Why is it that most small businesses fail in the first couple of years? What actions are being undertaken to cause this to happen?
At Silvan Ridge Business Advisers, we have been around small business for years. Here are the traps that we see small business owners falling into.
1. Not having enough money.
Too often a small business starts up with not enough money to see them through the early stages. Quite often the small business owner does not allow enough capital to see them through the first few months. Things never turn out as planned, so ensure that you have enough capital when you start out.
2. Funding Growth
Your business has grown and it is time to expand, but how do you go about it? One option that is considered is to seek out investors. Investors will put pressure on to get a return on their money faster than what you expected. Consider organic growth or growth that is funded from your own internal finances – this will potentially be quite easier in the long run.
3. Going into Business with Friends
Whenever I hear that two friends are going into business together I shudder. It might sound like a good idea over a couple of beers but it rarely is. Unless an appropriate business plan is discussed where the business ideas of each partner is laid out, it will not end well. In most cases I would advise to keep your friendships separate from your business.
4. Starting Without a Plan
We understand that you are keen to get your business started. Time spent before you open, planning how the business will operate, determining your long term goals and laying down the rules of your business are essential. Too many people go into business with no real long term goal. Why are they doing it? What are they hoping to achieve? What are the risks? What are the benefits? All these questions need to be considered.
5. Letting Emotions get in the Way
Your business has been going okay for the first couple of years but you have now hit a couple of hurdles. Are you able to view your business objectively? Unfortunately, too often we allow our emotions to get in the way and it effects the business. Business decisions need to be made with a clear head and without ego. Obtain the advice of independent parties in relation to aspects of your business. Having built it from the ground up it is hard not to let emotion and ego get in the way but you must.
Avoid these 5 traps and you are well on the way to creating a long term and very successful business. Love Your Business.