Some reports suggest that 90% of new businesses will fail when they enter the market. This does make a lot of sense. After all, they can’t all be winners because if they were, no one would make a profit. That said, it’s important to know the issues which lead to the death of a company. Once you know the problems, you can ensure that your business doesn’t fall into the same traps.
Tax Concerns
First, it’s important to think about issues with taxation. As soon as you start a business, you should be set up and ready to pay taxes. If you don’t do this, then you’re going to find that you end up paying huge penalties later on. The first step is to get your EIN number. Applying for an EIN online is easy and arguably the quickest way. You also need to make sure that you are paying the right amount in taxes. If you’re unsure then it’s best to hire an accountant who can help you pay the lowest amount while staying on the right side of the legal line.
Broken Website
A broken website is one of the worst things that can happen when you own a business. A lot of your clients are going to find you and make a purchase through your site, so if yours isn’t working right now, you’ve got to get it back up and running as soon as you can. Ideally, you should have IT experts who are able to do this on demand so that you don’t have to wait around for another business to come and sort the issue.
Low Demand
Your business can and will only survive if you have enough customers coming through the door or using your online services. Before you open your business you should carry out some critical research that will show whether there is enough demand for what you are offering. This can be done by market research and various polls placed online and in people’s inbox. If there isn’t enough demand then there is no point opening a business. This will only end with you potentially closing down if you can’t get the word out about your company and what you offer. You will need to think of ways you can drum up more business and engagement. This can be done through various marketing tools and strategies.
Employee Churn
Something that you need to be concerned about and keep at the back of your mind at all times is the risk of high employee churn. This happens when a large quantity of your employees up and leave within quick succession of each other. This can spell extremely bad news for your company and could even close it down. You will be spending a large portion of your time re-advertising the job and re-interviewing potential employees. Why is this a problem? It takes precious time away from you doing other vital things within your company.
One way to deal with this is to hire top quality employees right from the start. You can do this by making sure they have your businesses best interest at heart when you interview them. You will know who you want to hire within the first seven seconds of meeting them. If you want to save yourself some time then you could use the help and services of a recruitment agency. They will do all the leg work for you so you can put more time and effort into building your company.
Overspending
The final thing that we’re going to be looking at is overspending. Overspending is something that you ideally need to be avoiding at all costs, as it’s one of the most common problems that businesses face financially. You set your budget where it is because that is the amount that you know you can comfortably afford. Ideally, you should be doing a separate budget for every single department of your company, and then make sure that they are sticking to it.
If a department needs more funding for something, they need to submit an application for further funding so that there can be a record of such an increase for the short period. If you don’t do this, then you might find yourself in the red, and going downhill faster than you think.
We hope this helps you understand some of the key issues that can lead to a death sentence for any company. By taking the right steps, you can keep your business on solid ground and ensure that you don’t fall into the same pitfalls that other companies have before.
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