One of the most known facts in the world of entrepreneurship is that 50% of businesses will fail. A recent study done by the Small Business Association (SBA) showed that 66% of businesses make it past the first two years, and only 44% make it past the first four years. One thing that is not so clear cut is why these businesses cannot survive. Through my experience I have seen that one of the many reasons that new businesses fail is that they cut corners in an effort to increase profits. Any person with a tiny amount of common sense can tell you that by reducing spending you will increase profits……but what is hard to tell is the difference between saving money and short changing your company. Below I will list some of the things where cutting corners should not be an option.
1. Building your dream team: You are starting your own company because you feel that you have a special talent or product that you want to offer the rest of the world. This specialty is exactly what you should stick to. Trying to be your own accountant, lawyer, or tax consultant can be very costly to your business. You will spend a couple hundred or a couple thousand dollars up front for these services, but 9 times out of 10 they will save you more money in the long run than your initial investment. They will also help your business make it through those tough start up years.
2. Having a good quality service or product: Your service or product is the keystone to your business. Using cheap materials, not training your employees correctly, not staying up to date in your field of expertise, and not having good customer service can all cause your company to fail. These are things that you will think you are paying extra for, but you will soon find out that they will pay for themselves. A good quality service or product will keep your customers coming back and will cut your work in half when it comes to bringing in new ones.
3. Designing a functional website: The world of today is ran by technology and the internet is a way that your company can go global instantly. Just having a website is not enough though, your website has to be functional and appealing to your customers. Once again, if creating websites is not your specialty then you need to spend some extra money to get this done professionally. This will be the first look into your business for a majority of your customers, and first impression is very important. If you have a product and you do not have an e-commerce site then you are probably losing a substantial amount of money. If you have an e-commerce site but hard to navigate then you will also lose revenue. This small up front cost will pay for itself and will help your company stay afloat.
This article only covers a couple of items that can affect your company’s survival. This link has some more items that you can use in order to keep your company afloat.
Also if anyone would like to share their experiences with how cutting corners caused problems within their business, please add your story below so that others can learn from it.