If you run a small business, you are likely aware that many similar businesses are forced to close within several years of opening. For small businesses with employees, about 50% of those companies shut down within the first five years, according to research put out by the Small Business Administration (SBA).
Typically, there isn’t a single reason why small businesses fail. Instead, a number of factors all contribute in varying degrees to the success or failure of the company. External factors, such as the health of your local economy, can be difficult to mitigate. Internal factors, like the ones discussed below, are areas that you may be able to address.
Getting additional help with your small business can be one way to make your business’s survival more likely. Many entrepreneurs decide to seek the expertise of professional employer organizations (PEOs) to make HR and accounting functions easier. Call (678) 376-1212 or put your business’s contact information into the sidebar arrange a call with NetPEO’s brokers to learn more about what a PEO can mean for your business’s survival.
Failure to Diversify Your Client/Customer Base
When your business is starting out, you may only have a small base of clients or customers. While this is a normal reality for most businesses, some companies find themselves leaning heavily on one or two clients for the majority of their revenue. Businesses relying on a limited pool of clients will find themselves bending over backwards to meet the needs of those clients and can struggle to adapt when the clients’ needs change.
Not Having a Proper Business Plan
Starting a business requires passion, but that doesn’t mean that you can go into it blindly either. A business plan allows you to assess what will be necessary for your business to succeed. This means having plans for how your business will work and have contingencies in place for difficulties your business is likely to face. If your business isn’t properly planned out, you can continuously find yourself scrambling to recover instead of moving on from issues.
Assuming the World Will Find Your Product or Service on Its Own
One key aspect of your business plan should include determining how you’ll let the world know about your product or service. While you may hope that what you have to offer will be spread by word-of-mouth, this is almost never a viable business model. You will need to be open to marketing, even if the idea of self-promotion feels awkward to you. If you can’t get the word out about what you have to offer, you likely won’t be able to sustain your business for long.
When you hire employees, you are letting other people take some of the responsibility for the smooth operation of your business. For some owners, letting others handle key tasks for the business can be an anxiety-inducing idea. However, constantly monitoring employees and not delegating tasks to others in one surefire way to reduce business efficiency can lead to both employee and owner burnout.
Getting the Wrong Employees
While some business models work as sole proprietorships, many companies truly succeed when they can take on an increasing number of employees to meet client demands. Finding the right employees can be a time-consuming process, especially if you don’t have a background in employee recruitment. You may be tempted to hire your friends or family, but that isn’t always in your company’s best interest. Your company will require employees with the right skills to thrive or you may find your business closing its doors permanently.
Turn to a PEO for Expertise in Areas Where You Struggle
Your passion for your product or service doesn’t often directly translate into the skills and knowledge to perform all the necessary functions to run a successful business. HR and accounting functions are some of the most common areas for small business owners to struggle with. Getting help with these functions from a PEO is a solution that works for many small businesses.
Research from the National Association of Professional Employer Organizations (NAPEO) suggests that partnering with a PEO is an excellent way of helping your business survive. Businesses that partner with a PEO are less likely to fail, have better employee retention rates, and experience growth at rates higher than similar businesses that try to operate on their own.
To speak with an experienced PEO broker who can help you navigate the process of finding the right PEO, call (678) 376-1212 to schedule your free consultation.