Starting a small business is a difficult task, even if you do everything right. 50 percent of new start-up companies fail within their first five years, with most failing businesses making mainly the same mistakes. Below are some of the top reasons why first-time entrepreneurs fail:
No business plan.
Not creating a business plan is the most common mistake entrepreneurs can make. Creating a business plan is the best way to understand how to transform your idea into a working business. It takes time, but the effort will be well worth it in the end.
Slim or no revenue model.
A business has to have some sort of a model showing how it is going to make money to cover operating costs. Even nonprofit organizations have a revenue model for donations.
Having a good idea isn’t enough; you need to be able to execute it.
Too much competition.
If there are multiple competitors all around you, it’s going to be hard for your business to succeed. Having no competitors around you is generally a red flag as well.
An inexperienced team.
When it comes time to find investors, you need to have people with experience in your industry on your team. Even if your idea is good, investors won’t bite unless you have people with experience working with you.
Not enough marketing.
Using word-to-mouth marketing isn’t enough. You need to market your business across a range of different media to reach your audience. Having a website and staying active on social media are crucial marketing techniques for any successful business.
Underestimating resource requirements.
Many entrepreneurs underestimate how much their business is going to cost. This includes not only start-up expenses, but also day-to-day costs. Don’t quit your day job until cash is flowing through your business. And once money is flowing, make sure you have someone you can trust to manage it.
If you’re looking to start a small business and have questions about the corresponding legalities, don’t hesitate to call a JacksonWhite small business attorney.
Call JacksonWhite’s Small Business Law Team at (480) 464-1111 to discuss your case today.