An estimated 96% of all businesses fail within their first 10 years, which underlines the genuinely challenging nature of sustaining commercial success and achieving longevity.
What this statistic does not reveal, however, are the precise challenges that undermine business success and trigger such a high rate of failure. While some of these challenges are unique to specific markets and exist outside of an entrepreneur’s control, there are also universal factors that can trigger a business’s decline.
Identifying these universal challenges and learning how to overcome them is crucial to ensuring the success of your business venture. Here are some of the most pressing issues that can arise within your business, along with advice on how to resolve them.
1. An Increasingly Disengaged Workforce
Businesses usually discuss engagement in terms of consumer interaction, but engagement equally applies to managing relationships with employees. A disengaged workforce is unlikely to be productive, and employees who lack a sense of belonging will, in turn, lack the motivation to reverse an ailing company’s fortunes.
There are innumerable professional and personal reasons why employees may be disengaged within the workplace. A 2013 report by Gallup suggested that just 13% of the global workforce were engaged in their jobs.
How exactly do you go about creating a more engaged workforce? You must first start with a positive and proactive mindset, which can translate negative emotions and perceptions into positive action.
This is similar to the outlook that legendary retail brand Zappos adopted when reimagining their customer service, as they transformed employees who felt undervalued into motivated, front line marketers who had the opportunity to engage with customers and reinvigorate the company.
In more universal terms, empower your employees as strategic thinkers within your business, enabling them to play a more central role in its future growth. Additionally, introduce training courses that develop key business skills with your employees, including problem solving and creating thinking. Over time, this will create a highly skilled team of employees motivated to achieve a common goal.
2. The Lack of a Scalable Business Plan
According to studies, an estimated 80% of startup business ventures fail during their first year. One of the main reasons for this may be the lack of a scalable business plan, which renders a venture incapable of expanding in line with increased workloads or demand. While some entrepreneurs may negate this in the short-term by placing greater demands on their existing resources, businesses that experience continued scalability issues are ultimately likely to fail.
When creating a scalable plan for your business, what are the core elements needed to drive it? First, create milestones for specific periods of time while dictating a vision of what your venture will look like in two, five and 10 years. This creates a framework for scalable growth while allowing you to evaluate your progress in real time and revise your strategy when needed.
Second, ensure you are able to fund your business’s growth and scale it at predetermined points in time. This may require you to seek out timely and effective funding methods, aside from traditional options and banks loans.
Firms are looking to the alternative lending market, with invoice factoring particularly popular at present. This method allows firms to sell their accounts receivable to lenders at a minimal rate of interest before paying them back once their own clients have paid. This is one way of maintaining cash flow so your business has the resources it needs to scale organically and in line with demand.
If you wish to keep the business debt free and draw a salary as the CEO, you can also take out an unsecured personal loan. This can subsequently reinvested into the business.
3. An Inability to Meet the Changing Demands of the Market
While entrepreneurs who fail to scale their ventures are doomed to failure, so, too, are those who fail to adapt to the changing demands of the market. Successful corporations are driven by flexible and agile business models, which allow them to reinvent themselves and achieve new competitive advantages in line with the demands being placed on them.
This precise model that you deploy depends on the nature of your business and the challenges it faces, but your primary areas of focus will be the source of your revenue and the way in which you deliver your products or services to customers. You may choose to develop your product range or expand into a related niche that reflects the demands of your consumers, for example, or adopt a ‘freemium’ business model that empowers customers in terms of how they spend their money.
You may even look to diversify revenue streams, perhaps by creating new, online sales channels or shifting products through an affiliate.
Regardless of your approach, the key is to deliver an agile business model buoyed by accurate data, particularly in terms of the customer segments that you target and the marketing channels used to reach them. This ensures that your model strikes the ideal balance between agile and profitable, creating a clear path to growth that is relevant to the unique demands of your market.
Hopefully, this advice will offer you insights into why your business is struggling and help you identify viable resolutions. If nothing else, it may at least encourage to think about future challenges for your business and adopt a proactive approach to meeting and overcoming these hurdles.
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