Sadly, 8 out of 10 businesses fail within the first 18 months according to Forbes. In Australia, an even sadder 1.5% of businesses will close in less than a year.
According to the Australian Securities and Investments Commission of 2011-12 report stated that the following were reasons for business insolvencies:
- poor strategic management (44%)
- inadequate cash flow or high cash use (40%)
- trading losses (33%)
While there are lots of different reasons why the businesses go down, there are a lot of similarities that you can learn from.
1. Don’t commit to infrastructure that is most likely to change.
51% of business don’t buy enough, or buy too many servers. Do your research to figure out realistically how much traffic your online business will get over six month periods. Ensure you have the flexibility to adapt to more and less traffic.
2. Always monitor your website for any changes that could be detrimental to both business and brand perception.
In 2014, UK company Screwfix was victim to an online glitch which saw all of it’s products discounted down to £34.99. Even products like a ride-on mower was lowered from £1,599.99. Once the company caught onto what had happened, they cancelled all orders that weren’t already being delivered and gave refunds to all customers. There was a lot of backlash from customers who had paid for the discounted products, and received an email of confirmation, who stated that Screwfix should have adhered to the price they advertised.
3. Have clear and concise terms and conditions.
Like with the Screfix incident, ensure that in all possible glitches and mishaps are addressed in the terms and conditions to protect your business, and your customers.
4. Have social media and use it effectively.
As mentioned in my previous blogs, online shoppers place a higher value on social media than on traditional media to educate themselves about products and brands. Consumers trust companies more that have social media and utilise it to engage with their customers. Allow customers to write reviews, give incentives for customer reviews especially photos and videos to create a deeper authentication of your brand.
5. Let them know about your business origins.
It’s now the norm to have cage free eggs, and organically grown produce. People like to know where the products they’re buying, or going to buy, is from. Have your business location on your website. Have an articulately written story about how your business was formed, created an inviting description of your staff, and allow your customers to imagine the life your products are from. Handcrafted? Let them know. Made from recycled materials? Let them know. Family recipe? Let them know.