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3 common reasons small businesses fail

On Behalf of | Nov 22, 2023 | Business & Commercial Law |

Starting a business can be an exciting time full of positivity about the future. Yet you only need to look around to see that things can soon change. Many people have been in your situation before, only for their dreams to sour a few months or years down the line when the business fails.

While there is nothing wrong with failure (you could even see it as a step to eventual success), you can certainly learn from others’ experiences to give yourself the best chance of making this business venture a success. Here are some common errors:

1. Trying to please everyone

It can be tempting to take any work going if providing a service or to try to cast a broad net and have something for every customer. Most successful businesses ignore most people and instead focus on a few. That way, they can specialize and become known for that specialty.

2. Having an idea but no real plan

“Then what?” is a good question to ask yourself. Once you achieve one thing, then what? Once you do that, then what? While you cannot predict everything that will happen, you do need to be strategic about risk management. You need to imagine where you want to be in six months, one year, five years and so on. That gives you direction and forces the type of forward-thinking that helps you see potential problems and opportunities. Launching without knowing where you are going will likely see you bobbing around aimlessly without progressing.

3. Failing to have clear legal documents

Every business needs contracts. These can cover all areas, from the initial agreement with your partners or investors to those with your employees, customers and suppliers.

Learning more about the legal requirements every business must meet will improve your chances of success.