A recent report by Bloomberg showed that 8 out of 10 businesses fail within the first 18 months of operation. That loosely translates to an 80% failure rate.
While most of these businesses fail because of a range of issues, we rounded up some of the most notorious ones for you. But that doesn’t mean you shouldn’t lookout for any other alarming issues within your business as the business world keeps changing.
So let’s get straight to it:
Here are the three most common causes of business failure in 2019.
Poor bookkeeping is honestly bad for business. Whichever way you look at it, all the core business functions relying on accurate data from the accounting or bookkeeping department for decision-making. Departments such as production and sales consider accounting data as their raw source of data in relation to job costing, materials purchasing, product pricing, advertising budgets, and more.
Similarly, the human resource team needs salary budgets/estimates and training costs figures from the accounting department. This is why it is critical for businesses to maintain updated accounting information at all times.
As a new business, you want as much as possible to avoid piling up past work. A day’s work quickly turns to a week’s pile, then a month’s and so on…Before you know it, your business requires a trained catchup accountant to help you get things back on track.
So, what’s the secret?
Make sure your business records stay up to date. Choose a suitable bookkeeping application such as Xero or QuickBooks and a competent accountant/bookkeeper to help you stay on top of your accounting work.
Listen to your customers
Your customers are the reason you open your business doors each day, they basically sign your paychecks and you have no choice but to listen to them.
Take note of the small complains or preferences they raise as they interact with your business. You can either establish an on-premise or online platform for registering complains/comments/compliments. And while at it, be sure to take their suggestions seriously, they’ll always know when you’re not listening.
Additionally, consider designing periodic surveys to gather views on their interaction with your business and staff. Get their opinion on a range of issues affecting them including the quality of service or products, level of efficiency, among other things. Lastly, don’t just go for the last coin in their bank accounts…
Learn to reward your customers for being your customers. Understand that they chose you over your competition and for that, a little appreciation is sometimes all the magic you need to keep them coming back.
Have a team that shares your vision
They say employees are a reflection a company. And true to this, if your team is not as enthusiastic are you are, your vision is likely to fail faster than you could ever imagine.
Before being a boss, be a leader. Leaders give directions, identify member strengths, sacrifice for the good of the others, and seeks to improve his/her followers.
As an entrepreneur, it may not be easy to find people that can reconcile their career goals with your business objectives. And truth be told – finding the right team for your new business is perhaps going to be the hardest thing to do especially if you’re working on a tight budget. So take your time on this one.
Consider balancing between experience, potential, and dedication. You’re better off hiring a highly motivated and promising sales member than one with a ton of experience with little-to-no innovative capacity or motivation. You want to shun individuals who rely more on their past experience to deal with problems than facing new challenges with new solutions.
Tip: Strike a balance between your budget and experience. Don’t break the bank trying to hire that accountant with 20 years of experience for your new business. Instead, consider other options such as outsourcing your bookkeeping which is always a cheaper option with greater benefits. In conclusion, we’d like to hear from you – What challenges are you facing as a small business in 2019?