The Seven Pitfalls of Business Failure and How to Avoid Them

When you’re starting a new business, the last thing you want to focus on is failure. But if you address the common reasons for failure up front, you’ll be much less likely to fall victim to them yourself. Here are the top 7 reasons why businesses fail and tips for avoiding them.

According to statistics published by the Small Business Administration (SBA), about half of all employer establishments survive at least five years and a third survive ten years or more. This is a far cry from the previous long-held belief that 50 percent of businesses fail in the first year and 95 percent fail within five years.

Better success rates notwithstanding, a significant percentage of new businesses do fail. Expert opinions abound about what a business owner should and shouldn’t do to keep a new business afloat in the perilous waters of the entrepreneurial sea. There are, however, key factors that — if not avoided — will be certain to weigh down a business and possibly sink it forevermore.

1. You start your business for the wrong reasons.

Would the sole reason you would be starting your own business be that you would want to make a lot of money? Do you think that if you had your own business that you’d have more time with your family? Or maybe that you wouldn’t have to answer to anyone else? If so, you’d better think again.

On the other hand, if you start your business for these reasons, you’ll have a better chance at entrepreneurial success:

• You have a passion and love for what you’ll be doing, and strongly believe — based on educated study and investigation — that your product or service would fulfill a real need in the marketplace.
• You are physically fit and possess the needed mental stamina to withstand potential challenges. Often overlooked, less-than-robust health has been responsible for more than a few bankruptcies.
• You have drive, determination, patience and a positive attitude. When others throw in the towel, you are more determined than ever.
• Failures don’t defeat you. You learn from your mistakes, and use these lessons to succeed the next time around. Head, SBA economist, noted that studies of successful business owners showed they attributed much of their success to “building on earlier failures;” on using failures as a “learning process.”
• You thrive on independence, and are skilled at taking charge when a creative or intelligent solution is needed. This is especially important when under strict time constraints.
• You like — if not love — your fellow man, and show this in your honesty, integrity, and interactions with others. You get along with and can deal with all different types of individuals.

2. Poor Management

Many a report on business failures cites poor management as the number one reason for failure. New business owners frequently lack relevant business and management expertise in areas such as finance, purchasing, selling, production, and hiring and managing employees. Unless they recognize what they don’t do well, and seek help, business owners may soon face disaster. They must also be educated and alert to fraud, and put into place measures to avoid it.

Neglect of a business can also be its downfall. Care must be taken to regularly study, organize, plan and control all activities of its operations. This includes the continuing study of market research and customer data, an area which may be more prone to disregard once a business has been established.

A successful manager is also a good leader who creates a work climate that encourages productivity. He or she has a skill at hiring competent people, training them and is able to delegate. A good leader is also skilled at strategic thinking, able to make a vision a reality, and able to confront change, make transitions, and envision new possibilities for the future.

3. Insufficient Capital

A common fatal mistake for many failed businesses is having insufficient operating funds. Business owners underestimate how much money is needed and they are forced to close before they even have had a fair chance to succeed. They also may have an unrealistic expectation of incoming revenues from sales.

It is imperative to ascertain how much money your business will require; not only the costs of starting, but the costs of staying in business. It is important to take into consideration that many businesses take a year or two to get going. This means you will need enough funds to cover all costs until sales can eventually pay for these costs.  This business startup calculator will help you predict how much money you’ll need to launch your business.

4. Location, Location, Location

Your college professor was right — location is critical to the success of your business. Whereas a good business location may enable a struggling business to ultimately survive and thrive, a bad location could spell disaster to even the best-managed enterprise.

Some factors to consider:

• Where your customers are
• Traffic, accessibility, parking and lighting
• Location of competitors
• Condition and safety of building
• Local incentive programs for business start-ups in specific targeted areas
• The history, community flavor and receptiveness to a new business at a prospective site

5. Lack of Planning

Anyone who has ever been in charge of a successful major event knows that were it not for their careful, methodical, strategic planning — and hard work — success would not have followed. The same could be said of most business successes.

