According to the Small Business Administration, one-third of new small businesses close within two
years, and only about half survive at least four years. Here are six reasons small businesses fail:
-
Poor (or no) business plan. You need to plan for every stage of the business cycle:
starting out, growing, maintaining and succession planning. Plan for seasonal demand,
business cycles and economic downturns. Although you may need to update your plans as
your business evolves, having a blueprint and contingency plans will make it easier to
adapt to changes.
-
Inadequate credit arrangements. Some business owners borrow money from friends
and family to start their operations. That can lead to relationship conflicts.
A business banker, on the other hand, is an objective professional who can help
you evaluate your plans, monitor your business's growth and arrange for the
credit you need to cover start-up costs, ongoing expenses and expansion.
-
Underestimating the competition. No matter how successful you are, you always need
to be aware of what the competition is doing. Someone is going to try to do it
better, faster, cheaper – your goal is to stay one step ahead by continuously
exploring ways you can improve and enhance your products and services.
-
Lack of strategic pricing. If you set your prices too high, you’ll lose business
to the competition. Too low, and you won't cover your costs or make a profit.
Research the competition and, if necessary, hire a consultant to help you position
your pricing. A marketing consultant may also be able to help you effectively
advertise your business.
-
Mismanagement. Small business owners are sometimes driven, entrepreneurial types who
don't like handling day-to-day details. This becomes particularly troublesome when a
business starts to grow beyond the ability of one person to manage every aspect of it.
If you don't like supervising people or juggling inventory, or if your business is
growing too quickly for you to keep up, hire competent and trustworthy managers.
Then you can devote yourself to the area of the business you enjoy most.
-
Tunnel vision. Don't become so focused on your great idea that you fail to see things
from your customers' point of view. Pay attention to what people are buying. Ask customers
for feedback through surveys, marketing campaigns and even face-to-face. If you're providing
caviar and your customers want hot dogs – or vice versa – your business may suffer.
Need an expert to discuss your business needs with?
Call
866-934-5136 to speak with a
Sunmark Commercial Relationship Manager today.
Congratulations, you're starting your own business! While you may already have the business model in
place, you may not have considered some of the details that you'll have to take care of - official
documents, insurance, payroll, and all the other paperwork that you may never before have encountered
in your more specialized roles. Below are some resources to help you get started with the little
things - so that you can spend more time focusing on developing your business (which is probably why
you're starting in the first place!).
http://www.sba.gov/
The mission of the U.S. Small Business Association (SBA) is to "help Americans start, build and grow
businesses." A "Small Business Planner" on the Web site contains resources on planning, starting and
managing your business – as well as how to close the business when the time comes. You'll also find
resources on a variety of topics from finances to online trainings, plus search for your local branch
of the SBA.
Chambers of Commerce
Check with your local Chamber of Commerce, which provides networking opportunities, cost-saving benefits, health insurance and other resources for members. Local chambers include:
Adirondack Regional Chamber of Commerce:
www.techvalleynorth.com †
Albany-Colonie Regional Chamber of Commerce:
http://acchamber.org †
Bethlehem Chamber of Commerce:
www.bethlehemchamber.com †
Colonie Chamber of Commerce Inc.:
www.coloniechamber.org †
Guilderland Chamber of Commerce:
www.guilderlandchamber.com †
Montgomery County Chamber of Commerce:
www.montgomerycountyny.com †
Rensselaer County Regional Chamber of Commerce:
www.rensochamber.com †
Saratoga County Chamber of Commerce:
www.saratoga.org †
Chamber of Schenectady County:
www.schenectadychamber.org †
Schoharie County Chamber of Commerce:
www.schohariechamber.com †
Chamber of Southern Saratoga County:
www.southernsaratoga.org †
http://www.tax.state.ny.us †
The NYS Department of Taxation & Finance includes all tax forms you'll need to
start and file for your business. If you’re starting a business in another state,
check out their similar departments.
http://www.irs.gov/businesses/small/index.html †
The IRS's "Small Business and Self-Employed One-Stop Resource" provides financial
information for starting and running your small business. Not sure which expenses
are deductible, or how to transition to a business with multiple employees? This
site will provide you with the guidance you need.
http://www.newyorkfed.org/education/addpub/credit.html †
The Federal Reserve Bank of New York presents "The Credit Process: A Guide for
Small Businesses." This site details types of financing, as well as how to prepare
a business plan and loan request.
http://www.nysegov.com/citGuide.cfm?superCat=28 †
New York State's Business guide contains resources on a variety of topics,
including taxation, incorporation, and women- and minority-owned businesses.
Business Accounts and Financing
Every company needs financing. Some institutions, like Sunmark, offer commercial insurance
and merchant services products to go along with their commercial accounts.
Insurance
Whether you need to insure your equipment or the building you’re working in, you’ll want to
talk to a professional about insurance.
Investment Advisor
If you’re setting up an investment plan for employees, you’ll want to consult an advisor
who can help participants and make sure you’re choosing a plans best suited to your needs.
Lawyer
You’ll need someone to draw up – or at least look over – legal documentation for starting your company.
Marketing Plan
In order to take a loan out to start your company, you may be required to show a business
model, including a marketing plan, in order to secure funds.
Payroll Services
If it’s bigger than a one-(wo)man show, you may want to contact a payroll services company
to handle payroll.
Printer
Find a local printer who can provide the basic letterhead, envelopes, and business cards
to start out. They should also be able to handle things like labels, flyers, or other
promotional materials. Many offer creative services for an extra fee as well.
Tax Advisor
As a new business, you may want to consult a professional for help with your taxes.
They’ll help you with all of the proper forms and make sure your paperwork is filed correctly.
Other Local Resources
Contact your local Chamber office or a local business leads group, such as Capital District
Business Leaders (
www.cdbl-online.org
) for other companies that offer resources in the area,
whether it be for legal, financial, marketing, health or maintenance matters