Avoiding Common Problems Faced by Small Businesses

The idea of starting your own small business is exciting. When you begin making that dream a reality, though, you’re likely to run into an unavoidable fact: business ownership is inherently risky. Even as the business landscape evolves, business failure rates haven’t changed very much over the last 30 years. In general, 20% of new businesses will fail within two years, 45% within five years, and 65% within 10 years.

There’s no way to eliminate the problems faced by small businesses altogether, but being proactive can help quite a bit. Let’s take a look at common challenges for small businesses, as well as how franchising is a lower-risk option.

4 Problems Faced by Small Businesses

1. Scalability Issues

One thing most successful businesses have in common is scalability. In short, that means your profits are able to grow faster than your operating costs. If your business is too niche, it makes scaling a major challenge. On the other hand, if your business has a broad customer base and finds success quickly, you might be tempted to scale too fast. That can create the same problems as poor scalability. And when you miss out on opportunities to profit, whether that’s by narrowing your focus or biting off more than you can chew, your business may fail.

2. Poor Planning

There’s so much that goes into developing a new business, and it’s crucial that you pay close attention to the details. This is especially true when it comes to your business plan, which is the foundation of your business itself. A good business plan includes an overview of the business, your goals and financial projections, your marketing plan, market analysis, and much more. Cutting corners on your business plan can lead to costly or strategic errors.

3. Not Enough Customers

Some aspiring entrepreneurs aren’t sure what kind of business they want to open. Others have been dreaming of their small businesses for much of their lives. If you’re passionate about your business idea, you might be tempted to move forward without doing the market research you need to prove it can work. There’s no two ways around it: a business that doesn’t meet the needs of its community will not succeed. Although it may mean putting your dream business to the side for now, taking the time to identify what your community will support gives your small business a better chance of lasting success.

4. Cash Flow Risks

You likely know that many problems faced by small businesses come down to finances. By far the most common one involves inadequate cash flow. In fact, up to 82% of businesses that don’t make it experience these issues. No matter if you’re self-funded or plan to receive help from investors, making a detailed financial plan should be a priority. By forecasting balance sheets and incomes, an estimated ROI, and the time you’ll need to break even, you’ll be better able to make smart financial decisions that preserve your cash flow.

Franchising Minimizes the Problems Faced by Small Businesses

One of the most popular reasons to join a franchise instead of starting a small business on your own is that it minimizes or eliminates many of the challenges for small businesses. The numbers bear this out: a recent study found that 92% of franchises remain open after two years, with 85% lasting through five years. It’s a testament to the power of the franchise model.

As a franchise owner, you’ll benefit from:

• A turnkey business model that’s been perfected over time
• Proven systems and procedures
• Guided scalability
• Financial requirements that ensure you have the cash flow and resources to start a business
• Help with financing, both in-house and through trusted vendors
• Thorough market research proving the brand’s viability in your area
• Protected territories, allowing you to build your business without competition within the brand

The Tailored Closet: A Smart Franchise Investment

Choosing a home improvement franchise like The Tailored Closet lets you make your mark in one of the nation’s most lucrative industries. Our franchisees give home and business owners the reliable storage solutions they need to maximize their spaces. From closets and pantries to offices and living rooms, we make any space more beautiful and functional. With multiple revenue streams through our residential and commercial services, you have more opportunities to grow a thriving business. The Tailored Closet is also backed by the strength and infrastructure of Home Franchise Concepts, a leading brand in the home services space with over 30 years of franchise experience. As a subsidiary of JM Family Enterprises(r), a privately held company with $22 billion in annual revenue, Home Franchise Concepts provides leadership and stability like no other franchisor.

Ready to learn more about franchising with The Tailored Closet? Inquire now to start a conversation with one of our franchise advisors.