Six Reasons Some Businesses Fail within Ten Years
Everyone know that the first year of business is hard, but why do businesses fail within 5 and ten years? Here are 6 reasons that will likely contribute.
Business failure is a reality you will have to deal with at least once in your lifetime. Understanding why businesses fail not only in their first year, but within 5 and 10 years could help you avoid this.
While 80 percent of businesses try to do their best to pass the five-year mark, this percentage slowly continuous to fall every year after that; in fact, around two-thirds of organizations with employees pass the two-year mark.
The fifth year? Around 33 percent. However, when it comes to surviving for ten years, just 30 percent of all businesses can do that, which means that only seven in ten will probably close up shop within ten years of inception.
There are a few specific reasons why so many organizations fail after ten years of going into business. But, as long as you don’t give up, struggle and persevere, you can find a way to keep your business from sinking.
With that in mind, let us look at a few reasons some businesses fail and have to close up shop within ten years of inception.
1. Not having enough business knowledge and skills.
You will undoubtedly do yourself and your business a favor by enhancing your business knowledge while polishing existing skills. After all, the business world is constantly evolving, becoming more challenging and rewarding in the process.
Due to this, business owners and entrepreneurs must do whatever they can to understand the basics of business management while learning new skills to stand toe to toe with current trends.
Doing so will provide them with the tools necessary to survive and thrive in today’s cutthroat economy.
That said, one way to build upon and add to your business knowledge is by enrolling in an AACSB accredited online MBA programs no GMAT required degree.
This degree will help increase business knowledge, equip you with the fundamentals and help build result-orientated strategies for your business.
2. Failing to deliver real value.
A unique value proposition is the heart and soul of every business, after your workforce, of course. It is a well-known fact that most successful companies can provide their customers with real value in the products and services they offer.
It is crucial to search for ways that allow you to over-deliver while under-selling. However, if you’re looking to earn a fast buck or employing a get-rich-overnight scheme into your businesses, you won’t progress.
Remember, the process of turning slow and steady success into more immediate results is a road towards ruin.
For starters, providing value allows you to create a buzz in the marketplace. Just imagine that you sell a service or product that blows your customers’ minds. The chances are that these customers will rave about your business, bringing in more customers in the process.
Sure, providing value will cost you a lot of time, money, and resources, but the investment will pay off in the future.
3. Failing to cater to the right audience.
If you can’t communicate with the right target audience, it is only a matter of time that your business will eventually fail. It is as simple as that.
If you don’t have any customers to buy your products or services, you will not bring in money, let alone earn profits. Moreover, when you’re unable to connect with the right demographics, you will never know your target customers’ needs and wants.
And if you don’t know what they want, how will you develop products and services that will solve their problems?
In the end, if you aren’t addressing your customer’s pain points, it indicates that you don’t know anything about them.
You must take three steps backward instead of taking two steps forward. Use email-ask campaigns, focus groups, market surveys, or straight-up phone calls to connect with and understand your target audience before churning out products and services.
4. Lacking transparency and authenticity.
Maybe not today but tomorrow, your business will eventually fail if you lack transparency and authenticity. When companies don’t focus on their customers’ pain points and needs, they’re at a high risk of losing their trust and loyalty towards your brand.
So, to avoid this from happening, you must focus on being transparent and authentic about your products and look for ways to provide your customers with value and inspire confidence to use your products or services.
These steps are crucial if you’re looking to run a sustainable business.
5. Failing to optimize your conversions.
Most business owners have a ton of work to deal with, which is why they forget to optimize their conversions altogether. In fact, regardless of the nature and size of your business, you’ll find it challenging to survive when the cash stops flowing in.
So, it is a no-brainer to address conversions early on to ensure an excellent return on investment on your marketing strategies. If you can, only then will you have a sustainable business to run.
In the end, it is futile to rely solely on organic traffic techniques such as SEO (Search Engine Optimization). Instead, you must also focus on conversion-optimizing, income-producing techniques and methods while building a large customers base in the process.
Without it, it is only a matter of time until your cash reserves run dry and you’re scrambling to keep your business afloat.
6. Failing to compete against other businesses.
Keeping your doors open is more challenging when you have fierce competition to deal with, primarily if you’re catering to a lucrative market where the stakes are high.
Not to mention, you will also have a target on your back. So, if you’re a small business struggling to compete with larger counterparts, you need to look for ways to pivot and adapt to keep your doors open.
Whether you implement a new business strategy on onboard top-notch talent or go out of your way to enhance customer services, do so as soon as possible.
With the businesses landscape getting more and more competitive, sustainability won’t be achievable for every business out there.
Since business is a mix of funding, planning, and passion in one package, the first few months of launching yours might feel promising, but it is what you do after that that will make or break your company.
The reasons mentioned above will help you understand why businesses fail so that you can avoid falling for the same reasons.