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    Why New Businesses Fail and How to Stop Your Business Following

    As scary as it sounds, over half of new businesses fail within the first three years of operation. It’s not the big businesses with multiple employees who are most at risk. Instead it is the sole operators or ones with less than five employees who are mostly likely to fail. It’s essential that you know the reasons why new businesses fail to stop your new small business heading down that path too.

    Top Reasons Why Most New Businesses Fail

    Statistics show that if you have no or few employees, your business was more likely to fail than those who employed staff. 58% of businesses with no employees which started in 2010 had ceased operations by 2015. This compares to 43% of businesses with one to five staff and 20% of businesses with over 100 staff.  The key to avoiding this fate yourself is knowing the common reasons why this happens, which include:

    • Not Doing Your Market Research – having a great idea and implementing it is not enough to ensure success. Instead you need to thoroughly complete your market research before committing any cash to it. This includes identifying your competition and your customer’s needs.
    • Omitting to Do a Business Plan – a business plan helps you to identify where you fit into the marketplace. It lays out information about costs, expected profits and any potential problems and their solutions.
    • Too Little Money – setting up a business on a shoestring is achievable, but challenging. Many new business owners underestimate the costs and consequently run out of money. By ensuring you have the funds to get you through the tough times at the start, you are more likely to stay in business.
    • Wrong Place, Wrong Time, Wrong Marketing –  your physical location can mean the difference between none or lots of walk in foot traffic to buy your products. Launching your business in the middle of a recession is most likely not the right time. Likewise, the wrong type of marketing will not get you the results you need.
    • Failure to Adapt – change is inevitable and if you don’t adapt your processes to meet it, you’re going to be left behind. By anticipating the future changes within your industry, you will be able to react and adapt it to succeed.

    How to Ensure Your New Business is a Success

    Putting in the effort at the beginning of launching a new business pays dividends later. To build a successful business, there are four main tasks you should do:

    • Network – networking with other business owners helps build your brand and shows others why they should work with you. Network NZ is one of the easiest and most cost-effective networking opportunities in New Zealand.
    • Write a Business Plan – having a roadmap to show you where you’re going and how you’re going to get there is vital.
    • Create a Great Work Life Balance – in the first few years, you’re going to need to work hard to get your business where you want it to be. But that doesn’t mean you shouldn’t have a life too! Schedule time to spend with family and friends.
    • Delegate or Outsource – you can’t do everything and expect to master it all. Keep the jobs you can do well and give the others to someone who is better at them than you are. This saves you both time and money.

    Do you have any more tips to share about how to grow a new business? We’d love to hear them! Pop your ideas down in the comments section below and let’s create New Zealand’s best start up business resource guide. Please join our FREE business support and networking group! We have over 3600 NZ small business owners who would love to meet you!