly what you’re going to need to get off the ground.
2. Failure to adapt
The market is constantly shifting, embracing new technology, marketing initiatives, and trends that appeal to consumers. You’re limiting yourself severely by staying rigid in your plan and failing to adapt to new and prosperous tactics.
One such shift in recent years has been a move to remote working and virtual teams.
Businesses like HelloRache, which provides virtual assistant services, are one step ahead in digitizing how services are delivered. For example, having a virtual receptionist will save costs since you don’t need a physical space to house your workforce. At the same time, you can still provide the same or even better service than you could while having a physical location.
Now, let’s say all of your competitors embraced virtual teams, and you didn’t. They’re saving more than you and can afford to put more capital into marketing and acquisition initiatives.
3. Lackluster business plan and marketing plan
One of the main reasons why businesses fail is because they don’t have a solid business plan from the start. You don’t need to be an expert to have one. Instead, you can use a business plan template and go from there.
Your business plan should include:
- Finding needs
- Financial projections
- A description of the company
- Well-outlined goals
- Market research
- Audience segments
- An executive summary
- A solid marketing plan
That last one is especially important. Your marketing plan needs to be solid and take your target audience into account. Who are they? What do they need? What platforms do they frequent?
You also need to outline your brand identity so that everyone is on the same page regarding how to present your product to that well-defined audience.
Not having a marketing strategy and brand identity from the start can make a business fail when starting to promote its products or services. Before launching anything to the public, make sure you have a detailed style guide for your content marketing and all the tools and resources you need to make it work. Design suites, video tools, photo editing software, and professional copy are just a few things you’ll need to have from the start.
4. Lack of efficient support
When you start bringing your products to the masses, sometimes those customers will have questions or issues that need to be resolved. The fastest way to drive them away from a repeat purchase is to have lackluster customer support.
People want to be helped quickly and on their time. That means you need to ensure that you have adequate staff, they’re trained properly, and they’re backed up by tech tools like a CRM platform and chatbots that can take some of the easier, frequently asked questions off their plate.
5. Premature expansion
All companies want to grow. That’s a fairly common desire. But you also need to have some self-control where growth is concerned. You don’t want to get too big for your britches and expand beyond your means.
If you try to grow too fast, a few things might happen. You could bring in a wealth of new customers and not have the means to fulfill their orders or provide them with adequate support. Additionally, you could sink a ton of money into new marketing initiatives that fall on their face, leaving you in the red and spiraling toward bankruptcy.
When it’s time to expand, take your time and create a foolproof plan based on hard data. That will create your roadmap to success.
6. Not registering a business properly
Not registering your business as an official business entity such as an LLC, can be detrimental to any kind of growth. If you opt for opt for an LLC formation service formation service, it can protect your personal assets while also enabling access to investment opportunities and tax benefits. Working with such a service can ultimately help you save money in the long run, which will be needed when the hard times come.
Ensure that you incorporate your business properly to take advantage of all the benefits you’re owed. Additionally, this can help you avoid penalties if you have a legal issue or when tax season rolls around.
Business rise and businesses fall, but if you take the lessons in this article to heart, you’ll have a better chance of succeeding when you launch your next great business idea.
To review, the six biggest reasons why traditional businesses fail include:
- Not securing enough funding
- Not adapting to new technology and trends
- Hacking a lackluster business plan and marketing plan
- Lacking any efficient customer support
- Expanding prematurely
- Not registering your business
By focusing on these six areas, you’ll be able to ensure your company’s survival, generating profits well into the future.
Joanne Camarce grows and strategizes B2B marketing and PR efforts. She loves slaying outreach campaigns and connecting with brands like G2, Wordstream, Process Street, and others. When she’s not wearing her marketing hat, you’ll find Joanne admiring Japanese music and art or just being a dog mom.