Five core strategies for business survival

Small business owners, whether they are business professionals creating a consulting firm or entrepreneurs introducing a new product or service to the marketplace, need to study the principles of business survival because statistics compiled by the the Bureau of the Census for the Office of Advocacy of the U.S. Small Business Administration suggest that most new businesses only survive between one and ten years.

They do not make it for two primary reasons: lack of knowledge and insufficient capital.

Lack of Knowledge

Three primary reasons accounted for the business owners lack of knowledge:

One, although many new business owners were experts in their technical field, they often had little or no grasp of business fundamentals.

Two, although many new business owners had worked for established companies before branching out on their own, they often had little or no understanding of how to do more than play their role in the organization.

Three, often new business owners did not prepare, initiate, or plan their startup but simply leaped into it, figuring that they could learn from experience.

Lack of Capital

Poor projections, naive optimism, and insufficient skills in applying for funding from financial institutions or winning financial backing from angel investors resulted in companies earning less than their operating costs.

Creating A Survival Plan

Knowing the primary causes of business failures, it’s possible to come up with some useful strategies for staying in business and eventually growing it.

Here, then, are 5 strategies to avoid business failure:

1. Education. A business owner must be able to design their own MBA program. Although this can be done formally, the time and attention required to to to school, even an online one, would take away from the business. However, there is no shortage of books, CDs, video-tapes, and seminars available to learn the fundamentals of business.

2. Management. When working for a company, all management issues have been established. However, while a business owner will be able to do some of management tasks, like time management, organizing marketing, or putting together a sales team, there are others that are too time-intensive to be done like payroll and taxation, for example. Fortunately, there are outsourcing solutions. Electronic invoicing companies like ADP.com take care of all human resource work, so that business owners can focus on running their business rather than spending a large portion of their time struggling to comply with new labor regulations or tax rules.

3. Preparation. A business needs to prepare, initiate, and plan their startup, as well as monitor and make course corrections as the business unfolds.

4. Financial management. A business has to become very good at financial planning and management ,as well as good at seeking out fresh funding to float new projects. Without sufficient cash flow, a business can be doing everything else right but still be forced to close its doors.

5. Marketing and sales. Marketing and sales need to work together to get more customers, build trusting relationships with customers so that they spend more per transaction (suggestive selling or buying more of the higher-end products), and buy more frequently.

Summary

The philosopher George Santayana is often remembered for his warning, “Those who cannot remember the past are condemned to repeat it.” By looking at mistakes common to most business failures, it’s possible to pay attention to doing the things that will circumvent those errors.