Business failure rate in Australia
As a small business owner, you are no doubt aware of the statistics surrounding small businesses and the high business failure rate in Australia. 60% of businesses will fail in the first three years, and of those who fail, 50% are profitable. The fact is, many small businesses do not survive for very long, and definitely do not thrive in their industry. And sadly, business failure can happen even if you’re profitable due to many other factors.
While these are grim statistics, it’s important to remember that, as the business owner, there are several steps that you can take to ensure that your business survives and thrives, instead of collapsing like so many others.
At Inline Partners, we care about our clients. That’s why we’ve compiled a list of the top reasons for the high business failure rate in Australia … so you can avoid these mistakes in your own business!
Starting a Business for the Wrong Reasons
Why did you start your business? Was it to make a lot of money? Was it out of necessity, or did you have a passion for your industry?
Believe it or not, the reason that you start a business (and your mentality!) can make a huge difference in the success of your business.
While being a business owner is incredibly rewarding, it is also hard work. Having a strong foundation, and solid reasons for starting a business can be a huge advantage.
Start a business based on a strong passion for your business, and the knowledge that your business is filling a real need for your customers. Consider your personality; if you have drive and determination (not to mention a positive attitude and resilience to failure), your business will often thrive.
Business owners who are independent and good at coming up with solutions, and face challenges with integrity and honesty, are going to have a better time as a small business owner.
Poor Financial Management
Poor management is a killer in any aspect of business, especially finances! Many business owners go in with the idea that they can manage all aspects of their businesses themselves, especially since outsourcing can seem like a financial luxury. This is a major problem contributing to the high business failure rate in Australia.
However, having a solid financial foundation is vital to the success of any business, especially a small business.
If you don’t understand finances, bookkeeping and accounting, then you should absolutely outsource this. It doesn’t mean you need to hire an in-house bookkeeper yet, but you should definitely get a professional onboard to make sure everything is running smoothly.
This also allows you to have a good understanding of your finances, so that you can make the best possible decisions for your business. It’s a worthwhile investment that will improve the overall health and profit margin of your business.
Poor Planning increasing Australia’s rate of business failure
Planning is absolutely critical for business success. If you fail to plan, your business will not last, no matter how great the idea is.
Make sure that you have performed a market analysis, created a business plan, made a list of potential problems and solutions, analysed your competition, accounting for marketing, advertising and company growth, as well as considered your workforce needs (and this is just the beginning).
No Online Presence
In the past, you might have been able to get away without a website, or without a steady stream of social media updates, but that doesn’t work anymore. Now, you absolutely need to have a website, and some sort of presence online if you want to succeed.
That doesn’t even include eCommerce, or other online sales methods (although this is often a good idea).
If you don’t have a website, many people won’t find your business (as online searches are a very popular way to choose a store to visit). If you don’t have a social media presence, potential customers will find it difficult to reach out to you. Don’t underestimate the importance and value of this step!
In conclusion, it’s important for small business owners to spend time on planning and presence, to make sure that their business is soundly run and accessible to customers.
If you are considering outsourcing your financial department, don’t hesitate to contact us for a quote. Our team of experienced accountants in Sydney is here to determine how to best serve your business and keep your finances on track. >>> Please click here.
