Small Biz Survival

The small town and rural business resource

A row of small town shops

Learn From the Mistakes of Others

By

Opening soon sign

Photo by Becky McCray

Starting a business is a risky endeavor.

But knowing does not stop many small-business owners. Every day owners open the doors to their business. Some end up satisfied with the results but many others decide, at some point, to close the doors.

The reasons for such closures are often not a secret. Talk with any business owner who has been through it and they will often give you all of the details on what went wrong.

Yet, we often don’t take the time to listen and learn.

So what are some of the reasons that a business does not thrive.

  1. Lack of homework. As noted here, owners don’t “look before they leap.” They don’t understand the risks nor have they checked out what the market wants. Quite often their motivation to sell something they have a passion for or what friends and neighbors tell them “everyone will buy one.”
  2. Estimation of profitability. Is there a reality-based plan with true market potential, true and market-tested pricing, and a solid cost structure? The profitability start-up curve is often much longer than that planned. Estimate when you will make money and then back it up twice or three times as far.
  3. Inadequate cash cushion. Everything takes longer than planned and costs more than expected. This is considered the number one reason why businesses close the doors.
  4. Management issues. Know your strengths and your limitations. Get help where needed. Also, be sure to stay on top of the accounting. Don’t buy unneeded equipment. Rent or time-share or even barter for what you need. Buy used. When starting know everyday what your bottom line is.

There are no guarantees of success when you start your business. So why not give yourself the best possible chance. Learn what your biggest risks are and do everything you can to be prepared.

 

About Glenn Muske

Glenn Muske is an independent expert on rural small business, working as GM Consulting – Your partner in achieving small business success. He provides consulting, and writes articles for county extension agents and newspapers across North Dakota. Previously, he was the Rural and Agribusiness Enterprise Development Specialist at the North Dakota State University Extension Service – Center for Community Vitality.

Wondering what is and is not allowed in the comments?
Or how to get a nifty photo beside your name?
Check our commenting policy.
Use your real name, not a business name.


Don't see the comment form?
Comments are automatically closed on older posts, but you can send me your comment via this contact form and I'll add it manually for you. Thanks!

Howdy!

Glad you dropped in to the rural and small town business blog, established in 2006.

We want you to feel at home, so please take our guided tour.

Meet our authors on the About page.

Have something to say? You can give us a holler on the contact form.

If you would like permission to re-use an article you've read here, please make a Reprint Request.

Want to search our past articles? Catch up with the latest stories? Browse through the categories? All the good stuff is on the Front Page.

Shop Local

Buy local buttonReady to set up a shop local campaign in your small town? You'll need a guide who understands how we're different and what really works: Shop Local Campaigns for Small Towns.

Best of Small Biz Survival

More of the best of Small Biz Survival