It is critical for all businesses to have a business plan. Many small businesses fail because of fundamental shortcomings in their business planning. It must be realistic and based on accurate, current information and educated projections for the future.

Components may include:

• Description of the business, vision, goals, and keys to success
• Work force needs
• Potential problems and solutions
• Financial: capital equipment and supply list, balance sheet, income statement and cash flow analysis, sales and expense forecast
• Analysis of competition
• Marketing, advertising and promotional activities
• Budgeting and managing company growth

In addition, most bankers request a business plan if you are seeking to secure addition capital for your company.

6. Overexpansion

A leading cause of business failure, overexpansion often happens when business owners confuse success with how fast they can expand their business. A focus on slow and steady growth is optimum. Many a bankruptcy has been caused by rapidly expanding companies.

At the same time, you do not want to repress growth. Once you have an established solid customer base and a good cash flow, let your success help you set the right measured pace. Some indications that an expansion may be warranted include the inability to fill customer needs in a timely basis, and employees having difficulty keeping up with production demands.

If expansion is warranted after careful review, research and analysis, identify what and who you need to add in order for your business to grow. Then with the right systems and people in place, you can focus on the growth of your business, not on doing everything in it yourself.

7. No Website

Simply put, if you have a business today, you need a website. Period.

In the U.S. alone, the number of internet users (approximately 77 percent of the population) and e-commerce sales ($165.4 billion in 2010, according to the US Department of Commerce) continue to rise and are expected to increase with each passing year.

At the very least, every business should have a professional looking and well-designed website that enables users to easily find out about their business and how to avail themselves of their products and services. Later, additional ways to generate revenue on the website can be added; i.e., selling ad space, drop-shipping products, or recommending affiliate products.

Remember, if you don’t have a website, you’ll most likely be losing business to those that do. And make sure that website makes your business look good, not bad — you want to increase revenues, not decrease them.

When it comes to the success of any new business, you — the business owner — are ultimately the “secret” to your success. For many successful business owners, failure was never an option. Armed with drive, determination, and a positive mindset, these individuals view any setback as only an opportunity to learn and grow. Most self-made millionaires possess average intelligence. What sets them apart is their openness to new knowledge and their willingness to learn whatever it takes to succeed.

 

7 Reasons Why Most Entrepreneurs Fail in Business:

Why do Most Entrepreneurs Fail in Business?

Entrepreneurs Fail as much as they Succeed

Entrepreneurship is a way of life that offers unlimited possibilities to those who truly believe in it and live by it. But at the same time, entrepreneurship is a way of life that can totally alter the course of your life if misunderstood.

Entrepreneurship is not something you can fake your way through; you are either doing it right or not doing it right simple. There are no ways around it.

To help you better make that choice, here are 7 Indicators of entrepreneurs who are headed for doom. As you go through the list, be sincere to yourself and tick each of the signs currently present in your entrepreneurial life.

The purpose of this article is not to scare you or condemn you, but rather to alert you and help you retrace your steps back in the right direction before your entrepreneurial journey goes up in flames!

1) Survival Driven (Seeking Money before Adding Value)

This is one of the most obvious reasons why most entrepreneurs fail. If your primary motivation for being in business is to acquire wealth rather than to create and add value, then you’ve started off on the wrong foot. If the drive for money supersedes the drive to create innovative products/services that will add value to your target market, then is time for some serious soul searching.

The study above has plainly revealed what becomes of entrepreneurs who think like this –they never actually attain that level of financial freedom they so much lay emphasis on. Why? Because the universe will never reward those who seek to get before giving.

The purpose of entrepreneurship is not the accumulation of money but the creation of value-adding products/services that will help make the world a better place for all. Wealth is a result of consistently providing solutions to the problems of humanity.

If you doubt me, go ask Bill Gates, Warren Buffet, Mark Zuckerberg and the likes. These are people like you and I who simply followed their passion (purpose driven) rather than following money (survival driven) and yet made a great fortune.

