Small Business Success: Top 5 Surprising Reasons Most Businesses Fail And How To Avoid Them

There is no agreement among experts on the percentages of companies that fail. Recently, Forbes estimated that 80% of businesses fail, while Fortune claims it’s closer to 90%. According to the Small Business Administration (SBA), about 50% fail in the first year. Of those that do survive, the SBA tells us that only about 66% survive the second year.

Whatever the number, most small businesses don’t survive the first few years. Why is the survival rate so low?

Starting many businesses myself and working with small business owners as clients, I’ve come across five surprising reasons why small business owners struggle and fail. In this article, I will point out these reasons and by knowing them, you can avoid these pitfalls.

Reason #1 – I don’t know what product they are selling.

It’s hard to believe that most business owners don’t understand what product or service they are selling. They say: “People come to me to buy flowers”, “I offer insurance” or “I sell cupcakes.” But the truth is that they are not selling a product or a service, they are selling a feeling or an emotion.

Buying habits are based on feelings and emotions and are only justified by the use of logic. Let that sink in. People buy based on feelings and emotions and then make a logical case for it.

Let’s say you have a flower shop. People can buy flowers from many different sources these days. Supermarkets have flowers as do some convenience stores. Why should they buy from you?

What feelings or emotions can you promote that will set you up for success with your business?

Reason #2 – I don’t know who your ideal client is

Many business owners will say that they don’t care who their customers are. As long as they have customers, they are happy. They just want to have customers.

The truth is that it is essential that you know who your ideal clients are, and this has many benefits. When you work with your perfect client, you do your best work because you enjoy working with them. You will feel more inspired and fulfilled by what you do. You will connect with your customer on a deeper level and they are more likely to recommend you to others.

So who is your ideal client?

Reason #3 – I don’t know what makes them unique.

I meet many business people who believe they will be successful just because they open their doors, have a website, or hang a sign saying they are open for business. They think that the product they have will sell itself. Sometimes this can happen. However, it is a rare occurrence.

In this increasingly confusing world, information and products are continually bombarding your customers from all sides, and you need to stand alone to stand out. To do this, you need to be unique from all other companies doing the same thing as you. By being unique, your client will recognize you and come looking for you.

What makes you unique in the market?

Reason #4 – I don’t know how to market the business.

When a business doesn’t know what product it’s selling, what makes it unique, and who its ideal customer is, it has a hard time promoting its business. If you’re trying to please and appeal to everyone, your message is too broad to appeal to anyone and you waste a lot of time and effort with your marketing.

If a company is clear about what and who it is, promotion is simpler and more direct. Advertising becomes more targeted, and because of this, its success rate is higher.

In light of this, how can you now promote your business?

Reason #5 – You don’t know your ultimate goal.

So what game are you playing? Many of the companies I come across answer this question by saying that they want to be successful. But what does successful mean? The answer is different for everyone. A company that doesn’t know what its ultimate goal of being in business is, doesn’t have a direction in which to work, and because of this it overflows and never achieves its goals.

Knowing what your end goal is is to provide you with a direction in which to work. Is your ultimate goal to eventually sell your business for a profit? Or maybe it is to provide a comfortable life for you and your family? But understand if it’s the latter, what does comfortable mean to you? What salary do you want to earn? Or is it that you want to spend more time with your family? Knowing the answers to these questions gives you a direction and a goal.

So what is your ultimate goal?