Each year thousands of businesses fail, mainly because the owners never research and planned their business in detail. The variety of reasons for failure can be broadly summed up under the following headings. Take note and make sure you don't make the same mistakes.
Wrong location
In retailing, location is paramount. The world will not beat a path to your door simple because you have the 'right' product or service at the 'right' price.
Do not be tempted, as many other small business people have been, to take premises because the rent or purchase price is low or because you like the area. Your location should be chosen carefully in relation to acces to your markets.
Little or no knowledge of the size of the market
Don't commit the cardinal sin of assuming that just because you think the retailing idea you have thought up is a good one that everyone else will think the same and rush to become your customer! Many new hopes fail simple because the market is just not big enough to provide the necessary custom.
The market you intend to serve might be contracting rapidly, be too competitive, or, for all intents and purposes, non existent. Opening a shop without researching the market is similar to taking a job without asking how much you will be paid.
Little or no knowledge of their customers' buying motives
Many shops appear to have little idea of the type of customers they are serving. The result is the business cannot have any sales promotion / marketing strategy and may actually be unsure of what type of business it is in.
For instance a business selling clothes on price, when its market holds quality and reliability as its main considerations, will not maximize sales from that market. To keep the importance of this point in the forefront of your mind define your business in terms of its customers.
No systems or policy for selecting, training and managing staff
Few who enter small business for the first time have had experience of selectiong, employing and managing staff, therefore, it is hardly surprising to find that many small businesses make costly mistakes in this area.
One dishonest or poorly trained employee can cost you all of your profits. Remember that, in generating and keeping custom, your most valuable asset will be well-trained sales staff.
Failure to keep records
Ask any small business person questions such as, 'How do this month's sales figure compare to last month's?' or, 'How much profit did you make this month?' and the likelihood is that the majority would not be able to give you an accurate answer.
The reason for this is that the have either not kept up to date with their records or don't have a proper and useful adminstration system. A shop founded and operated on this basis has little chance of success.
Without basic accounting information, your business could be nearing failure without you recognizing the problems until it is too late. In particular, retail businesses are prone to failure through theft of stock eroding profits.
A good stock control system is needed not just to closely monitor and control stock loss, but to give accurate sales information to enable you to buy in the right goods at the right time.
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