Issue link: https://www.ascpskindeepdigital.com/i/1347398
48 the student edition Did you know only 50 percent of businesses survive past the first five years? There are several reasons businesses fail, but simply put: if business expenses exceed profit (over time), the business will fail. Let's identify four of the most common reasons small businesses fail and discuss ways to defy the odds of failure to create a successful long- term business. LACK OF CAPITAL Lack of capital covers three main areas: the lack of start-up funds, the lack of operating capital, and the lack of savings set aside for unexpected expenses. To remedy this pitfall, you should create an effective business plan and make sure you have enough insurance to cover emergencies, unexpected expenses, and potential lawsuits. Legal fees and defense costs can be substantial, even when you aren't found liable, and settlements can threaten your assets and future earnings. Protect yourself with individual liability coverage from ASCP. POOR BUSINESS PLAN An effective business plan identifies an opportunity in the market, recognizes the competition and barriers to entry, and details how the business will capitalize on the opportunity by a specific date. One major pitfall in most business plans is the overestimation Beating the Odds 4 common hurdles that prevent businesses from succeeding of the market opportunity. If you live in a town of 25,000, you cannot assume that you'll treat all 25,000. The most effective business plans identify the potential capacity of the business, and then plans the business operating costs according to the probable demand. POOR MANAGEMENT Poor management is the primary reason businesses fail. If you are new to the industry, it is good to partner with other successful business owners in the same or similar industries. Additionally, many professional skin care manufacturers can provide assistance and advice from their network of successful businesses. The Small Business Association offers complimentary mentoring and even has an Office of Women's Business Ownership. 1 POOR MARKETING Where are my clients? Answering this question should be your marketing goal. All consumers go through a marketing funnel of decision- making. First, potential clients need to become aware of your business. Next, they need to have an interest in your services. Through your marketing strategies, your potential customers can evaluate your business, and if by Drew Coleman they like what they see they will give your business a try, and then hopefully adopt your business—and become a regular customer. Each step in the marketing funnel provides the direction to which aspect of marketing you should work on next. If, for example, no one in your town knows your business exists, your first step would be to formulate an awareness campaign. Once awareness is generated, moving down the funnel will ultimately help clients adopt—or purchase—your products and services. There are several reasons businesses fail. At the end of the day, though, if you can gain and retain customers while keeping an eye on expenses, your business will defy the odds of failure and will succeed financially for years to come! Note 1. US Small Business Association, "Women's Business Resources," accessed January 2021, www.sba. gov/starting-business/how-start-business/find- mentor-or-counselor/womens-business-resources.