We had our Financials session last week at the Mompreneur Rising and it made me realize again that as entrepreneurs, most of the times, we don’t know what we don’t know. We might know that something is not working but we might not be able to put our finger on it. A lot of the time we shoot in the dark and hope for the best and that’s the reason 90% of businesses fail in the first 3 years.
I have decided to list the top 12 reasons business fail from research by Jessie Hagen of U.S. Bank. If you are an entrepreneur, go through these 12 reasons carefully and be honest with yourself, see which ones you have taken care of and which ones you need to work on. Although all the points are super important, the first 6 are crucial to pay attention to.
You will see that managing money, pricing properly and understanding your financial statements are crucial for your business to succeed.
More than 60% of businesses that fail are Profitable when they fail. Profit is not Cash and this is an important point that a lot of entrepreneurs ignore.
The more you know and plan, the more clarity you will have and “Clarity brings Power” my friends.
Here is the list:
82% Poor cash flow management skills/poor understanding of cash flow.
79% Starting out with too little money
78% Lack of a well-developed business plan, including insufficient research on the business before starting it.
77% Not pricing properly - failure to include all necessary items when setting prices.
73% Being overly optimistic about achievable sales, money required and about what needs to be done to be successful.
70% Not recognizing, or ignoring, what they don't do well and not seeking help from those who do.
64% Minimizing the importance of promoting the business properly.
63% Insufficient relevant and applicable business experience.
58% Inability to delegate properly - micro-managing work given to others or over delegating and abdicating important management responsibilities.
56% Hiring the wrong people - clones of themselves and not people with complimentary skills, or hiring friends and relatives.
55% Not understanding who your competition is or ignoring competition.
47% Too much focus and reliance on one customer/client.
It’s my mission in life to empower as many entrepreneurs as possible to find balance and harmony in their lives. I highly encourage you to take the necessary steps to ensure that your business will not just survive, but thrive.
You have a Gift and talent that’s been given to you and only you. Share it with the world and make a difference in other people’s lives, no matter how big or small your mission is.