In the era of budding entrepreneurship, an increasing number of people are taking the leap into setting out on their own and starting a small business with a dream of creating something great. Unfortunately, it’s only a matter of time before these trailblazers are confronted with the sad state of small business development in Australia and are discouraged to avoid becoming another ‘statistic’.
According to the Australian Bureau of Statistics (ABS), over 60% of small businesses terminate inside of their first 3 years of operating. It’s a terrifying figure and it’s one that’s thrown at every brave soul who strives to begin their business venture.
So why is this happening?
Greg Hayes, from Hayes Knight Accountants & Advisers, weighed in on the topic and stated,
“One of the key reasons [for failure] is that many small businesses start with a bad idea – an idea that was never going to work. But one of the biggest reasons for failure is a lack of capital. It’s a common story that many people go into business under-capitalised and they just run out of money. There’s also the issue of a lack of proper training. They get carried away with an idea but don’t think it through, they have no clear strategy and they get very much caught up in the day-to-day of what the business requires but pay little attention to long-term plans.”
But where exactly are these small businesses going wrong? CB Insights analysed start-up post-mortems and identified the top 20 areas where they went wrong. Here are the top 10 reasons from that study:
- No Market Need (42%)
- Ran out of cash (29%)
- Not the right team (23%)
- Competition (19%)
- Pricing/Cost issues (18%)
- Poor Product (17%)
- Lack of/poor business model (17%)
- Bad Marketing (14%)
- Ignore Customers (14%)
- Lose focus (13%)
The stats are harsh, but that’s the reality. However, that shouldn’t stop entrepreneurs from going out and achieving goals. Isolation, lack of proper planning and low accountability are enough to stop any successful business dead in its tracks. Thankfully there are tools out there to help you and your business thrive in this difficult landscape. Connect with other like-minded business owners at a coworking space or virtual office, enrol in a small business workshop or support program and find the right resources that are designed to give you a leg up.
Small business is tough we know, and that’s why we’ve developed START21. A support program designed to help you succeed with the 21 key steps necessary to create a healthy and sustainable business. Learn more at one of our discovery sessions.