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Top 10 Reasons Most New Businesses Fail

If you just opened your business or if you are thinking about starting a new business, you will need to know why many new businesses are expected to fail within the first year. Even for those established businesses, owners should also be aware of these causes, especially if your business has been growing, because you may have started off right on the right path, but you may have gotten off-track over time.

The U.S. Small Business Administration released statistics that report only 7 out of 10 businesses remain open after 2 years, and only 50% are still open after 5 years. These statistics only apply to businesses that have hired at least 1 employee and the statistics are not available for sole owner home businesses, but it almost guaranteed that the failure rate would be even higher.

Business Plan Creation PageThe top 10 reasons most businesses fail are:

1. Failing to Have a Business Plan in Place
2. Not Creating Measurable Goals
3. Poor Customer Service
4. Inadequate Funding
5. Charging Too Little
6. Insufficient Value Proposition
7. Insufficient Record-keeping
8. Neglecting Your Own Health and Emotional Well-being
9. Not Realizing There Is Lack Knowledge or Expertise
10. Not Feeling Passionately About The Business

Westlund Consulting can help! We create business plans tailored to specific businesses that have measurable goals, explain profitable price points, and clear value propositions. We also help you organize your financial records with your banks, help you organize your business records through software training, and increase the likelihood of your business funding being approved. Westlund Consulting’s services will give you extra time to attend to your customer service and the peace of mind to attend to your personal health and emotional well-being.

Top 10 Reasons To Have A Comprehensive Business Plan

1.  Business plans are designed to define a purpose to show how results will impact the business bottom line. You are in business to make money, and business plans help move businesses from start-up to profit status.

2.  A well-written business plan helps forecast the future, even when the future is not well known.

3.  For those businesses hoping to raise capital or get start-up funding, a business plan is critical. Funding sources will not consider investing in a business without seeing a formal business plan that outlines the future potential of the business.

4.  Good business leaders know that a well-written business plan provides day-to-day operational support. Organizations that stay the course of their business plan have a higher chance of success. When the business plan is used as a road map it helps leaders stay focused on business growth, mission and goals.

5.  Business plans determine the best ways to allocate scarce resources, such as budgets, inventory, etc.. A business plan helps leaders avoid pitfalls that may lead to failure.

6.  A business plan helps clarify business market position and growth potential. Great ideas can end up bogged down in unnecessary changes resulting from poor planning or consideration. Business plans help decipher, organize, and plan some of these ideas before they result in failures.

7.  A comprehensive business plan will include a marketing element. Marketing research data helps leaders target their markets and know how those markets can best be leveraged to help build and promote their business brand and services.

8.  For start-up businesses, a detailed business plan is critical if success is to be maximized. Business plans channel energy, money and time in a focused direction to help to assure success. A good idea can be capitalized on even more with the use of a business plan that shows where money should go, and how long it will take before a business idea can shows profit.

9.  While the main purpose of a business plan is to help businesses move from start-up to success, a business plan is also indispensable as a tool for future development and growth. The right decisions today help ensure tomorrows success. The business plan clarifies these opportunities and moves businesses in the right direction.

10.  A business plan demonstrates a formal seriousness to investors, employees and others involved in the development and growth of the business. Having a formal business plan means that the owner(s) have taken the time to thoroughly map out what the business is and what it will be in the future. This crucial step is an important element that most start-up businesses do not recognize, which often leads to failure.