In our last post, we went into depth about how employee theft affects small business owners. As such a pervasive and common threat, business owners of all industries need to take a closer look at who they are hiring and the processes that are in place. While we don’t want to dampen your spirits, it’s also important to note the other major contributing factors to why businesses fail. Entrepreneurs may have the drive and idea to succeed, but without understanding the common flaws, they can become yet another statistic. Therefore, let us take a closer look at the common reasons small businesses fail. More importantly, ensure your operation is secured with an Indianapolis General Liability Insurance policy.
The numbers don’t work.
If there isn’t enough demand to turn a profit, your business simply cannot be successful. If there is a major competitor, such as a big box store, crunch the numbers and the business plan before going full force into the market.
Owners who are their own worst enemy.
Some owners cannot get out of their own way. They may be stubborn, risk averse, and conflict averse — meaning they need to be liked by everyone (even employees and vendors who can’t do their jobs). They may be perfectionists, greedy, self-righteous, paranoid, indignant or insecure, explains The New York Times. There are also plenty of business owners who will not accept criticism and feedback so growing isn’t possible.
Growing too fast, too soon.
There’s nothing more satisfying to a business owner than getting a second or third location. However, your success should not translate into overexpansion too soon. First, make sure you have the resources, cash cushion, and staff to open another store efficiently without creating an endless money pit.
No cash cushion.
While the recession might be “over,” life happens and you can’t always predict every potential financial disaster. From a new competitor to a crashing economy or a hefty lawsuit, there are so many reasons that your business should keep a healthy cash cushion in reserves, just in case.
Paying too much for labor, goods, rent, or materials can not only minimize your profit, but also cause major issues within your small business. Negotiate terms that are reflective of the economy and that will allow you to turn a healthy profit.
About Walker & Associates Insurance
If you’re not sure if your insurance is sufficient, it’s smart business to have your risks evaluated by professionals you can trust. Since being founded in 1960, Walker & Associates has embraced a “service is first” philosophy. Our team is focused on ensuring that each client receives individualized guidance to preserve their assets and control their expenses. Our strong relationships with international, national, and Indiana insurance companies allow us to negotiate the best coverages, terms, and pricing for our clients. Contact us at Walker & Associates Insurance, (888) 760-7292, for all of your business and personal matters.