Building a business from the ground up until it’s ultimately a thriving enterprise can seem like a daunting task. Not to be pessimistic, but there’s a lot that can go wrong along the way. To be successful, it requires careful planning, organization, execution and a willingness to continually learn. While there is no one-size-fits-all template, there are several measures you can take to ensure your business will succeed.
Why Do Most Businesses Fail?
Research on Statistic Brain’s website identified three primary reasons for most businesses failing.
- Incompetence accounted for 46 percent of failures (e.g. nonpayment of taxes, lack of planning and no knowledge of financing)
- Unbalanced experience or lack of managerial experience was the reason behind 30 percent of failures (e.g. expanding too quickly and inadequate borrowing practices)
- Lack of experience in line of goods or services accounted for 11 percent (e.g. inadequate inventory and wasting advertising budget)
So how can you ensure that you don’t fall into the same trap?
Maintain Detailed Documentation
Perhaps the most important thing to do is document anything of importance. This can include everything from cash flow and employee documents to marketing reports and employee performance/behavioral issues.
Not only will keeping records provide you with tangible data to monitor profitability and improve your decision making, it’s important from an HR standpoint. For instance, if you find yourself in a wrongful termination lawsuit, you could provide reports documenting employee misconduct.
Chaos and clutter are toxic to any business. To keep things on track, meet deadlines and keep consumers happy, it’s essential that you’re as organized as possible. Fortunately, there are an arsenal of apps and software that can help you stay on top of your game.
For example, collaboration tools like Slack and Wrike will keep team members on the same page. Task planners like Wunderlist and Trello will ensure that you’re completing necessary tasks each day. Accounting software like Freshbooks and Xero will make organizing financials much simpler.
Give Yourself Some Financial Wiggle Room
Mistakes and curveballs are inevitable in business. While it’s impossible to predict exactly what will be thrown your way, you should expect the unexpected and cover yourself when setbacks occur.
Ideally, you’ll have some extra capital at your disposal or an investor who can help you pull through tough times. If this simply isn’t a possibility, you should strive to be as lean as possible and not waste money so that you’ll have some reserves on standby.
Weigh Risk Versus Reward
Hardly any businesses succeed without taking at least some amount of risk along the way. The key to getting ahead is being a smart risk taker and carefully weighing risk versus reward when making critical decisions.
For example, it’s wise to examine what the downside would be if you made the wrong decision. If you know for sure that you could get back on your feet even in a worst-case scenario, then it’s probably a risk worth taking. When you make a series of smart decisions, it’s likely to be a catalyst for growth.
Although there are no guarantees that your business will succeed, taking an intelligent approach and being ready for a bit of turbulence will help your chances greatly. You may also want to check out the U.S. Small Business Administration’s website because it offers a lot of helpful advice.