The Small Business Association states that 30% of new businesses fail during the first two years, 50% during the first five years, and 66% during the first ten years. So why do these businesses fail? Why is it that even if they make it past the first couple years, the odds of them failing goes up even more? The way consumers purchase products and the way companies market those products to consumers has changed dramatically over the last couple years. This means that every step in a businesses’ process, from marketing the product, to manufacturing the product, and finally to delivering the products to the customer and ensuring their satisfaction, has become increasingly important to that businesses’ success. In considering today’s market and consumer marketability, we have established the top 3 reasons why businesses fail today…
Not Adapting to Change
The most important reason why businesses are failing today is because they are not adapting to changes in the industry, economy, or consumers. New companies are emerging every day and in every industry, and today more than ever before, these new businesses have almost equal opportunity of surviving, if not better opportunity, than companies that have been around for years. Customer loyalty has dropped dramatically as customers are more informed about which product or brand is actually better than the other. Customers in previous years, such as Generation X, simply chose the brands they were most familiar with and stuck with that, causing businesses to depend on customer loyalty. With Millennials and Generation Zers, customers are actually turning their products over and looking at the ingredients, looking up brand ethicality, and so on.
Businesses are failing because they are not adapting to these changes. Utilizing new technologies to quicken business processes, using social media marketing rather than traditional advertisements, and constantly improving and maintaining brand image is only a couple of the ways businesses need to be adapting to these recent changes.
The second most common reason businesses fail is because of poor management. This does not just mean from an upper-level stance, but lower-level management as well. Ensuring that everyone involved in your business, both externally and internally, knows your business inside and out is extremely important in ensuring management is aligned throughout the company. This includes knowing what the business stands for, the goals of the business, and the reason your business was created. Many companies do this by telling everyone who begins working for the business, the history of how the business began and why, as well as accenting on the importance of abiding by the company norms. This allows every individual inside and outside of the company, to be aware of how they should be operating, and how people under them should be operating as well, leading to improved management overall.
Unsustainable Competitive Advantage
Competitive advantages are becoming extremely difficult to maintain today as more and more businesses are entering the market, with increased chance of success. A business can no longer rely on one competitive advantage, such as a successful product, to maintain their business’ success. Companies with sustainable competitive advantages are not only consistently ensuring their product is the best on the market, but ensuring their brand is constantly improving their processes ethically and financially. This ensures that even if a new product comes out on the market, it is in direct competition with your own product as you’ve been consistently innovating and improving it. This also ensures that if a new company comes out that is ethically attractive and financially stable, you have also maintained your brand’s image and effectively improved your processes as well.
The key to ensuring your business does not fail is to constantly act like it is a brand new business. No matter how long your business has been around, whether it’s 5 years or 35 years, if you treat your business like you just started it up yesterday, you’ll be constantly working to improve it and therefore never fall behind your competition. This is evolved around your own motivation to be the best in the business and the perseverance you have, and your employees have, in consistently and effectively improving your business.
If your business could use some improving, click here to check out our MaxExposure products on our website today!