Starting your own spa or massage practice or managing one for someone else is a challenge many seek. It’s exciting to take a business from ground zero and manage its growth over time. But the sad reality is that many businesses don’t make it long term. In fact, only about half of all establishments survive five years or longer, according to the U.S. Small Business Administration Office of Advocacy. Only one-third of establishments survive ten years or longer.
Many factors can affect why a business fails. In some cases, the owners may decide they want to do something different. A partnership can dissolve and cause a business to flounder and eventually fail. Market conditions change, and some owners may not respond quickly enough or have enough capital or expertise to meet changing customer demands. The competition steps in and takes over.
Although business closure factors vary, when you look closely, there are several top reasons businesses fail. Here are some of them:
Poor management: There are many things to handle when you run your own business or manage someone else’s, including hiring and managing employees, finances, marketing, and negotiating with suppliers. Most are not proficient in all these areas but often fail to own up to their deficiencies, which can be an organization’s undoing. If you lack expertise in an area, hire competent professionals, whether internal or outsourced, who can help you or get appropriate training.
Lack of planning: Having a business plan is critical. It forces you to analyze the various aspects of your business. Also, since it is based on accurate and current information, you will be better able to see if your projections for growth add up. A thorough plan should include your vision, an analysis of the market and competition, required team members, financial needs, and a marketing and promotion component. Your plan also should have a budget that projects one, three, and five years. As part of your plan, assess your challenges and opportunities. As you identify your challenges, strategize how you plan to resolve or meet them.
Lack of strong online presence: In today’s business environment, you need a website so that prospects can find you online; you also need a social media presence. Your website, optimized for a mobile device, needs to provide information about your services and your value proposition from a competitive standpoint. A strong social media presence will enable you to engage with clients to answer questions and provide updates on your products and services.
Grow too fast: When things are going well, there’s a tendency to want to redouble your efforts. You may think about taking on more space, partnering with another individual or business, and expanding services and product offerings. Growth is essential, but so is timing. You may not have the bandwidth and resources to keep both going, and eventually, it can cause your business to flounder.
These are just some of the more common reasons businesses fail. It’s important to periodically review your business plan and make the necessary changes to keep moving forward. Plan for the future but always keep your eye on the day-to-day running of your business.