Over 50% of Lancashire SME’s will fail within the first 5 years
The first 5 years are crucial for Lancashire SME’s
For many, starting their own business is the realisation of a dream, represents opportunity and is an exciting time in their life. It makes it particularly sad to see then that over 50% of start-up SME’s will fail within their first 5 years of operation, often dragging the hopes and dreams of their owners down with them.
Lancashire SME’s are no exception to this sad statistic, with Lancashire County Council reporting only 40.03% of businesses started in 2010 as still active in 2015. This statistic is echoed by a more recent study conducted by the Office of National Statistics, showing the overall national average of SME’s started in 2011 still being active five years later as 44.1%.
But why do so many start-ups fail and what can Lancashire SME’s do to survive?
This 2015 Financial Times study provides some insight as to why so many businesses fail.
The overwhelming majority of the reasons reported can be grouped into three main headings, with the small number of remaining reasons falling into miscellaneous or third-party categories.
No market need, Outcompeted, Poor marketing, Ignore customers, Product mis-timed.
2. Planning & Management
Not right team, Pricing/cost issues, Need/lack of business model, Lose focus, Don’t use network/advisors, Bad location, Failure to pivot, Burn out, *Ran out of cash
*although we acknowledge there could be multiple reasons this could have happened, we believe most fall under planning and management.
Both categories are mutually supportive and intertwined, and appear to be supported by both Start Up Donut & Businessknowhow as the main areas of concern for SME’s, although somewhat anecdotally.
The good news is that both marketing and planning/management can be heavily influenced and changed by one person. You. The business owner.
You are ultimately ‘the secret’ to your business success.
As we’ve already discussed, your business may be the culmination of a life dream, you’re hopefully enthusiastic about it and highly driven. These are important traits for successful entrepreneur and the characteristics of successful Lancashire SME’s.
However, they can also sometimes cause you to ‘steam ahead’ like a bull in a china shop. Not taking the time to step back, evaluate and adjust accordingly, or even taking the time to methodically plan (in writing!) your course of action, set milestones and hold yourself accountable. Your biggest asset could also be your biggest weakness. Many business owners have fallen foul of their own ambition, ego or enthusiasm.
Check Yourself Before You Wreck Yourself
In order to ensure the survival of your business, you first need to diagnose the underlying problems that could turn a sniffle into a proverbial coffin box.
You should conduct a regular check-up of your business, looking at it objectively and critically to identify problems both big and small, and then take the necessary action to correct it.
We’ve created a free downloadable business health check to help businesses like your own assess their current position. It can be printed off or viewed on your computer, and takes less than 10 minutes to complete. It’s a simple check list and scoring system, focusing on the main areas of business failure.
Download Free Business Health Check & Find Out Your Chances of Survival in Less Than 10 Minutes
There Aren’t Any Silver Bullets
You may have been hoping for a silver bullet, magic potion or insider knowledge to help the longevity of your business and ensure that you aren’t one of the 50-60% of who fail within their first five years. We’re sorry to disappoint and pass the buck back to you, but the success of your business may lie firmly on your lap and your ability to objectively look at how you operate.
A well thought out plan, milestones, and regular assessment of how you operate are just as essential to the success of your business as your drive, enthusiasm and passion. Combine them all for a winning business.
It’s worth noting that there are services and initiatives available to Lancashire SME’s such as yourself, to help your business growth and longevity, some of them free of charge. We recommend looking into initiatives like Boost Lancashire, for council approved coaching and advice. Alternatively, we’re more than happy to put the kettle on at our Cotton Court based office and have a chat with you free of charge, just get in touch.
0161 325 00 20