The Tribune

Starting a business comes with multiple challenges and pitfalls. And even when you are off to a good start, keeping a company running successfully is not for the faint of heart. Many small businesses encounter issues that prove to be insurmountable, sadly resulting in closure.

Many entrepreneurs start a business with optimism and high hopes but, unfortunately, more than 30 percent fail within three years of opening. Below are six typical problems that contribute to small business failure, along with ways to minimise or avoid their potentially dire ramifications.

Poor cash flow can kill a small business

While new businesses commonly grapple with inadequate financing, about 38 percent of failed start-ups attribute their decline to running out of capital. To foster healthy cash flow, developing a financial planning strategy is crucial:

• Create a budget: Small business owners should also set and follow a sustainable and realistic business budget.

• Reach out to investors: Receiving investor funding typically helps to move away from depleting your savings or too many business loans.

• Track expenses: See where your money is going, and create plans to sufficiently cover your expenses.

Maintaining a solid grasp of your cash flow is essential to tracking and improving your company’s’ financial position.

Inadequate leadership

Incompetent leadership is detrimental to a business. To prevent this, it is essential to establish a clear organisational structure with designated leaders or managers for each responsibility. It is also crucial to avoid overburdening these individuals, as this can lead to demotivation and, eventually, turnover.

Disengaged employees

Disengaged employees can lead to high turnover, which negatively affects company culture, causes lower productivity and decreases customer satisfaction.

Attracting employees who align with your company’s mission and values is vital to motivating your team. The key is creating a supportive work environment and finding ways to create opportunities for professional development. Think of your business as a small community and get to know your employees personally.

Lack of business planning

Without a comprehensive business plan, your business has no clear direction. This can result in disorganisation among leaders and team members, and many investors will not fund your business without reviewing a business plan.

A business plan is crucial, as it helps you focus on your key goals and prioritise them, as well as your resources. Outline your corporate goals and objectives, identify your target customers, note the pain points you want to address, and detail your intended revenue streams.

Strong competition

Research has found that among all businesses that fail, 20 percent do so because they did not properly assess their competition. To help your business stand out, conduct a competitive analysis to learn more about others in your niche and identify your firm’s competitive advantage.

Small businesses will have to be more innovative to compete with established companies in addition to offering excellent customer service.

Inefficient marketing

Low-return marketing strategies can hurt a company’s revenue streams significantly due to insufficient visibility or delivering the wrong message.

I recommend honing your company’s brand identity so it stands out among your competitors, and use public relations tactics to optimise your online presence by using various SEO strategies.

Consider investing in marketing campaigns that target your ideal customers, via social media, and build a strong base of new customers while staying relevant to existing customers. Until we meet again, fill your life with memories rather than regrets. Enjoy life and stay on top of your game.

• NB: Columnist welcomes feedback at deedee21bastian@gmail.com

Deidre M. Bastian is a professionally-trained graphic designer/brand marketing analyst, international award-winning author and certified life coach