There are currently over 33 million small businesses in the United States, employing nearly half (46.4%) of private sector employees. Unfortunately, it’s not uncommon for small businesses to fail in their first several years. Even the bigger ones tend to disappear from the radar, with only about half of the Fortune 500 companies from 20 years ago still existing. Learn why many small businesses are failing and protect your business from suffering the same fate.
If you have a startup or an established small business, the last thing you want is to close your doors. Business survival is probably one of your top goals before things like growth and innovation. To give your business the best chance of survival, here are some of the top reasons small businesses are failing.
5 Reasons Small Businesses Are Failing
1. Ineffective Business Planning
One of the most common reasons small businesses fail is that they fail to create and follow a strategic plan. How do you know if there is a market for your goods or services if you haven’t done the research? Putting together a comprehensive business plan can serve as a guide to help your business achieve its goals and a way to avoid many common small business pitfalls.
2. Financing Hurdles
Running out of cash or not fully understanding what costs are associated with keeping a business operating are common hurdles for many small business owners. Even profitable businesses can run into issues with funding operations and long-term growth. Fortunately, there are many funding options for small businesses. The key is not to wait too long to pursue them.
3. Financial Mismanagement
What businesses do with their money once they get financing is another common problem. It’s vital that small businesses understand how to manage cash flow, which includes staying on top of various financial responsibilities. Failing to manage cash flow properly can find a business in trouble quickly.
4. Marketing Missteps
Unfortunately, many new businesses mistakenly believe that all they need to do to be successful is open their doors. Depending on your target audience and the nature of your business, you’re likely going to need a comprehensive and ongoing marketing strategy that builds brand recognition, attracts new customers, and helps you retain the ones you currently have.
5. Failure to Adapt
Even with a business plan in place, you can’t expect things to run according to your outline. Internal and external conditions change, and you must be ready to adapt. Unexpected events (like pandemics, natural disasters, and economic conditions) will impact your business. The faster you can pivot away from something that isn’t working to a product or service that better serves your customer’s needs, the greater your chances of success.
Discuss Your Business Funding Options With CAB Capital
While there are many different reasons small businesses fail, quite a few of them come down to a lack of financing and access to cash. If you’re interested in learning more about your business funding options, CAB Capital can help. We offer assistance to small businesses of every type through our wide variety of alternative lending solutions. Contact us today to schedule a free consultation.