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13 Reasons Small Businesses Fail Part 1

March 19, 2015

I had a recent meeting with a number of individuals that were interested in starting their own businesses. During our discussion I was asked what I thought were the major reasons why startup businesses failed. I had to give it a lot of thought because the decisions that make a business succeed are often just the opposite of decisions that make a business fail. So, as I go through my list I'm going to stress the mistakes that I have seen, with the idea in mind that if you do the opposite, you're probably on the road to success!

 

1. One of the major reasons businesses fail is that the founder tries to do it all himself. Starting a business is hard work, it can grow tiring; it is helpful to have others who can help carry the load, encourage you when you're ‘down’, and talk you out of stupid decisions.

 

2. Trying to do business in the wrong location. Let's say that you do want to start an office cleaning business and are located in a town of 1800 people. Just how many officers are there in the town of 1800? That's not to say that there may be a few offices that you could clean and pick up a few hundred dollars a month; but there is not enough business in that town to provide a full-time living. If you want to succeed in your business you will need a population base that can support it.

 

3. Another mistake often made is choosing a marginal niche. Perhaps you have a desire to enter the carpet cleaning business. Yes, you could buy a used portable carpet cleaning machine, but do you have the expertise to use the right cleaning products on the various type of carpeting available? And, to be honest, chances are good that little portable unit cannot do nearly as good a job as a truck mounted unit. Are you prepared to buy a used truck mount for $6000.00 or $7000.00, or spend tens of thousands to get a new truck mount in a van?

 

With some cleaning supplies and a couple of good vacuums, you can clean a variety of offices: little ones, big ones, privately owned and corporate headquarters; just by starting out with just a couple hundred dollar’s worth of equipment.

 

4. Copying someone else can lead to failure. You know that ‘Joe’ across town has an office cleaning business. You've seen his shiny new vans with his business logos and you'd like one just like his. But you forget that he’s been in business 15 years and has dozens of clients. You need to operate out of the trunk of your car. Big difference!

 

5. Refusal to change when opportunity presents itself can lead to failure. There are times when the way to succeed is to have a vision of you want to achieve and stick with that vision no matter what problems you encounter. Surprisingly, many successful startups end up doing something totally different than they originally intended. You may want to start an office cleaning business, and find that many successful women clients have a crying need for a house cleaning service. IF you find that many of them ask, “Do you clean houses?” you may be able to take your business in an entirely new direction!

 

Tomorrow, we look at 6 more reasons in Part 2. 

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