It’s always fun when you come up with a new fail business idea and you feel ready to participate. You have done your research, thought about the pros and cons, developed a plan for how it will work, and you are convinced that this will work for you. So, what could be wrong?
Well, quite a lot actually. About half of new businesses go beyond the first year, and some fail within just a few months. In fact, a study conducted by the SBA (Small fail Business Administration) found that 90% of startups failed in 2019 and 21.5% were complete failures over a 12-month period.
So why do businesses fail? Is there something natural about the beginnings that make them fail? And what can you do as a new business owner to protect yourself and ensure that your company has the best chances of success?
Today Mitchel Zelman shared with us his experience, helping to answer the question of why so many startups fail in the first year and offers tips on how to avoid failures in your company.
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1) Loss of Money
Loss of cash is one of the biggest problems new companies face, and it is often the root cause of why such small businesses fail during their first year. If you do not have enough money to keep your company running until it starts to make money, there is no way for it to survive.
This is not just about being able to pay off debts and keep a roof over your head while you wait for business to take over. It’s about having money when it comes time to increase your performance, market your products, hire employees, or improve money.
So how can you avoid losing money?
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Create a Financial Model:
It is important that you have a strong understanding of your initial financial situation and how it will improve once the business has started again. You need to understand what it means for your business to maintain existing standards, and what will happen if growth or other opportunities arise that require large sums of money to use them.
Mitch Zelman says we should not rely on outside support; If you are planning to apply for a business start-up loan or start-up loan, do not plan this as your only source of income. There are many people who fail to get the support they need from investors because their budget is entirely dependent on external sources of funding.
Even if you succeed in raising enough money to keep your business running, the next investment cycle may not come until later, or it may not come at all. If you are planning to protect your investment, you need to know how your company will support you even if that source is not available.
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Make Money Management Management So Important:
Cash flow is the backbone of any business because it represents real money from your activities. If you do not have the wrong money, it means that the money goes out faster than it does.
These shortcomings can be caused by a number of factors, including poor planning of how much revenue or funding will be available and when, or prioritizing short-term costs rather than focusing on long-term.
You need to know exactly how much your business produces and uses, so that you can predict whether there will be enough money for the company to cover its costs.
You also need to understand the costs involved in any changes in production levels, financing, hiring of new staff, etc. What happens if you hire someone, and they are not working? What kind of costs will you incur if you decide to grow your business after a year or two, or move to another location?
You need an accurate understanding of your financial management to make sure you have enough money to meet your needs at all times.
Many entrepreneurs jump into their businesses without fully understanding how to manage money properly. To be rich in your company, you need to be financially responsible and keep an eye on your finances. You need to know how much money you have and where it is going.
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2) Lack of Knowledge and Experience
An entrepreneur with a positive attitude and enthusiasm to succeed can still fail if he does not have the business experience and knowledge needed to run his company. You can have a good business plan first, but without proper guidance and advice, you will fail.
That’s why it’s important not to go it alone when starting a business. You need to surround yourself with people who know you better about certain aspects of the business world, such as advertising and marketing, finance, manufacturing, and management.
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3) No Real Business Plan or Company Purpose
Having an effective business plan is essential if your startup wants to have a chance to thrive. A good business plan is very important if you do not have the money or support needed to get your company off the ground.
Many people think they can make it bigger without having to plan their businesses, but this is rarely the case. Without a business plan, you run the risk of not achieving your financial goals, failing to develop the company properly and strategically, or faltering because you do not know where you are headed.
It is just like a bird that has to keep going until it falls from the sky. If you do not know where the bird is going, you can bet it will crash and burn.
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4) Bad Relationships
This is one of the major causes of business failure. If you do not have good relationships with your co-workers, it can be a disaster for your company because trust and respect are key factors in running a successful business.
It is extremely difficult to maintain success and progress when there is a conflict between partners, especially when everyone involved disagrees on key business objectives. That’s why it’s important to choose your colleagues carefully and check everything they bring to the table before jumping in with both feet.
As a business owner, it is very important that you know what you are getting into early. You will be spending a lot of time with your partners, so it is important that you feel comfortable with them and believe that they have the skills needed to help your company thrive.
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5) No Important Marketing Plan
Your marketing plan is not just about advertising your goods or services; it includes things like knowing how many customers will be interested in what you can offer and how they can feel about your company.
The marketing plan is also important in determining some of the costs involved in running a business, including things like product development, production levels, hiring more staff, etc. You need to know exactly who your customers are in order to tailor your marketing strategy. accordingly.
If you do not have a marketing plan or do not do it, you are more likely to lose control of your business and watch it go downhill.
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Conclusion:
Mitchel Zelman believes that love alone is not enough; you need to understand the basics of a business and how money works before starting your business. If you do not, then you will be frustrated, and it will not take long before you leave the business.
The important thing to do is to educate yourself as much as possible about running your first business. Read books, attend conferences and contact other entrepreneurs who can give you advice and support during your early years of growing your company.
Once you have mastered some of these subjects, first think about who you want to work with and how much experience they have. Then start working! You can use the help of your advisers to get your business down.
Next, focus on building a strong marketing plan to conduct market research and reach new customers. If you can achieve certain goals and milestones over time, you will have more opportunities to grow your business. Then go ahead and build!
