Every year, there are about 660,000 new companies registered in the UK. To put it another way, that is 70 new businesses being formed every hour! How remarkable is that, right?
Even with growing numbers of new businesses and the fact that Britain is a booming nation for startups, why do we find ourselves in a productive crisis? According to The Telegraph, 20% of new businesses fail the first year and 60% would go bust within the first three years. Again, why do we see ourselves in a productive crisis? In this article, we will bust out why startups fail and give yours a chance to succeed.
There are many factors why small businesses fail and these reasons vary per industry. However, there are common culprits for failure that all entrepreneurs must be aware of.
Lack of vision
Some companies don’t have a vision statement. For some who don’t know what it is, a vision statement is a crucial part for a business plan consisting of two parts: The first part is visualising where you see your business in five or ten years time. The second part is about laying the road to your visualised goal.
Cash flow problems
Starting any business is a financial risk and doesn’t just mean leaving your regular job, and a pay cut. There are lots of expenses to account for. Even if you have the best business plan, and operations are great, if you mess up your financing, you will experience regular problems.
No disaster plan
You might have sorted out your business plan and organised your financial planning, and the road map to get to where you want to be in 5 years time, but then, what happens when you hit a roadblock, or a problem? Questions like, what if the market crashes or is plunged into recession?
Disasters happen, and are impossible to fully plan for. No one knows the future like how no one predicted the COVID-19 pandemic. Therefore, it is absolutely essential to have a plan that can prepare you for such a disaster, so in case it happens, your business can continue trading and you will not lose everything you worked so hard for.