About 50 percent of new businesses will fail within five years for common business problems.
As an entrepreneur, this stat makes starting a successful business look like a toss of the coin. There are only two possible outcomes: head or tail, failure or success and look forword the common business problem.
Table of Contents
- What is Common Business Problem
What is Common Business Problem
However, opening a thriving business doesn’t have to be a thing of chance. There are known problems most new businesses encounter, so if you can learn how to overcome them, you’ll give your business a great shot at success.
Ready to learn more about common business problem and how to solve them?
For any business to make money, it must sell a product or service and this is the common business problem.
Some businesses hit it off as soon as they launch, but in most instances, it will take several weeks or even months before sales start to pick up.
Unfortunately, sales won’t keep rising forever. Soon enough the number of orders will remain stagnant or even start to decline. This is a common business problem. Almost every entrepreneur will face it.
How do you solve it?
Some entrepreneurs in this position make the mistake of investing in an aggressive marketing campaign. Don’t be like them!
Start by understanding the reasons your sales are declining. Is there a better product or service on the market? Is it because your customers are having a bad experience? Is your offering priced too highly?
Only when you know what’s behind the falling sales can you implement an appropriate corrective measure. If most customers are saying they can no longer afford your product, for instance, a price adjustment might just be enough to get that sales engine revving again.
Three things are certain in life and common business problem: death, taxes and, well, uncertainty.
As an individual, you don’t know what awaits you tomorrow. Perhaps you’re going to hit a jackpot. Or you’re going to breathe your last.In business, there’s economic uncertainty. As much as economic analysts will give fairly reliable forecasts, life has a way of pulling surprises.
The COVID-19 health crisis is a good example.
Prior to coronavirus, not many people thought a health issue can cause severe economic impacts, but here we are. With stay at home orders being effected in the United States and beyond, businesses are feeling the pinch. Scaling down operations or even shutting down is now the order of the day.
How do you overcome the challenge of economic uncertainty? Proper planning.
Embrace the fact that the economy will not always be thriving. Economic downturns and recessions will come.
This way, you’ll plan your business’s finances accordingly. Think of economic uncertainty as a business’ rainy days. When the economy slows down, you don’t want to be in a situation where you need to make sales to keep the business open.
Cash Flow Problems
Of the businesses that fail, 82 percent hit the rocks because of poor cash flow management.
Every day, there’ll be money coming in and going out of your common business problem. Every business strives to ensure the cash flowing in is more than the cash flowing out. This is the only way to make a profit.
Unfortunately, achieving and maintaining positive cash flow is easier said than done. Especially in the first couple of months after startup, you’ll find that your expenses outweigh revenues. This is normal because you have to set up an office, invest in marketing, and hire some people before the sales pick up.
However, this doesn’t mean you exercise improper cash management.
You need to stick to your business plan
Avoid spending business money on non-essential items or services. Those fancy pieces of furniture and appliances can wait. Focus on ramping up your revenues before you can start spending on things you’d consider a luxury.
Also, hire a financial specialist as soon as possible. When you have trained hands on the financial deck, it’s easy to avoid making money mistakes that can cost your common business problem.
Changing Government Regulations and Policies
The government has a responsibility to create an enabling environment for businesses. But you’d be living in utopia if you believed that the government doesn’t screw up businesses.
A single regulatory change can kick you out of business.
Let’s say you run a small company that manufactures parts for internal combustion engines. Then, the government declares that all vehicles in the country should be electric by a certain time. Unprecedented, yes, but not unreasonable, especially when you throw climate change in the picture.
Just like that, your parts manufacturing business will have no future, unless you pivot to manufacturing parts for electric motors. This means going back to the drawing board.
Although changes in government regulations and policies don’t typically have adverse effects on businesses, you have reason to worry if you’re in one of the heavily regulated industries, such as pharmaceuticals and healthcare, oil and gas, food service, and finance.
To stay ahead of this potential challenge, ensure you have the services of a business lawyer at your disposal. They will help your business prepare for regulatory disruptions while staying compliant.
Did you know a data breach will cost your business over $3 million?
Ok. Perhaps you’re now thinking that your common business problem is too small for hackers to give a hoot about it. Well, 43 percent of cyber attacks target small businesses.
A hacker doesn’t just want to deface your website or lock you out of your computers. They want to steal crucial data and hold you at ransom.
There are two ways to solve the cybersecurity problem.
Maintain a 100 percent offline operation, which, unless you run your business under a rock, is impossible.
This leaves you with one option: beef up your cybersecurity. Hire an in-house cybersecurity pro to lead your business’ charges.
Common Business Problems Solved!
Starting a business is an exciting journey, but it’s not without its fair share of roadblocks. We’ve fleshed out some of the most common business problems and what you can do to solve or avoid them. You now have a greater chance of making your business successful.
Keep reading our blog for more small business insights.