Four reasons why a home business commonly fail in the first year

Insufficient investment capital

Running a business takes a lot of time and a lot of money. The resources required to launch the business can be calculated quite accurately by the cautious businessman, what’s more difficult to judge is the profits you will see in the first year. There’s no guarantee or time limit on when your business will become self supporting. This dilemma affects many fledgling business owners who have underestimated the investment required to allow their business the chance to grow. Of course the difficult judgement lies in how long you finance your business if it is not producing a profit. A decision must be made on whether to withdraw funding from an enterprise if it is failing, whilst also ensuring it has had a long enough time running to ensure it will not succeed.

Your personal priorities aren’t aligned with what the business requires

Are you in the right state of mind and body to commit to making your business work? Few things are more stressful and exhausting than forging your business in it’s infancy. You have to be prepared to sacrifice your time and resources to achieve the results you want. Many people feel they are capable of making this commitment initially however as they become submerged in this long battle for success they find themselves re-prioritising what is more important to them – be it friends family or even just their spare time to relax.

Wrong time, wrong place

The timing and location of your business are hugely influential, especially in the early years before you’ve had a chance to establish yourself. You may have sourced a niche and a demand for your product or service – but you need to take every precaution available to ensure your potential customers are able to reach your business location. Similarly you need to be strategic with the timing of your opening. Research when the most profitable time to launch your business will be, do you want to take advantage of the Christmas rush? Or maybe your product sales are directed towards the summer. Analyse and develop a launch strategy that ensures you hit the ground running at the right moment.

Lack of exposure and proper advertising

It’s never been more important than now to give your business a fighting chance from the start of it’s life. With competition in every fathomable commercial sector on the increase if you don’t have the correct advertising campaign and business presence you will not succeed. This takes many forms and is dependant on your business of course but in general; get a website – this is commonly the first potential interaction people will have with your business. If you have nothing to offer the search engine rankings you are missing out on a huge slice of the global market. You should also consider the potency of social media sites to promote your product of service through various offers and entertainment that will create a buzz on the web. Of course this is not to say one should forget the importance of more traditional advertising methods and word of mouth business, the trick is to diversify your advertising campaign as widely as possible to increase the odds in your favour of a successful conversion.

This article was provided by Todd McCullough, an independent business finance researcher. He enjoys writing informative financial themed articles for financing and loan companies such as