Do you know small businesses employing 0-19 people have a 59.7% rate of success in Australia? Before we get to how to make your small business successful, we should look at why many of them fail.
Why do many small businesses fail?
- Financial mismanagement
In order to make your business a successful one, you need to know how to manage your cash flow and stay on top of your financial responsibilities. If you are not sure where to start, you can start with having a good cash flow forecast. It will help you to monitor when you have money coming in and going out of your business.
Invoicing is part of good cash flow management. Whenever you deliver a product or a service, don’t wait to invoice as it can hurt your cash flow. Try to get into the habit of sending invoices for payment as quickly as possible. There are online tools you can use to generate and send invoices online, alternatively you can consider getting an invoice book especially when you do a lot of business out of the office.
Lastly, one common mistake is that some people are mixing their business and personal finances which can leave you uncertain about the actual business performance. Remember to always keep them separate, only by doing that you will know how much cash your company is generating.
- Insufficient advertising
Advertising can help to increase sales and grow your customer base, however many business owners do not invest enough in advertising. When we say invest, we also mean “time”. There are marketing activities you can do without spending money. If you are running a local restaurant, you can create your Google My Business listing for free which will make your business searchable on Google Map. There are also many tutorials on the internet that guides you through how you can improve the visibility of your business profile on Google.
Social media is another free channel you can use to promote your new product or service or promotion. If you do not want to hire a graphic designer, you can use free online platforms like Canva which allows you to easily create promotional posts using their templates.
- Overall economic conditions
While broader economic conditions such as consumer spending are often linked to business failures. Starting a small business is hard work, but it becomes even more challenging in a tough economy. If you are suffering from a decline in sales because of the economic downturn, you will need to think creatively and see how you can transform your business to generate sales from new product lines or rethink your product offering.