States like Utah won’t receive high grades at ease in doing business for no reason. Companies receive excellent support from organizations like the Small Business Administration (SBA) or the state government.
But why are there so many businesses that still fail? Many factors influence and increase the risk of failure. Some of them, for example, often forget the following:
1. Exit Strategy
A smart businessperson always has foresight. It includes what they will do in case they incur substantial losses, want to expand, or earn a significant profit quickly. For these reasons, they always have an exit strategy.
Company owners or investors can do it in many ways. For example, they may approach a business broker in Utah, whose job is to liaise with the selling and buying of businesses.
Another approach is company acquisition or a buyout. It’s also not uncommon for some to engage in serial entrepreneurship. They build businesses, make them grow, and sell them after for a handsome profit.
2. Succession Planning
As the saying goes, only the institution says. Everyone, including the people, can disappear. Some of them may move on to greener pastures. Others may decide to retire, while a number may die.
If it’s the objective of the organization to thrive despite these changes, then they need to undertake succession planning. It is not an overnight strategy but rather a long-term one that involves the following:
- Creation of a talent pipeline where the new breed of leaders may come
- Careful decision-making on whether only families can succeed in the roles or the position is open to all
- Identification of critical roles (these are positions that definitely need a successor)
- Best time to let others succeed in the role
3. Marketing Analytics
“Big data” is a buzzword these days since it’s a rich source of market information. Many growing companies, such as Airbnb and Netflix, use these data to help them make critical decision-making processes. For instance, Airbnb is using algorithms to personalize promotions according to regions. Netflix’s big data help customize an account owner’s list of recommendations.
Based on Gartner data, in 2019, marketing analytics accounted for 16% of the company budget. The investments for it also increased by 20%. However, many of these businesses did not use the information for decision-making. In other words, they are wasting money.
Gartner then provided a strategy to help businesses maximize the data they collect. This way, they can experience the benefits of analytics and make more informed decisions.
4. Business Continuity Plan
If there’s one thing that coronavirus pandemic teaches the world, it’s that nothing is guaranteed. However, one may be able to prepare for it. This is the purpose of a business continuity plan.
It is a process that recognizes the chances of disruption. In turn, businesses can already foresee scenarios, develop mitigations and solutions, and then test these even before the problem arises.
This plan allows companies to thrive despite the storm, and if they incur losses, they can bounce back faster. It also boosts security for employees and reduces the risk of decreased productivity and efficiency due to anxiety.
Running a business doesn’t offer any guarantee. Some of the established ones can disappear in an instant, while other less-known can become stars overnight. Either way, some tried-and-tested factors can influence success and failure. These include the use (or lack thereof) of plans mentioned above.