The Big Question: Why Do 50% Of Companies Fail Within 12 Months?

Research shows that around half of new companies will fail within the first twelve months.
That’s great news for the other 50% of firms because it means much of their competition disappears. However, it’s a terrible revelation for the people who started those operations. Most of them probably invested a lot of money into their business concepts. Still, they lost everything and find themselves back at square one.
So, why does that happen? Well, surprisingly, most firms seem to make the same mistakes over and over again. In the hope of helping you to avoid them, I’ve included some of the most common errors on this page. Read the information carefully, and then do your best to avoid these instances. If you do that, you will stand a much better chance of success with your new company.
Failure to seek enough investment
Lots of business owners end up going bust because they didn’t have enough money in the first place. That is why determining a budget and creating your business plan are significant moves. People who don’t seek enough investment will always struggle. You need money for marketing, wages, and more. Lots of new company bosses forget about that when they go to the bank. The solution is to ensure your business plan is watertight. You can do that by paying experts to assess the document. There are plenty of advisors out there who will willingly take a look at your plans if you pay for their time. The basic rule of thumb is that you should never rush into anything. You should also overestimate slightly. At the end of the day, it’s better to have too much money than not enough.
Failure to design an adequate marketing strategy
Many new entrepreneurs won’t understand the cost and complexities of marketing. With that in mind, now is the time to increase your knowledge. Sure, there are lots of free advertising tools available to companies today. The issue is that it takes a long time to use them to their full advantage. So, you have to consider the cost of hiring people to promote your brand. You can do that in-house, or you could use an agency like Jellyfish. There are also lots of marketing avenues for which you will have to spend money. If you don’t understand all the costs involved, you’ll never plan adequately. For example, you will have to launch a website and promote it using Google Adwords. You might also pay for real-world advertising strategies using flyers, leaflets, and more. Try to work out how much you will need to spend, and then double it.
 
Failure to purchase the right insurance policies
Regardless of your business model, insurance is essential. If you don’t have the right policies in place, you are going to get into trouble. That is the case even if your staff members sit in a safe office all day long. However, it’s especially vital if they spend their time in dangerous situations. If you run a construction firm, you would have to apply for many different types of cover. Experts from FMB Insurance say that getting all the different policies from the same company is the best way to keep costs down. Still, you might have to spend much more than you expect. So, it’s essential that you research the situation and add those costs to your initial budget. Working without the right insurance is illegal, so you should never do that.
Failure to offer competitive pricing
Like it or not, there is nearly always competition in all marketplaces. That means there is always going to be another company trying to steal your customers. You have to keep people loyal by making sure you offer competitive prices for everything. It doesn't take a rocket scientist to work out what might happen if you don’t do that. Your customers and clients aren’t stupid. Most are willing to pay slightly more for an improved service. However, if you offer them the same as another company for twice the price, you’ll never get their money. That is why market research is so important when creating your business plan. You need to understand how much you can charge for your products or services with your competition in mind.
As you can see from the information on this page, there are many reasons new businesses fail. Your job as the owner is to ensure you avoid all those instances. Now you have the right information; you should find it much easier to leave no stone unturned. Whatever happens, entrepreneurs just have to perform as much research as possible. Read hundreds of articles of this nature, and you might just get enough advice to succeed. Good luck!