4 Tips to Avoid Failure for a New Business Venture
Only 29% of new businesses survive more than 10 years. New businesses fail for many reasons including inadequate funding, incompetence, neglect, lack of interest in the marketplace, inexperience, natural disaster, legal problems, patent trolls and management issues. Surprisingly religious organizations maintain the highest success rate after the fifth year. Medical doctors and child daycares rank among the top five successful business ventures. At the other end of the spectrum, grocery stores, restaurants and trucking companies have the highest failure rate. New business ventures may avoid failure with these four tips.
- Develop a Marketing Strategy: Entrepreneurs should test the product or service for marketability. Do people want or need the product or service? Can the product or service turn a profit? Strategize ways to grow the business. Design a marketing plan to bring prospective clients or customers to the business. A new business should invest six percent or more of gross sales in marketing.
- Design a Business Plan: A business plan is required to approach investors. The business plan should include product or service contributions, financial projections, costs, information concerning the target market, a summary and a mission statement.
- Locate Investors: Lack of funding is a major reason cited for new business failure. An entrepreneur should consider all financing options. Acquire adequate funds from investors with a passion to see the business succeed. Listen to the advice of the investors. Investors and banks in the same region have gained valuable knowledge specifically dealing with new business ventures locally.
- Acquire Tax Planning Assistance: A small business must manage taxes to survive. New businesses are wise to invest in a good accountant. Penalties and interest on back taxes may result in business failure. If a small business cannot afford an accountant, proper tax planning software is a feasible alternative.
Photo courtesy of Business Earnings Market by Alex Skopje at Flickr’s Creative Commons.