A majority of new small businesses in California will fail within the first few years. A whopping 75 percent of startups that receive venture funding fail. Most other types of small enterprises fail within the first 10 years after opening. There are multiple reasons that small businesses fail, and entrepreneurs might avoid these problems with careful planning.
The leading cause of small business failure is a product that does not fit its market. Business owners should conduct market research to determine what consumers in the market need and what type of products might help them solve different problems. Another issue that can lead to business failures is the use of the wrong types of marketing channels to advertise the products.
Business owners and entrepreneurs also should take the time to create ideal customer profiles. This can help them target their marketing efforts more effectively and concentrate on identifying consumers that fit their profiles. Establishing strong training programs for sales personnel also is important. If the sales team is poorly trained, they may not be able to drive sales, which can harm the business.
Some new entrepreneurs and small business owners rush to start their enterprises without employing careful business formation and planning strategies. When they do so, they are much likelier to fail than if they took the time to conduct in-depth analyses and planning. Entrepreneurs might benefit by getting help from experienced business and commercial law attorneys from the initial planning stages. Lawyers may help by conducting due diligence and research so that their clients are better informed about their potential markets and the feasibility of their products. Attorneys also might offer legal guidance that can help their clients avoid potential setbacks and problems. Finally, lawyers may help their clients choose appropriate corporate structures for their businesses.