No one plans for their business to fail. But a harsh statistic is that in the first five years of trading, almost 50% of start-ups will fail for various reasons.
If your business is falling, you must take the steps to address what is going wrong and if there is anything you can do to rectify this.
Top Reasons Why Start-Ups Fail
- 79 percent of businesses fail because they start with insufficient funds.
- 78 percent fail due to a lack of a well-developed business strategy and inadequate market analysis.
- 77 percent struggle because they don’t price items correctly or don’t account for all relevant factors when calculating prices.
- 73 percent struggle because they are overconfident about the number of profits they will make, the amount of money they need, and what they need to do to succeed.
- 70 percent of people struggle because they don’t understand or consider their flaws and don’t ask for support.
Steps you Can Take to Save Your Business.
- Make sure the price you get for your product or service is higher than the cost of delivering an additional device (e.g., make one more widget or perform one more hour of service). If you have several items, repeat the process with each one. If you charge different prices to different consumers, you must research the consumer level. Increase the price, reduce the cost of delivering the incremental unit, or avoid selling the product or service when you find circumstances with a negative variable contribution. There may be unusual exceptions to this law, but in general, you must ensure that each sale generates enough revenue to cover your overhead.
- You’ll almost certainly have to cut costs to remain in operation. To begin, cut out all discretionary spending. The business holiday party or the summer outing must be canceled. Then there’s the expense of things that don’t include people. Is it possible to lower your travel or utility costs? If the alternative is space because you are out of business, the landlord might be able to reduce rent, at least temporarily. Unfortunately, cutting costs may necessitate the difficult decision of laying off employees, reducing their hours, or lowering their pay. Austerity steps are never simple, but if the alternative is to close the firm, it is preferable to keep some employees working than to lose everybody when the company closes.
- Address your debt levels. You cannot keep ignoring your debt levels both professionally and personally. Consult specialists such as Strategic Consulting Firm who can assist in moving forward to clear your debt levels.
Being proactive when it comes to saving your business can help you identify ways you can drive to save the company instead of burying your head in the sand until it is too late. After all, you have poured your heart and soul into this venture; chances are you will thank yourself in the future for doing the hard work now to rescue anything you can and push for success in today’s harsh climate.
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