Business failure: most common mistakes to avoid

Several studies state that around 90 % of companies don’t get to survive over 5 years. Did you just drop your cup of civet coffee? Is it possible you didn’t know about this statistics? Bringing up a company is not an easy task. We thought you already knew…

If you clicked on this article it is possible that you’re worried about avoiding business failure. We don’t have all the answers, and you must know that you have an arduous path ahead, sprinkled with effort and obstacles, but you shall not fall into despair.

In this article we’ll see some of the most common mistakes that companies made and that may cause you severe survival issues. Here we go!

1. Lack of experience in the sector

The cemetery of failed entrepreneurs is full of engineers that threw themselves into the adventure of having a restaurant, or taxi drivers that decided to use their savings to open a supermarket. You can be a very professional and capable individual, but if you get yourself into a sector you don’t really know, the most probable thing is that reality strikes you hard.

2. Lack of planning

You don’t even have a business plan? When you go outside your home, do you put a blindfold trusting your good luck and just hope all the traffic lights are green for you? You must be aware of where you want to take your company and in which way. Is there enough market for what you want to sell? Can you fight your competitors? Have you got a clear idea of where should your business be placed and how to reach potential clients? These are only some of the many questions you must answer before heading to your destination.

3. Not enough financial strength

Most businesses need money, for starting just as well as keeping it up long enough – for years, sometimes – until they’re ready to start generating some kind of profit. Otherwise, even with a lot of passion, enough knowledge and a good idea, it is very likely that they head towards closing up. Do you really want to create a company that is devoted to plane manufacturing when you hardly have any money left at the end of the month? You should get your head out of the clouds…

4. The word “marketing” doesn’t sound familiar

It is true that there are some companies that develop their activity without the need of any kind of marketing apart from word of mouth, but there are not many. If you want to make yourself known, you will need some advertising and commercial strategy that brings you closer to your potential users. You don’t have one? Do you think customers fall from the sky? Then you are likely to expect a long journey through the desert, with an uncertain end…

5. No control over finances

It is a mistake that no business man should ever make, but that happens more that we would think. Did you cover the chairs of your hotel with carbon microtubules just because it sounds chic and you like the word “microtubule”? but, do you have any idea of how much that costs? If you don’t have a very good control over your finances it is very likely that you end up having to close up your business,

You can even be a little more forward-thinking and think you’ve got it all under control. Be careful, barely perceptible expenses can create an insurmountable mountain of losses at the end of the year. If you can’t manage your company’s accounts, hire professionals to take care of them (it’s still not a good idea to leave it in the hands of your grandmother, even if she has just completed a basic accounting course at the senior citizens’ social club).

6. Mismanagement of the people you surround yourself with

Choosing a good team is a key issue for the success of a company. If you choose based on whimsical factors, such as the sympathy they cause or the color of their eyes, instead of paying attention to their preparation or their professionalism, you are on the wrong track. But not only that, once you have a good group of professionals around you, you will need to motivate and encourage them to continue to perform at their best and want to stay in your company for a long time. Offering fair wages and a good work environment will help you avoid costly enemies such as demotivation or high turnover.

7. Too much statism

Do you still use a horse-drawn carriage for your journeys? The world changes and companies must change with it. If you stay stuck in the past, you may have some problems. This does not mean that you should break away from what works for you, but that you should always be prepared to detect market dynamics and implement changes when necessary. And don’t forget this word: innovation.

8. Dying of success

Some companies start out so well that they are heading for excessive growth and end up having to close down. Why does this happen? It is usually due to financial problems or mismanagement, causing what used to be a promising business to turn into a huge disaster. So remember, if you want to expand your business, do it, but plan it well and with a view to making it something long-lasting.

9. Not offering good customer service

This is an aspect that some companies do not take into account and end up paying dearly. Poor customer service is a bad idea. You’ll lose customers who might still be able to offer benefits – and remember that getting new customers is much harder than keeping the ones you already have – and you’ll probably suffer negative publicity that can hurt you a lot (or would you recommend to your friends and acquaintances the services of a company that hasn’t taken care of you?). For these and other reasons, maintaining excellent customer service is essential for any business.

And now that you’ve seen some common mistakes that can lead to business failure, you should take a look at Pandora ITSM. Pandora ITSM is a software that has several functionalities, among which is an ticket-based incident management tool that can help you improve customer service in your company. Find out what Pandora ITSM has to offer.