2) Inadequate Knowledge (Low Business IQ):

The entrepreneur on the path to failure won’t see the need to develop his/her business IQbecause of the quest for money. Such an entrepreneur feel business is all about how much you can make. The fact that how much you can make is a function of how much you know and how much you can do is usually ignored. Thus, they forget that a business just like every other discipline requires certain competencies (knowledge, skill and experience) in order to remain functional.

So what do you eventually get? An entrepreneur who is dabbling his/her way through the ever dynamic world of business. In the end, failure becomes inevitable. Why? Because as an entrepreneur your ability to do is perpetually limited by what you know. In other words, you are the engine of your business.

So, to have more means you have to do more and to do more means you have to keep learning more! How do you learn more? By consistently focusing on personal development and self improvement through reading (books, blogs, magazines, etc.), attending seminars,business development trainings, executive mentorship or coaching programs, membership to a business club or network, etc.

3) Lack of Focus (Jack of all Trade)

The great Albert Einstein notably stated;

“genius is the ability to focus on one particular thing for a long time without losing concentration.”

Such is not the case for the entrepreneur heading for doom. In fact, the exact opposite is the case; trying to do more than one thing at a time eventually not achieving excellence in any. As an entrepreneur your success or failure will be as a result of how well you maximize your strengths.

Your strengths are those activities you naturally enjoy doing and would naturally do for free your entire life if necessary. This is how every great entrepreneur in history made their success; doing what they love and loving what they do.

They are not jack of all trades and masters of none, NO! They are jack of few trades and masters of some. Why? Because entrepreneurship is about using your passion to make a positive contribution for the benefit of others. Stop doing what everyone else can do and start doing what only you can do exceptionally well. Focus on your core areas of strength.

4) Fear of Failure (Risk-Averse)

Nursing the fear of failure is another reason why entrepreneurs fail in business.Entrepreneurship is about unleashing your passion and creativity to do something that you truly care about. It doesn’t matter whether what you have in mind to create is popular or generally acceptable, what matters is that it mattered enough to you that you are willing to do whatever it takes to make your idea become a reality.

The entrepreneur on the path to failure is the one who would never launch out because of thefear of failure, being laughed at, losing money, being called crazy etc.  Daring the un-dared for the sake of making change happen is the essence of entrepreneurship and it means looking your fear in the eye and stepping out in spite of it. Don’t allow fear of failure hold you back, do the thing you fear and the death of fear is certain.

5) Lack of Vision (Shortsightedness)

Entrepreneurs fail for lack of vision. The entrepreneur on the path to doom is the one that will never think of tomorrow. If you cannot literally see yourself and your business far into the future beyond today, then you are on the path to destruction.

Why would you want to go into business just for today’s sake alone? Why would you want to build a business the world will no longer remember after you are gone? The essence of entrepreneurship is to perpetually be of service to humanity.

Therefore, you must never cease to ask and be able to answer this question; “What can we start doing today to meet the needs of tomorrow?” Not having this consciousness is the reason why most entrepreneurs fail in business. Since they are not thinking about the future, the need to keep improving their game will be less paramount and as a result; they end up being eaten up by those businesses that are consistently creating the future today.

6) Poor Money Management (Extravagance)

Being an entrepreneur means being able to do more with less. The entrepreneur on the path to failure is the one who is extravagant –the habit of being excessively flamboyant, wasteful or spending money irrationally. Thrift or frugality is a requirement for your entrepreneurial journeyif you hope to become successful. How else do you intend to succeed if you cannot judiciously manage the resources in your disposal?

A good way to avoid being extravagant is to look into financial management systems and to classify your expenses into two categories; urgent expenses and Important expenses. Your urgent expenses are your recurrent expenses, meaning they are periodic in nature. Your important expenses are your capital expenses; meaning they are not periodic in nature but are necessary for the continuity of the business.

They are more like expenses made today in order to secure the future. Also, as your business begins to grow, don’t become one of those who start showing off the success of their business by acquiring unnecessary symbols of wealth. Place yourself on salary, this is very important. You must never take what is not yours, make it a priority to put aside and redeploy all excesses created by the business back into the business.

