Research shows that 45% of new businesses fail during the first five years. So if you want to avoid that fate for your new company, being aware of the major challenges that you face before launching the business is really important.
That’s why we’ve put together the following article. It highlights seven major challenges that every new business must overcome in order to succeed long-term. So let’s get into it.
One of your first challenges is carving out a niche for your company. Why does it need to exist? What need is the current market in your area (or nationally) not meeting?
If you can’t answer that question, then it’ll be hard to build a loyal base of customers. When you offer the same services or products that all of your competitors offer, the success or failure of your business may come down to far you’re willing to cut prices, which isn’t what you want for a new company.
2. Client Dependence
As a new company, it’s also very easy to become overly reliant on one or two clients. These are clients you have an ongoing relationship with, they are predictable, reliable and contribute to a steady stream of cash flow. However, factors that affect their business, such as supply chain issues, could negatively impact your business as well if you rely to heavily on them.
Ideally, your company should never be reliant on any single client to achieve its revenue targets. The more of your overall income a single client makes up, the more risk you’re assuming because your business could fail if they leave.
That’s why it’s good to practice diversifying your income across many clients or customers as quickly as possible. Doing so will help you create a more sustainable company that can last in the long run.
3. Hiring a Strong Team
The employees you hire will play a huge role in determining the success or failure of your new company. That’s because they’re on the frontline, interacting with clients, making sales, and resolving your complaints. If they do those things poorly, it’ll be hard for your business to gain traction.
That being said, it can be difficult to hire a strong team of employees right away. This is something that you may need to build toward over time.
When you do get an employee that you value highly, be sure to treat them well because doing so will be key to keeping them at your company and benefitting from their services as long as possible.
4. Unexpected Closures
When it comes to running a business, you have to start expecting the unexpected. Issues like complicated moves, employee injuries, weather events, and other unforeseen hazards can create a situation in which your company needs to close for an extended period of time.
Many business owners wouldn’t be able to survive something like this because they have no backup plan in place and would fall behind on things like rent, employee payments, and other charges.
That’s why you may want to consider upgrading your income insurance to a more robust plan. Doing so will ensure that you have cash coming into your company in the event of an unexpected closure. That way, you won’t be derailed by the unexpected for very long.
Marketing a new business has become a more complicated thing to do as consumer habits and technology have evolved. It’s not enough to place an ad on TV or get your business featured in the newspaper, you need to reach potential customers online to attract a steady audience of newcomers to your brand.
That can be a difficult thing to do if you’re not experienced in the digital marketing industry. You’ll want to figure out SEO, social media marketing, email marketing, and more to get the most out of your budget that you can.
The good news is that you don’t need to figure all of this out at once. There are also tons of great online resources you can use to quickly pick up different digital marketing styles so your business can begin benefiting from them immediately.
Fatigue is another very real issue for new business owners. Starting a new company from nothing takes a lot of time and energy. Fatigue will often creep in as a result of that, and it could damage your effectiveness as a leader.
That’s why it’ll be important to focus on balancing work and rest – even as a new business owner. Doing so will help you maintain your energy levels for longer so that you’re able to consistently improve your company over time instead of burning out too quickly.
Finally, growth can be a difficult thing to achieve as a new business owner. Even if you successfully reach your target audience, you’ll still want to expand beyond that to continue progressing toward your long-term goals.
Digital marketing can help with this. You can also rely on word-of-mouth marketing from satisfied customers and potentially look into opening up a new location when ready.