Why Small Businesses Go Under
Small businesses go under because of poor management, running out of cash, and refusing to pivot. Thanks for coming to my TED talk. Seriously though, these are the three biggest reasons businesses fail, and every one of them is fixable when business owners admit they need help and get it.
Owning a business is a dream for many people. In fact, >62% of Americans dream of being their own boss. There are many reasons, including fear of failure, that will prevent many from starting, but for those that do, they are statistically fragile for the first 5 years.
Admittedly, being an entrepreneur comes with a personality that naturally leans towards problem solving and of self-reliance. We don’t ask for help.
Or we ask for a little help on something, but not on the big things. Stubborn independence keeps us from seeking experts, consultants, and coaches, because we know we can figure it out. I’ve been there and we built a $200k plus a year business that way.
But that’s not the end of the story. Because without seeking the help we really needed there was unnecessary stress over money and deep fears of success. Mike and I were the poster children for poor management and cash flow problems. We ultimately went under because of Mike’s near fatal accident, but we would have greatly struggled to the five-year mark if we had continued down the business ownership road we were on.
It Really All Comes From Poor Management
Many businesses struggle with poor management, particularly in the early days. Poor management really is the root of business demise and flows over into the “running out of cash” and “refusing to pivot” reasons for why small businesses go under. Undervaluing people, failing to market properly and make sales, not tracking income and expenses, and being stubbornly stuck to doing things one way are key management issues that affect the health and well-being of a business.
You Can Stop the Bleeding
Reversing the damage caused by poor management begins with awareness that the business isn’t thriving. That’s a huge step. Mike and I were out earning our money mistakes, we didn’t know the trouble we were in. We were also stuck to doing things one way, the familiar way we had been doing business for years in the industry, and it cost us opportunities to grow and to take on new clients and challenges.
After awareness, you must be open minded to seek answers from the experts. It may be your pricing. It might be your team. Like us, you may be stubbornly refusing to pivot or take on a new audience. The key is to look for the answers without judging them. That’s the hard part. But be open to read books, seek outside experts, research your industry, and ask other people. And do it with an attitude towards fixing issues and making your business better. Happy Entrepreneuring!
There are still 2 spots available for 3-hour intensive sessions! Get on my calendar to talk about whether this single day problem solving intensive is the right fit for your business!