7) I Can Do Well All by Myself (Insecurity)

There is a limit to what an individual can achieve alone, thus the need for team work. The entrepreneur on the path to destruction is the one who will never empower others nor seek the help of others for fear that they might outshine him/her. Great things are seldom achieved alone.

As an entrepreneur, it’s very important you understand that you have no exclusive right to what is being done through you. Whatever it is you have in your mind to create is not entirely yours to dominate, you are only a vessel through which an idea, innovation or product/service is being launched.

So, you must get rid of any insecurity and every scarcity mentality you might have that someone is going to beat you to it. The more insecure you are and as a result keep refusing to solicit the help of those more better than you in certain areas, the more you endanger the chance of that idea, innovation, product or service ever becoming a reality.

 

6 Reasons Your Small Business Will Fail (And How to Avoid Them):

According to Small Business Administration research, only half of new businesses survive for the first five years and only one-third of new businesses are able to survive for 10 years. The inverse is compelling as we can conclude that if only 50% of new businesses survive for the first five years, then the other 50% fail in the first five years. We can also conclude that about 65% of new businesses don’t make it to the ten-year mark.

Forbes reports an even more grim statistic, based on Bloomberg research, that of every 10 businesses, eight fail within the first 18 months. What are the reasons businesses fail to thrive, given a 50/50 chance of survival and assuming a product or service for which there’s a demand? Let’s discuss six reasons businesses fail and some ways you can avoid business failure.

Six Reasons Businesses Fail: 

1.  Leadership Failure.

Your business can fail if you exhibit poor management skills, which can be evident in many forms. You will struggle as a leader if you don’t have enough experience making management decisions, supervising a staff, or the vision to lead your organization. Perhaps your leadership team is not in agreement on how the business should be run. You and your leaders may be arguing with each other publicly, or contradicting each other’s instructions to the staff. When problems requiring strong leadership occur, you may be reluctant to take charge and resolve the issues while your business continues to slip toward failure.

How to Avoid Leadership Failure: Dysfunctional leadership in your business will trickle down and affect every aspect of your operation, from financial management to employee morale, and once productivity is hindered, failure looms large on the horizon. Learn, study, find a mentor, enroll in training, conduct personal research – do whatever you can to enhance your leadership skills and knowledge of the industry. Examine other business best practices and see which ones you can apply to your business.

2.  Lacking Uniqueness and Value.

You may have a great product or service for which there is strong demand, but your business is still failing. It may be that your approach is mediocre or you lack a strong value proposition. If there’s strong demand, you probably have a lot of competitors and are failing to stand out in the crowd.

How to Avoid Value Proposition Failure: What sets your business apart from competitors?  How do you conduct business in a way that is totally unique? What are your competitors doing better than you are? Develop a customized approach or service package that no one else in your industry is using so you can present it as a strong value proposition that attracts attention and interest.

This is how you build a brand. Your brand is the image your customers recognize and associate with your business. Your brand identity, including your logo, tagline, colors, and all the visible aesthetics and business philosophies that represent your company should be supported by your value proposition. It should separate you from the pack and present your individual perspective to your customers. Do everything you can to present that unique value proposition to your market so you can capture a market share and begin building your conversion rates.

To publicize your brand and set yourself apart, you will also need to step up your marketing plan and use as many venues as possible to present your brand to the public. You may be far better than your competitors but that won’t make any difference if your prospects don’t even know you’re in the game. Use social media, word of mouth, cold calling, direct mail, and other tried-and-true marketing techniques. Ensure you have a well-optimized online presence, develop lead generation and contact information capture techniques such as offering high-quality content on your site, a subscriber newsletter, and information giveaways.

3.  Not in Touch with Customer Needs.

Your business will fail if you neglect to stay in touch with your customers and understand what they need and the feedback they offer. Your customers may like your product or service but, perhaps they would love it if you changed this feature or altered that procedure. What are they telling you? Have you been listening? Or is the market declining? Are they even still interested in what you’re selling? These are all important questions to ask and answer. Maybe you’re offering a product or service that is fallen well below trend.

