Learn From the Mistakes of Others

Photo by Becky McCray

Starting a business is a risky endeavor.

But knowing does not stop many small-business owners. Every day owners open the doors to their business. Some end up satisfied with the results but many others decide, at some point, to close the doors.

The reasons for such closures are often not a secret. Talk with any business owner who has been through it and they will often give you all of the details on what went wrong.

Yet, we often don’t take the time to listen and learn.

So what are some of the reasons that a business does not thrive.

Lack of homework. As noted here, owners don’t “look before they leap.” They don’t understand the risks nor have they checked out what the market wants. Quite often their motivation to sell something they have a passion for or what friends and neighbors tell them “everyone will buy one.”
Estimation of profitability. Is there a reality-based plan with true market potential, true and market-tested pricing, and a solid cost structure? The profitability start-up curve is often much longer than that planned. Estimate when you will make money and then back it up twice or three times as far.
Inadequate cash cushion. Everything takes longer than planned and costs more than expected. This is considered the number one reason why businesses close the doors.
Management issues. Know your strengths and your limitations. Get help where needed. Also, be sure to stay on top of the accounting. Don’t buy unneeded equipment. Rent or time-share or even barter for what you need. Buy used. When starting know everyday what your bottom line is.

There are no guarantees of success when you start your business. So why not give yourself the best possible chance. Learn what your biggest risks are and do everything you can to be prepared.

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About Glenn Muske

Glenn Muske is an independent expert on rural small business, working as GM Consulting – Your partner in achieving small business success. He provides consulting, and writes articles for county extension agents and newspapers across North Dakota. Previously, he was the Rural and Agribusiness Enterprise Development Specialist at the North Dakota State University Extension Service – Center for Community Vitality.