So what are some of the key reasons businesses fail?
-Going into business for the wrong reasons: You should have a passion for what you do and some real drive to make it work.
Going into business solely to make money, or to spend more time with the family, is not enough.
-Poor management: Business owners frequently lack skills and expertise around key areas such as finance, purchasing, selling, production and staff issues.
Unless business owners realise where they lack some skills and seek guidance they can find themselves in trouble.
Neglect of a business can also lead to its demise. Business owners/operators need to organise, plan and control all business activities - this includes market and customer research which tends to get overlooked in more established businesses.
-Insufficient Capital: Not knowing exactly how much it will cost to set up or insufficient working capital to ensure the business continues to operate.
Accurate cashflow projections are vital for every business to succeed. You need to know when funds will be available to meet the ongoing overhead costs.
-Lack of planning: Businesses that fail to plan are planning to fail!
Every business needs a business plan that is reviewed regularly. A business plan needs to include goals and vision, SWAT analysis, financial planning, marketing plan and competitor knowledge.
-Overexpansion: A leading cause in business failure is over trading.
Often business owners think a measure of success is how fast they grow their business and they take on more work that they can deliver on - slow and steady growth is what you should aim for.
- No website: In this day and age your customers are searching you and your competitors online. Put simply, if you do not have a website or low performing website you are missing out on business.
So now that you know some of the pitfalls - plan carefully and enjoy the year ahead.
-Darrin Walsh is chief executive of the Rotorua Chamber of Commerce.
