Startup, start-up is considered a new trend today. But did you know that in 10 years up to 70% of companies fail in business and declare bankruptcy.
According to a survey, 80% of startups pass the first position, this rate continues to decrease in the following years. Only about 2/3 of new businesses survive after 2 years of operation. 5 years? Only half left. And 10 years? 30% left.
If you don’t want this to happen to your business, there are a few things listed below to help you avoid it. Obviously, you won’t fail until you give up. You can fail 20 times, but if by the 21st you do, you have succeeded because you didn’t give up.
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Why do businesses fail?
To help you avoid business failure, you need to first understand the reasons that lead to this failure. There are dozens of reasons, which can stem from external factors such as the market, competitors, or come from your own bad management.
In the long term, it is very difficult for a business to survive, let alone whether it can develop as your expectations from the beginning or not. But in order to be successful, it is certain that failure must be avoided.
9 Reasons why businesses fail in business
1. Failure to deliver value.
What makes a company is the core value they bring. However, many companies often overstate the value they can actually provide to customers. This approach is completely wrong because it is the commitment factor that builds trust from customers.
Or companies that do not make customers imagine the value they bring. They build an image that is too general, causing a certain ambiguity and difficulty to imagine.
2. Failed to connect with target customers.
If you don’t connect with your target audience, your business will fail. Connection here, is that you do not understand the needs and desires of potential customers, and at the same time do not help them understand the benefits that you bring.
What do customers really want? What is their insight? What is the problem they are facing that has not been solved? How does your product or service solve this problem?
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Surely, if you do not touch the “pain” of the customer, you probably do not fully understand your customer persona. The result is that your sales job has very little chance of success. Use market research, customer research to understand and build strong relationships with them.
Exploring as much detail as possible about your customers will help you reduce the chances of business failure.
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3. Failure to optimize conversions.
Most businesses operating in the online field cannot survive without knowing how to optimize the conversions from marketing campaigns. How much is it costing you to get a potential customer’s phone number?
How many of them become real customers? Apply conversion metrics like ROI to measure all the costs your business spends on advertising channels. Because numbers don’t lie, you’ll know if it’s problematic or working.
You cannot rely entirely on organic traffic from SEO. If you don’t optimize your conversions, you’re wasting your own time.
4. Failing to create an effective sales funnel.
Building an effective sales funnel is one of the key goals of any founder. A sales funnel is a process that leads from regular traffic viewers to real customers through content that supports brand identity. Sales funnels also help build strong relationships with your customers.
There is no way for you to sell directly online. But many businesses fail because they do not have enough evidence (old customers have used) about the quality of products and services.
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5. Lack of authenticity and transparency.
Businesses that lack authenticity and transparency in business will fail. Maybe not today, tomorrow, but surely one day it will fail. The main reason here is that you are not building trust in your brand from customers.
Focus on the core values mentioned above, ensuring the commitments you tell your customers. Business tricks won’t help you survive in the long run.
6. Inability to compete in the market.
The inability to compete in the market can come from many reasons. If small businesses do not intelligently choose niches, and do well in that area, it will be difficult to compete with big competitors. They have more money, bigger market share, easier marketing, higher brand awareness, etc.
Find niches where your business can compete for survival.
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7. Unable to control costs.
Spending money is definitely easier than making money. And that is also one of the reasons why startups often fail in the long-term race when they lack experience in managing operating costs.
Allocating reasonable funds is the first step to help businesses make steady progress. You need an accounting team that can help you control your financial ratios and expenses in a reasonable way.
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8. Lack of strategy and leadership.
Most new businesses often lack the necessary strategies and leadership experience from the ground up. Due to the lack of practical experience in the market, many new bosses will have difficulty in operating because of the large amount of requirements and responsibilities placed on them.
The advice here to help you avoid the main reason for business failure is to find a mentor, an experienced collaborator.
9. Failure to build a business model.
The business model that you learn from this business, when applied, is not necessarily effective at your company.
Therefore, the initial research work, coming up with the right business model for the market and customers is a prerequisite to help you avoid business failure.