5 Reasons for failure in Australian Small Business
As a small business owner, you’re likely aware of the facts about small businesses and Australia’s high business failure rate. 60% of enterprises fail during the first 3 years, and half of those that fail are profitable.
Although these are grim figures, it’s vital to remember that, as a business owner, you can take a number of measures to ensure that your company survives and develops rather than fails like so many others.
That is why we have compiled a list of the main reasons behind Australia’s high business failure rate… so that you can prevent these blunders in your own company!
Inadequate due diligence while starting a business or purchasing an existing one.
It might be expensive to enter a business without doing your research. Enthusiasm and excitement frequently take precedence over careful thought and planning. Given how simple it is to create an online business, it is clear that there has been a lack of strategic preparation and thought.
These are a few questions that are frequently overlooked before a business launches:
- Did you comprehend what you were committing to?
- What issues did you not foresee when you looked at the chance of running a successful business?
- Have you looked at the idea from all sides?
Poor Financial Management
Ineffective management can ruin a business’s finances more than anything else! This significant issue contributes to Australia’s high percentage of business failures. However, any firm, especially a small one, needs a solid financial foundation to succeed. You should outsource this if you don’t understand accounting, bookkeeping, or financing. Although you don’t need to hire a professional bookkeeper, you should have one on board to ensure everything is operating well.
As a result, you may better understand your finances and make decisions for your company that will benefit it.
Inability to repay debts
No matter how big or small, every firm has this ongoing problem. Businesses that try to use the money they don’t now have to finance future expansion put themselves at risk.
This dilemma affects some industries more than others. The most vulnerable are service providers and tradespeople, who are paid after completing a job. Nobody enjoys a consumer or client who doesn’t pay. As part of small business training, strategies for dealing with debtors must be in place.
Poor record keeping
It would be like trying to drive a car while wearing a blindfold if proper business records weren’t maintained to allow knowledge of how the company was operating. It should be evident that businesses that do not keep accurate records cannot address this issue in a useful manner.
A successful small business needs to have well-defined financial objectives and be constantly aware of how those objectives are being met. The only way to do this is to provide weekly and monthly financial reporting. If you don’t know what you need to earn to support yourself and the bills, it’s very simple to slip into difficulty.
No online presence.
Before, you might have gotten away without needing a website or a consistent stream of updates on social media, but that strategy is no longer effective. You must now have a website and online presence if you wish to prosper. That excludes even eCommerce and other internet sales channels.
Small business owners must invest time in planning and presence to ensure that their company is successfully operated and readily available to clients. Don’t undervalue this step’s significance or worth!
To sum up, small business owners must invest time in planning and presence to ensure that their operation is efficient and open to clients. Debt Free Australia is available to answer any queries and provide you with more information. Call us at 1800 676 598 to get in touch.