Small businesses fail at a notably high rate.
Half of all small business ventures go under within five years, and only a third survive ten years. Twenty percent don’t even last beyond their first year, according to data from the U.S. Bureau of Labor Statistics. [1]
But why do so many small businesses fail?
There are many reasons. Understanding and planning for the pitfalls can help ensure that your endeavor doesn't become a failure statistic.
Here are the top four reasons small businesses fail, along with ways to combat these challenges.
Lack of Demand for Product or Service
A little under half of small startup businesses fail because consumers don’t demand enough of the product or service the enterprise is selling. [1] With 42 percent of failed businesses citing a lack of demand as their primary reason for going under, business owners must perform market research to understand what consumers need and want rather than assume they know what demand will be.
Here at Visa Business Plans, we are aware of the importance of performing effective market research to ensure adequate demand for your product or service. With over two decades of experience starting, growing, operating, and selling successful small businesses, we know well what a solid market study must analyze. Leveraging our experience providing business and executive coaching to entrepreneurs globally, we help investors identify opportunities to capitalize on and threats that could negatively impact operations.
Cash Flow Problems
Another issue that many small businesses run into is cash flow problems, which force 29 percent of all startups to shut their doors. [1] Cash flow issues arise for various reasons. Thus, little room for error exists when it comes to cash flow for a startup.
In addition to providing business coaching to help your enterprise avoid cash flow problems, Visa Business Plans also crafts business plans for Small Business Administration (SBA) loans. These loans can help provide your endeavor with necessary capital funding while maintaining a solid cash flow.
Hiring the Wrong Employees
Much of a small business’s success depends on the quality of its employees. Unfortunately, a quarter of startups that fail do so primarily because they had the wrong team in place. [1]
Hiring the right people for your enterprise is not easy, particularly in the current climate. However, Visa Business Plans can assist in making the difference between success and failure. Our business coaching services help you develop detailed employee hats, allowing you to pinpoint the right employees and develop a solid foundation to meet both your short and long-term goals.
Ignoring the Competition
Any business offering a good or service that is in demand will face the challenge of other competitors. However, many small businesses neglect to fully assess the competition, with nearly 20 percent of failed startups citing doing so as the main reason for failure. [1]
If you want your startup to be successful, you must be aware of what your competition brings to the market and how that impacts your ability to survive in that same field. Visa Business Plans’ coaching services will help you evaluate your competition and provide the differentiation needed to succeed in a competitive environment such as the U.S.
Visa Business Plans Can Help Your Small Business Succeed
With nearly half of all small businesses failing within their first five years of existence, you must give your enterprise every possible advantage you can. Utilizing the services of the experienced professionals at Visa Business Plans is one significant advantage and can be the x-factor between success and failure.
As owners, operators, and consultants to numerous small businesses over the past three decades, and advisors to thousands of successful entrepreneurs, we know the pitfalls startups face and how to avoid them. By pairing with a business coach from Visa Business Plans, you will receive expert advice and guidance that will help your business survive and prosper.
Visa Business Plans is led by Marco Scanu, a certified coach from the University of Miami with a globally-based practice coaching Fortune 1000 company executives, entrepreneurs, as well as professionals in 4 different continents. Mr. Scanu advises clients on turnaround strategies and crisis management.
Mr. Scanu received a bachelor’s degree in Business Administration (Cum Laude) from the University of Florida and an MBA in Management from Bocconi University in Milan, Italy. Mr. Scanu was also a Visiting Scholar at Michigan State University under the prestigious H. Humphrey Fellowship (Fulbright program) with a focus on Entrepreneurship, Venture Capital, and high-growth enterprises.
At present, Mr. Scanu is the managing partner and CEO at Visa Business Plans, a Miami-based boutique consulting firm providing attorneys and investors with business planning services in the areas of U.S. and Canadian immigration, SBA loans, and others.