How to Avoid Losing Touch with Customers: A successful business keeps its eye on the trending values and interests of its existing and potential customers. Survey customers and find out what their interests are and keep abreast of changes and trends using customer relationship management (CRM) tools. Effective use of CRM can help keep your business from failing.

4.  Unprofitable Business Model.

Akin to leadership failure is building a business on a model that is not sound, operating without a business plan, and pursuing a business for which there is no proven revenue stream. The business idea may be good but failure may come in the implementation of the idea if there are no strategic guidelines in place.

How to Build a Good Business Model: Research and review the way other businesses in the industry operate. Develop a complete business plan that includes financial forecasting based on predictable revenue, strategic marketing, and challenge management solutions to overcome potential obstacles and competitor activities. Create a milestone chart with specific tasks and objectives assigned along the timeline so you can measure success, solve problems as they occur, and stay on track. A sound business model that incorporates best practices can help your business avoid failure.

5.  Poor Financial Management.

SmallBizTrends.com, a business news resource, offers this infographic which states that 40% of small businesses make a profit, 30% come out even, and the remaining 30% lose money.

You must know, down to the last dime, where the money in your business is coming from and where it’s going in order for your business to succeed. Your business can also fail if you lack a contingency funding plan, a reserve of money you can call upon in the event of a financial crisis. Sometimes people start businesses with a dream of making money but don’t have the skill or interest to manage cash flow, taxes, expenses, and other financial issues. Poor accounting practice puts a business on a path straight to failure.

How to Avoid Financial Mismanagement: Use professional business accounting software to keep records of all financial transactions, including every expenditure and all revenues received, and use this information to generate profit and loss statements. This is valuable information that you need to run your business, know where you stand at all times, and keep it operating in the black. If you lack skill in financial management, consider hiring a tax advisor and professional bookkeeper or certified public account to help manage your financial affairs.

6.  Rapid Growth and Over-expansion.

Every now and then a business startup grows much faster than it can keep up with. You open a website with a trending product and suddenly you are inundated with orders you are not able to fill. Or perhaps the opposite is true. You are so convinced that your product is going to take the world by storm that you invest heavily and order way too much inventory and now you can’t move it. These are both additional paths to business failure.

How to Avoid Growth and Expansion Problems. Business growth and expansion take as much careful and strategic planning as managing day-to-day operations. Even well-established and successful commercial franchises such as fast-food restaurants and convenience stores conduct careful research and planning before opening a new location. They measure local and regional demographics and spending trends, future development plans for the area, and other pertinent issues before they move forward. You must do the same for your business to avoid failure.

Conduct thorough research to ensure the time is right and the funding is available for expansion. Make sure the initial business is stable before expanding to an additional location. Don’t order inventory you’re not sure you can sell but have a plan already in place to fill orders quickly should the demand present itself. The key to successful growth and expansion—and avoiding business failure—is strategic planning.

If 50% of new businesses fail, then 50% of new businesses can succeed. Starting a business is an exciting endeavor that requires a clearly defined product or service and a strong market demand for it. Whether you desire to start a new business or you’re already running a business, you must understand that success depends on careful strategic planning and sound fiscal management that begin prior to startup and continue throughout the life of the business.

 

4 REASONS SMALL BUSINESSES FAIL:

Most entrepreneurs start a new business with dreams of success, but the unfortunate fact is, too many of them fail.  The U.S. Census Bureau showed the reality in hard terms – 400,000 small businesses opened and 470,000 SMBs closed their doors just last year.

According to the Small Business Administration’s Office of Advocacy, three out of 10 new firms (with employees) fail to survive for more than two years and about five out of 10 close up shop within five years. The survival rate is even lower for sole proprietors.

What separates new businesses that flourish from those that close in disappointment?   In many cases, the difference between failure and success is as simple as doing the following: setting manageable goals, planning for growth, investing in the right business tools, and understanding the common pitfalls that sink other businesses.

Here are four of the top reasons small businesses fail within the first year:

Money.  An amazing idea or product just isn’t enough to start a small business anymore.  Without sufficient funds, opening doors to customers is impossible, and many small business owners underestimate the amount of money it takes.  Visit the startup cost calculator to put the amount of capital a small business needs into perspective.

