Out of the thousands of businesses that started in 2012, almost half failed by 2015, according to the Australian Bureau of Statistics. This fact paints a rather bleak picture of the chances for start-up success, one that is not necessarily representative of a more promising reality.
In fact, Washington State University data suggests that Australia is one of the five best countries in the world to start a business. This proves that the reason for these failures isn't the business environment, so what is it?
Let's have a closer look at common mistakes made by start-ups, in order to help you avoid them and ensure your business is a success story rather than a flash in the pan.
Up to 70 per cent of entrepreneurs and start-up managers trusted their 'gut instinct' over professional advice.
Doing everything yourself
People drawn to the inherent risk and creativity involved in starting a business are often fiercely independent and resourceful. As a result, they often attempt to fill every role within the business from digital marketing specialist to accountant.
Data from a recent Wolters Kluwer (WK) survey proves this is fact, revealing that up to 70 per cent of entrepreneurs and start-up managers trust their 'gut instinct' over professional advice. The same survey showed that 26 per cent of failed SMEs believed that not seeking such advice was the main reason behind their demise.
In today's business world, solid advice and guidance costs money, but it could be the difference between your business's failure and success. The use of smart finance solutions can help you afford the professional guidance you need to succeed.
Doing everything yourself may be cheaper, but it may cause your business to underperform.Accounting problems
When starting a business, the last thing you may want to think about is balancing the books and keeping the accounts in order. It's a tiresome yet essential component of running your own business and neglecting it is the reason for a large percentage of start-up failures in Australia.
In fact, 27 per cent of WK survey respondents said he main reason their business failed was insufficient time spent managing the books. A further 67 per cent said their business failed because of a failure to anticipate rising costs.
If your business is in a state of growth, positive cash flow is essential to sustain it. Spending more time getting to know your finances, and how your business needs may change in future should safeguard you from falling into this trap.
Poor or insufficient marketing
Marketing is one of the more interesting and creative sides of running a business. It's a wonder then, that 37 per cent of small businesses cite insufficient or poor marketing as the main reason for their failure.
This may be due to the fact that effective marketing seems intuitive, yet can be incredibly difficult to get right and extremely expensive to outsource.
Rather than tackle the problem head-on, it appears that many SMEs either do it themselves to varying levels of success, or attempt to avoid the task outright. The survey data shows that this is a disastrous strategy that should be avoided at all costs.
Smart marketing will help your business grow in the future.Working capital problems
Even the most inexperienced entrepreneurs will know that without cash in the bank, your business can't grow, pay suppliers or attract new customers. Despite this, half of start-ups surveyed said that lack of working capital was the reason for their failure.
Unpaid invoices are often a cause of such working capital problems, which can suddenly become a problem when large or unexpected expenses come up and the businesses' credit cards are already maxed. Instead of leaving your ability to operate your business solely in the hands of clients that you've invoiced, take out debtor finance with Earlypay.
We could pay you up to 90 per cent of your invoices, in as little as 24 hours, so that your business can survive no matter the punctuality of your client's payments.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].