If you’re looking at the prospect of starting your own business, then the two-year point is the first hurdle, where a fifth of all businesses will fail. That can be a pretty scary statistic but this isn’t a post to scare you off the idea of starting your own. Instead, we’re going to look at some of the most common causes of failure, especially of new businesses, and what you can do to manoeuvre them. Here are a few tips to help you strengthen your chances of success in your field.

Getting into an unresearched market

One of the ways that many businesses fail is by hitting the very first hurdle, getting into a market with a new product or service without getting any idea of whether it’s viable for the market or not. There are plenty of ways to do market research, and any of them is better than going in without any preparation at all. You need to have a good idea of your competitors, the market share you could potentially get, how to position your brand against others, and more. Markets differ depending on the niche and geographic location as well, so you need to get specific with it.

Not having an idea of the day-to-day operations of the business

Before you start, you need to have a basic idea of how your business is going to run when you start it. You need this because before you can get anything done, you’re going to need resources, equipment, and goals. You can’t start running a business until you have an idea of what that looks like and, if you try, you’re going to spend a lot of time figuring out what it is you should be doing and not making any money in the progress. How do you get the idea of the day-to-day operations that you need? You need to create a business plan, of course.

Failing to manage your finances

While you can rely on an accountant and a bookkeeper to help you keep on top of the money matters in your business, you can’t leave it to them to do all of it. Every business owner should have an understanding of their money situation, as it will directly apply to their goals and the ability to meet them, how much product they should be looking to shift, how much they can invest, and more. Simply put, if you don’t put time into managing your finances, you are giving yourself a bigger chance of being blindsided by a financial problem down the line. You’re also much less likely to spot the red flags of financial trouble in time to do anything about them.

Not getting the finance that you need

A slightly different problem from the previous point, not getting the finance that you need can be just as damning to your brand but for different reasons. If you don’t have a good idea of how much funding or working capital your business needs, it can be very easy to get into a business without the right cash to fund it. The first thing that you need to do is to make sure that your business plan includes an itemized account of how much money you need to keep the business running until it can start earning enough for self-sustenance. Then you need to look at the methods of funding that are available to you and do not start your business until you’re able to use one of them.

Treating every question as new

If you look at every challenge or problem that faces your business as if it is a completely new problem, this can be a good and a bad thing. Sometimes, thinking outside the box around a certain problem can allow you to discover new, innovative, and better ways of doing things. However, sometimes you could be spending time and energy poring over a question that already has a time-honoured solution, wasting your productivity when you could be spending it elsewhere. To avoid this problem, don’t go it alone. Make use of guides to help you start, run and grow your business. Use the wisdom that is already there to help you answer the most basic and ubiquitous questions so you can use your brain for other issues.

Not being up to date with the trends in customer behaviour

There are too many stories of entrepreneurs who had good business ideas but failed to get them off the ground because they had a disconnect with how customers actually operate. This could include the online service that doesn’t run a social media account, the business that doesn’t use multiple payment portals for their online point of service, or the business that fails to offer any way to find customer service online. Keeping your finger on the pulse of customer behaviour is important. Reading business blogs and connecting with businesses on social media can help you catch up if you need to, but in order to stay razor-sharp, using customer feedback systems can help you get the info direct from the source.

You haven’t done enough research into your marketing plan

While it’s only one part of the business, the marketing plan is a crucial piece of planning that’s going to help your business get before the eyes of the people that you want to convert into customers. It is, effectively, your plan to sell your products or services, including your niche, your brand identity, the pain points that you want to hit in your marketing, and how you’re going to market your business at all. You should do research on what is likely to be the most effective methods of marketing before you start up your business, and create a robust marketing plan that you can follow easily once you’re up and running.

No plans to scale

What is it at the two-year point that many businesses seem to have trouble with? Those that don’t make it to this point due to the foibles above can still make one critical mistake: they haven’t made any plans to scale the business. If your business lasts two years and is able to successfully grow, then you’re likely to have enough momentum to expand it, bring your products and services to even more people, and reach the next level in running a business. However, many businesses fail to plan to scale, which means they can miss their opportunity and this can even sometimes mean they aren’t able to meet the demand of the market, which can lead to other competitors swooping in to take their place.

You don’t know what you’re doing right

There are plenty of things you can do wrong and if you’re not able to get any insight from them, that can be trouble in and of itself. However, you can be in just as much trouble if you have no idea what you’re doing right, as well. When you get it right, you want to be able to replicate it. To that end, you should make sure that you’re capturing performance data for your internal operations, as well as for analytics for your marketing. This way, you can develop much keener insights on where you’re going right and what you’re doing wrong to keep sharpening your business.

Poor management or leadership

This might be a bitter pill to swallow, given that, in those early days, all the management and leadership in your business is likely to come from you. However, if you are putting yourself in a position as a manager or a leader, then you need to make sure that you’re the right fit for the job and, if you’re not, you need to become it. This can mean investing in real leadership and management training to ensure that you’re doing the best you can. Managers who misunderstand their workers’ day-to-day and leaders who fail to inspire or set the direction for their team are both going to fail to get the productivity and motivation that they need from their team.

Hiring the wrong people

As a business owner, you’re going to need to learn how to not do everything yourself (as failing to do so can indeed be another risk factor of business failure), whether that’s by outsourcing or by hiring. When you hire people, your choice of employees can have a huge effect on your business. Salespeople who are bad at sales are going to slow your acquisition of new customers, while highly-motivated and confident salespeople are likely to actively bring in more customers than you would otherwise. Putting together a comprehensive recruitment process is a must for your business, to ensure that you have a set method that helps you get the best people on your team.

Adaptability and the ability to look into the insights of others and their past experiences are both crucial skills if you want to make it in the business world. Hopefully, the tips above can help you imbue your own fledgling business with them.

Disclosure: This is a collaborative post.