There are four main reasons small businesses seek financing: startup costs, inventory purchases, business expansion, or business fortification.  Fortunately, in 2015, loans to small businesses are expected to increase; great news for small businesses searching for capital.  If you need money, one of the best resources available is the U.S. Small Business Administration.  The SBA has a variety of loan programs and offers considerable resources to small business startups.   A non-traditional lender is another option; many small businesses are borrowing from on-line lenders like On Deck Capital Inc., LendingClub Inc., and Kabbage for working capital.

Systems & Processes.  Although creating processes and procedures isn’t sexy, being inconsistent in how products and services are managed leaves SMBs vulnerable to customer disappointment.  “As entrepreneurs,small business owners are responsible for a number of business tasks, including marketing, inventory management, accounts payable, accounts receivable, payroll – in all of these different areas large companies have dedicated departments and specialists.”

When looking at small businesses who’ve failed, many didn’t implement the following:

1. Inventory Management System – Small businesses need to think of their inventory as cash sitting on shelves.  If piles of money were sitting in a warehouse, wouldn’t you want a system to track it?  Additionally, poor inventory management eats up capital, leads to bad customer service, and usually results in large write-offs that businesses have a hard time absorbing year after year.  According to the2015 State of Small Business Report, 46% of SMBs with 11-500 employees currently do not track inventory or are using a manual process.  The Profit’s Marcus Lemonis stated, “If you have inventory just sitting around for years, it’s just like burning money.”
2. Customer Relationship Management (CRM) System – Forming and building relationships with customers is critical to the success of any small business.  Without a tool to help SMBs stay organized, streamline customer interactions, and maximize each opportunity, that business’ long-term success is jeopardized.  CRM software uses analytics and reporting tools to keep small business leaders knowledgeable about their customers; unfortunately, only 29% of small businesses currently use a CRM system.  Small business owners who have implemented a CRM system experience many benefits.  Don Powers, owner of Powers Scanning stated, “I immediately saw an increase in sales after investing in my CRM system, which also allowed me to focus on recurring revenue.”
   Key Benefits of a CRM:
   • Build profitable relationships by maximizing opportunities
   • Manage leads & sales pipeline
   • Analyze performance and business metrics
3. Poor Accounting Process – 46% of small business owners reported they do not work with an accountant.  In fact, the assumption of many owners is that hiring an accounting firm just during tax season is enough.  This couldn’t be farther from the truth.  Not only do small businesses run the risk of owing more than anticipated in taxes, but they risk losing profits.  In 2014, nearly a quarter of small business owners said they had lost track of whether a customer had actually paid them.  Using tools like a software package or an online service to manage finances not only keeps track of all financials but offers insight into how the business is performing and allows for accurate planning to guarantee revenue growth.

Marketing.  Successful businesses market their products and services.  But many small business owners aren’t taking advantage of easy-to-use, modern technology and marketing approaches.  The national average for marketing budgets is 10.2%, yet, 56% of small businesses invest only 3% or less in marketing.

According to Joel Harvey, Managing Partner of Conversion Sciences, “Small businesses can’t compete with big company marketing budgets, but small businesses can be highly efficient by investing in data-driven marketing. Analytics, social intent, testing, live chat and ratings and reviews are all sources of insights that small businesses can use to leverage the one inherit advantage they have over their larger, longer-established competitors — nimbleness.”

As more and more people research and shop online, without a website that shows in major search engines, your business will become increasingly invisible.  Small business leaders should ask themselves the following:

1. Is your full product line available on your website?
2. Does your website include a clear call to action?
3. Is your value proposition clear and concise?
4. Is your website mobile friendly?
5. Does your website show up in search engines for keywords related to your products?

Evolution.   A small business’ initial success doesn’t mean continued success.  Failing to monitor industry trends and evolve means being left behind.  Most small business owners wear multiple hats and struggle with time management.  However, this is one area worth the investment in time to keep from becoming outdated and obsolete.

