Small business insights: Why some businesses don’t make it!

Thank you to our client and friend Edward Callaway at Sonic Breakthrough Coaching for this guest post!

One of the topics that I am passionate about is helping business owners and leaders succeed! My name is Edward Callaway, and I am a business coach specializing in small to medium sized businesses.

It is commonly known that over 20% of businesses fail in their first year and over 50% don’t last over two years. In fact, according to the 2022 Statistics Canada business report, every year between 2015 and 2019 an average of 90,151 businesses closed their doors for good. Let’s explore some of the reasons for this.

Inadequate Planning and Strategy

One of the initial reasons that small businesses stumble is from a lack of comprehensive planning and solidifying a strategy. Starting a business without a well-defined roadmap can lead to aimless decision-making, poor resource allocation, and missed opportunities. I find that most successful businesses are built on thorough market research, clear business models, and realistic financial projections. Taking the time to plan and strategize sets the foundation for sustainable growth.

Finding that time can be a challenge and is something that I see owners struggle with. In the realm of entrepreneurship, it’s not only essential to work in your business, but equally crucial to work on your business. While day-to-day operations demand attention, focusing solely on immediate tasks can create a tunnel vision that prevents broader strategic growth. By dedicating time to working on your business—strategizing, refining processes, and setting long-term goals—you empower yourself to steer the ship towards innovation, scalability, and sustained success. Balancing both perspectives ensures that your business not only functions efficiently today but also evolves for tomorrow’s challenges.

Financial Mismanagement

Effective financial management is essential for the survival and growth of any business. Inadequate understanding of cash flow, overspending, and mis-allocation of funds can quickly lead to disaster. Without proper financial tracking and controls in place, businesses can find themselves in a position where they’re unable to cover operational expenses, invest in growth, or weather unexpected downturns. Developing a robust financial strategy, including budgeting, forecasting, and prudent spending, is crucial for long-term success.

I see owners who are great at setting personal goals but have not taken the time to set solid and measurable financial goals for their business. In business another word for a goal is a budget, and setting budgets helps keep the financial health of a venture steady. It is vital to track and analyze these goals on a regular basis to be able to react quickly and appropriately to changes in the marketplace.

Evolving with Market Trends

Remaining attuned to shifting market trends and consumer preferences is another key to any business’s longevity. Stagnating in an ever-evolving market landscape can be very detrimental. Businesses that fail to adapt risk losing relevance and, consequently, their customer base. Staying ahead necessitates vigilance, innovation, and an unwavering commitment to meeting and exceeding customer expectations. By staying agile and embracing change, you position your business for continued growth and resilience.

In my corporate days a business leader that I greatly admired once told me that “Complacency Sucks”. When things are going well, we tend to take on an “if it ain’t broke, don’t fix it” mentality. If your business has been successful for a few years there can be a hesitancy to change things, but that is a double-edged sword and owners and leaders can risk becoming irrelevant as conditions in the market, and attitudes of the consumer, change over time.

Remember, while these challenges are common, they are not insurmountable. Proactively addressing these issues and leveraging the experience of others who have been there before you (working with a business coach) can significantly increase the chances of your business flourishing!

Wishing you prosperity and progress,

Edward Callaway

Business Coach

For more information on the services offered by Sonic Breakthrough Coaching, please visit their website at www.soniccoaching.com.

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