So what are the top 5 reasons new businesses fail inside a 2 year period.
Reason number 1: This is a very common mistake new business owners do and that is that you underestimate the cost of running the business on a day to day basis.
What this actually means is that you dont count in all the costs that you should, when you start your business in the first place.
This can mean all the utilities and storefront costs or warehouse costs.
Usually you count in the the rent but there is so much more like insurance,theft,vandalism and similar types of costs, that comes with every psychical business.
But there is also other hidden costs like opening up phone-lines or staples and, usually there is a few invoices every month that you did not plan for in your business plan budget.
Let say that if you want to be on the safe side when it comes to making sure that you can cover your unexpected costs, you should count your budget up by 50% each month.
So if your business plan says that you should be able to get away with spending 5000 dollars a month all and all.
This actually mans that you should calculate for 7500 dollars instead.
This way you are covered.
Reason number 2: This is also very common and an easy mistake to do as a new business owner.
It is overspending on marketing and similar material for your business.
You been saving and waiting to start your business and you got a loan to top it all off, and now you want to really get going.
But hang on a minute, this is where new companies get into trouble.
You want everybody to know about your store front or company and you market hard and you market everywhere and very quickly you have spent a 5 figure amount in your first year on marketing.
Normally you should try and grow your business the first 1-2 years as organic as possible and really save on the marketing dollars.
And when you do marketing you should target just the people that you think could become a future customer to your business.
So here we would recommend to spend a little bit on google ad words and a little bit on Facebook ads and then look at Instagram influensers in your area with a following of 500-2000 people.
And maybe even taking out a small weekly ad in the local paper or free paper if you are also targeting older customers from 60+ years and upwards with your storefront, or your business.
We know a lot of people say that you have to be on the first page in the google search to be relevant, but you also need to find out how much that will cost you.
Because more often than not you will pay true your nose to reach the first page on google, and for most smaller business this is not an absolute must.
There are ways true back-links and other SEO options to land pretty high on search engines without paying true your nose.
Reason number 3: This is also a very common mistake that new business owners do and that is that you hire staff in your first year of business.
When you take on staff you have to understand that it is much more than maybe the 15-25 dollars and hour that you will have to pay.
And those things are payroll taxes and other social costs so usually count 1.5x on the salary when you hire somebody.
Second thing that you need to keep in mind when you hire a person and usually your first employee, is that you figure out if this is a short term or long-term person for your business.
We will give you an example here if we look at your first employee that you could see saying on for a longer period of time.
If you feel that this person is a long-term option for your business then try and teach that person to do many different job, within your company.
This way you have some multitasking going on.
And you can here pay a little bit more than you should if the person is a temporary solution for your business.
Then the second option is that you need a person for store gig and it is not a big job, then you can a little bit less for that person.
And take it for what it is.
Here we want o also be very clear that the better you treat your employees the better job they will do, and simple small stuff like free coffee of high quality in your store/company made in house with a quality coffee maker(costs under 100 dollars to buy) will make all the difference in how they look at you as their boss and employer.
It is the small stuff that keeps workers loyal to their employee for years to come.
Simple stuff like giving them time off in the middle of the day to bring their pet to the vet or to go to a dentist appointment.
Good workers will respond well to this kind of treatment and will give their all back to your business.
Reason number 4: This one is tied to your companies finances and that is to keep a rolling stock going .
What we mean by that is that you need to avoid having a stock of goods that cost you a lot, but that does not move around fast enough, this is what we mean by a rolling stock.
A rolling stock is a stock of merchandise that moves with in a maximum time frame of 60 days.
This way you dont tie up much needed cash flow for your newly started business.
What is often said from experts are that it is better not have a special item in stock when you are a new business even if you lose that particular sale, rather than having a lot of these items in stock and they move very slow or once every other year.
So during the first 2 years time try and avoid to get sucked in to a larger stock of merchandise unless you have unlimited funds to do so.
Reason number 5: This once is something that we seldom hear advisers talk about.
But it is such an important aspect of how your business will be a success going forward.
And that is you as the owner/leader/worker.
What is it? NUTRITION that is what it is!.
So often a new business owner has to work 16+ hour day and that also means that you will spike your stress hormone cortisol to a max level.
And the more high quality high octane fuel you put into your body the better off you are, when trying to succeed with your business.
So if you can eat as much plant based nutrition/food as possible, look at Lewis Hamilton and Rafael Nadal as an example of how well they preform on plant based nutrition.
If this is to difficult for you, try and use Casein protein in combination with Oat meal and chicken and potatoes and also add veggies and fruit into your daily nutrition intake.
So the nutrition intake is so important when you work a lot and when you work under very stressful circumstances.
So these are a few pointers that all new business owners should take to heart to really succeed with their new business venture.
Thank you for reading.