History is full of examples of large market leaders who did not evolve and are now either much smaller or out of business (i.e. Blockbuster, Kodak). Study how other successful businesses thrive and incorporate the best of what you find into your business.  Staying ahead of market trends will help secure your longevity and be your opportunity to beat the competition.

LEARN FROM THE FAILURE OF OTHERS

When small businesses first develop a business plan, failing is not the desired end result.  How do small businesses avoid failure?  One way is to learn from the mistakes of small businesses that have failed.  Every unsuccessful business closed for a reason: money, poor practices, high overhead, or ineffective marketing are just a few of the reasons.  Take the time to research this invaluable data because it may hold the key to your success.   Protect your business from the devastation of closed doors by learning why other others failed.

 

15 reasons why businesses fail (and how to succeed):

1. Poor cashflow

Cashflow is the life blood of your business, without it you cannot survive. Even the most profitable firms can find themselves going out of business because their cash is tied up in unpaid invoices.

2. Lack of focus

If your business is trying to be everything to every man, then you’re bound to overstretch yourself and your resources. By establishing a niche for your business and focusing on being great at what you do best, you will provide better service and create more satisfied customers. Without focus and achievable goals, many businesses find it hard to set priorities and achieve their full potential.

3. Lack of planning

The most important document that any business has is its business plan, which documents what you intend to achieve during the next 12 months and how you plan to do it. This needs to be communicated to everyone in the business to ensure everyone is working for the same goal.

4. No performance monitoring

So you have a plan, but that’s not the end of it. You should constantly review your progress to ensure you’re meeting your business goals and that your staff are meeting their personal potential.

5. Lack of insurance

If you don’t have the correct cover for your business, the results could be catastrophic should the worst happen. Ensure you have the right insurance for your business activities and look at whether you can benefit from enhanced legal expenses insurance.

6. Relying on a small number of customers

Having a small number of loyal customers is, in itself, not a bad thing. If we follow the 80/20 rule then 80% of your sales will generally come from 20% of your customers, but you need to consider how you would cope if your largest client went bust.

7. Insufficient knowledge of the market

To be successful in business you need to have your finger on the pulse and constantly adapt your business to meet the changing needs of your target market. You should continually carry out research into what your customers want and know what your competitors are doing to meet that need.

8. Poor management structure

Leadership has to start at the top of the company, but there is more to the success of a business than the owner. Hiring the right people to delegate responsibility to, who you can trust to carry your business forward, is crucial.

9. Insufficient funding

Without new investment flowing into businesses, many companies have found it difficult to grow – even if demand for their product exists. Bank funding has become increasingly harder to come by in the past three years, but alternative sources of finance are available including grants, peer-to-peer lending and funding marketplaces.

10. Tax bills

HM Revenue & Customs is the biggest creditor in business insolvencies in the UK. To avoid the tax man knocking at your door, you need to stay on top of and budget for tax and VAT bills, and stick to deadlines so that you don’t incur large fines.

11. Poor location

If your business depends on passing trade or ease of access, location is key. Before settling on a business premises, make sure you do your research on the area and try to estimate foot fall. When first choosing premises for her Coffee Republic chain, entrepreneur Sahar Hashemi would stand outside potentials sites counting the number of people who walked past. Also, try to avoid being tied into unnecessarily long leases.

12. No data security or back up

The information that you store about your customers, employees, and business activities is not only highly sensitive but incredibly valuable to your company. Losing this information to security breaches or physical damage is potentially devastating for a business of any size. For more information, read our guide to protecting your business from data disaster.

13. No succession planning

If you want your business to succeed even once you’ve left it, effectivesuccession planning is vital to ensure a smooth transfer of ownership.

14. Growing too quickly

Many businesses – especially in the early stages – try to grow too quickly, funded by lots of borrowing, which results in crippling interest charges. Growing slowly will give you more chance to assess demand, understand your market and expand in a sustainable way.

15. Not seeking help

Seeking professional advice and help can really boost a business. According to the National Business Survey 2010, businesses experienced 18% better growth rates and better financial management when they took advice from business support organisations.