As mentioned a bit earlier, at least 80% of new businesses fail within their first year of being open. There are many reasons why businesses tend to fail, and it is best to list them here so that you can try to avoid making these common mistakes when you open your retail business.
Many new businesses fail to advertise properly. It wouldn’t occur to most business owners that insufficient advertising might cause a problem with keeping their business afloat, but during tough times, advertising might be your best weapon.
When the economy is running badly, you should have enough money put aside to advertise special promotions and sales to your customers. When you do advertise, you should try to be everywhere. You want people to see your businesses name no matter where they turn. Here are some of the ways that you can advertise to ensure that you cannot be forgotten.
You should know that these do not have to cost you an arm and a leg. Commercials can be costly, but these others don’t have to be. Running a website can be free or cheap, and the software to host your own online store can also be cheap or free. You just need someone that can keep track of orders for you.
Improper advertising can leave the community not knowing that your business exists; especially during hard times. You want to stay available to all of your customers because if you disappear from view, so will your customers.
Improper book-keeping
It doesn’t matter what you do to keep your business running at its best. If you do not keep proper track of your money’s coming and goings, you will eventually be left with none.
If it is at all possible, do your own book keeping so that you know exactly where your money is going. If you do not know much about it, you should hire someone that does, but also someone that you can trust. If you must, hire someone just to watch the book keeper so that you don’t get ripped off.
As the business owner, you need to know exactly how much money that your business has. You should know exactly how much profit that you are gaining each month so that you can use your money wisely. It is not always easy to keep track of all of your money, especially if you are generating a lot of business, but it doesn’t have to be impossible.
Even with a good book keeper, you should look into popular accounting software like Quark Express and Microsoft Money because they do most of the work for you. All you really have to do yourself is add the right numbers and let the software add and subtract for you.
Every year many businesses go under due to bad book keeping. They spend money they don’t have or they make errors processing payroll deposits. Don’t let that happen to you.
The worst thing that a business owner can do is to run it on too much credit. Each day it gets easier and easier for new businesses to gain credit accounts and credit cards from various companies. All too often, these companies run up more credit than they can repay.
It just goes to say that you have to live and run your business within your means. All too often business owners find themselves buying things that the business simply doesn’t need. They also buy things for themselves on company credit. This is a big no-no in the business world.
Once a business spends too much money on credit, they learn all too late that the interest rates on credit cards can force hundreds of extra dollars in expenses. New and small retail businesses just can’t afford to pay them. There is also the fact that over buying supplies and merchandise can be a far bigger problem than businesses expect.
Over paying employees can run any business into the ground if they are not keeping up with their regular expenses properly. Any successfully run business owner knows that you start off small, and hopefully build your way up. That is impossible if you are living and running your business above your means.
It is impossible to succeed at business if you open your business in a bare market. You do not want to choose the wrong time to host a grand opening. If you are trying to open your retail business during a depression for example, you will undoubtedly fail unless it is a dollar store that you are planning on.
Even a dollar store can fail under a depression because they rarely sell anything that is essentially needed. Some things they do sell are needed but most are simply knick knacks that are of little importance.
As a budding entrepreneur, you will have to keep up with economic trends. These days, the economy is constantly changing. You should avoid opening your retail business during an economic collapse. If at all possible you want to open your business during a steady economic period or when your market is on the rise. That is not always possible, but you must try.
It is really common sense, but many companies have a tendency to over charge their customers. It sounds like an easy thing to avoid, but sometimes, a business owner might have to charge more money for their wares because of financial difficulties or tax problems.
Many business owners take advantage of adverse economic situations and over charge as a means of capitalizing off of the consumers desperate needs. This can be devastating to any business if others aren’t doing this or if the demand just doesn’t meet the standard that the owner might have predicted.
You would be surprised at how often a business owner fails to properly deal with the taxes on their goods and property. It would seem to be an easily dealt with issue, but the unseasoned proprietor can easily fall prey to the IRS.
Poor calculation can be a costly problem, but failing to properly fill out your tax forms, and missing valuable monies can be a problem as well. Sometimes it is simply an issue of filing your taxes late. Keeping up with your fiscal year’s end can be frightfully easy to forget. A good accountant is a need to avoid common tax problems like these and others.
It is very easy to fall into the common problem of choosing a poor location for your retail business, but it happens every day. Businesses that open in a hard to get to area often find themselves without customers, but this is not the only problem with location.
Sometimes a business can be greatly situated but be poorly accommodated. Basically, this is when a proprietor buys or leases a damaged piece of property. Sometimes a person can be in such in a hurry to garner the property that they fail to see its flaws. This can run up a lot of debt in trying to salvage it.
You should always try to ask why the business that was there before you went under. Whoever the realtor is sure to know the details. If they don’t I wouldn’t trust that realtor. A failure to keep any piece of real estate is a common problem of the inexperienced proprietor.
Before you agree to take on any property, you should have knowledge of the property’s background. You should have someone with you that knows the basics of plumbing and all of the other property damage that the average person cannot see.