Why Most Businesses Fail in the First Year

You have passion, drive and a GREAT business idea - so how do you avoid becoming one of the "failed business statistics"?

There are lots of reasons small businesses fail in their first few years but it's rarely because they weren’t “good enough.” Most new businesses fail because they skip over the boring but critical stuff that actually keeps a business alive.

In this episode, we’re cutting through the fluff and getting straight to what really makes or breaks a business in the early years. Before you drop thousands on a fancy logo or get lost in the social media hype, let’s make sure your business has a strong foundation that actually sets you up for success.

We’ll cover:

• Why market research is non-negotiable and how to do it right
• How to avoid jumping into an oversaturated market with no real plan
• The biggest mistakes new business owners make with marketing (and what to do instead)
• Why relationships will always beat random marketing tactics
• What realistic success actually looks like in the first few years

If you’re serious about making your business work (and not becoming another statistic), this episode is a must-listen. 

Let’s set you up to not just survive, but thrive.

Links & References:

Episode #14 - Strategic Planning for Business Success with Connie Kercher

Join us at our next PWR Virtual Speed Networking Event!

For even deeper connections and faster business growth, check out the Powerful Women Rising Community!

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Connect with Me, Your Host Melissa Snow!

Melissa Snow is a Business Relationship Strategist dedicated to empowering women in entrepreneurship. She founded the Powerful Women Rising Community, which provides female business owners with essential support and resources for business growth. Melissa's other mission is to revolutionize networking, promoting authenticity and genuine connections over sleazy sales tactics. She lives in Colorado Springs with her two dogs, three cats, and any number of foster kittens. She loves iced coffee, true crime, Taylor Swift, and buying books she’ll never read.

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Chapters

• 0:04 Reasons Businesses Fail
• 9:52 Building a Successful Business Foundation
• 22:23 Empowering Women in Business

Transcript

Speaker 1: 0:04

Welcome to Powerful Women Rising, a podcast for female entrepreneurs ready to do business their way. Grab your coffee and join host Melissa Snow, business relationship strategist and founder of the Powerful Women Rising community, as she interviews industry experts and shares insights on strategy, marketing, mindset and more. Here you'll find the tools, strategies and inspiration you need to feel empowered, take bold action in your business and keep rising.

Speaker 2: 0:36

Hello, welcome back to another episode of the Power for Women Rising podcast. I'm your host, melissa Snow, and we are back. Another Monday, another week, another opportunity to live the dream. Are you living the dream? Everyone, I am, actually, for the most part. Last week, we had our monthly virtual speed networking event for female entrepreneurs. If you've never been to that, why not? You are missing out. It's so much fun. We have usually like between 60 and 80 female entrepreneurs from all over the world, all different experience levels, all different industries, and we just attract some of the most amazing women who are there to show up with authenticity and integrity and genuinely want to connect with other people and to do what they can to support other people, and it's just an amazing experience. Every time I have one, I'm like God, this is the best thing ever. Why wasn't I doing this years ago? But I'm doing it now and it is super fun. So if you've never been to one of those events, definitely check it out.

Speaker 2: 1:47

All right, let's talk about today's topic. It's a biggie. We're talking about why most businesses fail within the first year, and before we dive into this, I want to put a little disclaimer on it. I am not a statistician. I am not an economist. I am not claiming to be the expert on any of those things. I'm only speaking from my own frame of reference, my own experiences and what I've seen with the business owners that I have worked with. There are a lot of factors that go into whether or not a business is successful or not, and we're just going to talk about a few of them today, and we're going to talk about them in ways that are somewhat surface level. But I also want to make sure that this episode is valuable for you, impactful for you, that there are things that you can take from this episode and actually use, while also recognizing this is a massive topic, with about 100 subtopics that are also massive. So just know, if there's something that I don't say that you're like I can't believe she didn't even talk about that. That is why we don't want to be here all day.

Speaker 2: 2:56

So, okay, let's talk about the statistics. The statistics in the United States say that about 23% of new businesses fail within the first year. Within the first five years, about 48% have failed and within the first 10 years, about 65% have failed. That is a lot of businesses If you think about the fact that right now in the United States there are, I think, close to like 33 or 34 million small businesses across the country, so that's quite a lot of businesses that are closing down within the first 10 years, and I don't want this to be discouraging to you. I don't want this to be like oh my gosh, there's no way I can ever succeed.

Speaker 2: 3:40

Because you can believe me, one of my favorite things about networking is meeting people who have businesses that I'm no way I can ever succeed. Because you can believe me, One of my favorite things about networking is meeting people who have businesses that I'm like I can't believe that's even a business. But they're succeeding and so you can too. It's not impossible. There are just some things that you need to keep in mind, and those are some of the things that we're going to talk about today.

Speaker 2: 4:01

So the first reason that I want to talk about is people start businesses without being prepared, they don't do enough market research, they don't know enough about what their potential clients actually need and want, or they don't realize that they are entering a completely oversaturated market and that they are going to have to have a way to stand out in that oversaturated market. Here's the brutal truth. Just because you think your idea is amazing doesn't mean that other people are going to find it so amazing. They wanna pay you for it. A huge reason that businesses fail is because they don't actually solve a real problem for a real person who is willing to pay money for it. And those three things all have to be in place. If you have a real problem that a real person has, but they are not willing or able to pay money to solve that problem, your business is not going to succeed.

Speaker 2: 5:04

So many of us get into business because we want to do our thing right, we want to coach, we want to help people, we want to be a consultant, we want to do social media management Whatever it is that we want to do that we're passionate about that, we love that. We know we're good at that, we know is going to help people. But we don't stop and think about what it actually takes to launch this business. And listen, I'm speaking from experience because when I first got my coaching certification, I had no idea what I didn't know about growing a business. I just thought I was going to get my coaching certification and I was going to be like, hey, everybody, I'm a life coach who wants me to help them, and everyone was going to show up and they were going to pay me money and it was going to be amazing.

Speaker 2: 5:48

What happens is business owners skip that market research and they jump straight to I need a website, I'm going to print business cards, I'm going to make a logo on Canva, I'm going to launch an Instagram with a cute grid layout, right Like all these things that are fun, that we think this is what we need to have a legit business and there is a time and a place for them. But you start doing these things without actually doing the work to figure out who you are selling to, who is actually going to buy your thing. You need to be crystal clear on who those people are, what those people really need and want and how they make their buying decisions. That is going to put you miles ahead when you start doing those other things, like getting a website and promoting yourself on social media and all of those things.

Speaker 2: 6:38

I also want to talk a little bit about that piece of entering oversaturated markets for a second, because this is really huge, especially after post-COVID. After COVID, everyone decided that they were going to be an online business owner. They were going to do affiliate marketing, they were going to be a coach, they were going to passively sell digital products and make millions of dollars, and what they didn't realize is that those markets were becoming oversaturated literally overnight, and so if you're entering a space that's already filled with hundreds or thousands of people doing the same thing, you are going to have to take some time in the. You are going to struggle to stand out unless you have a very unique spin or a very unique approach to what you do. So you really need to spend some time and do some research, figuring out what makes you different.

Speaker 2: 7:39

What is different about the audience that you're targeting? What is different about your niche? Are you talking about this thing in a way that is different than anyone else out there is talking about it? Do you have a unique method? Are you teaching a way to do it that is different than what anyone else is teaching? Are you solving a problem that no one else is solving, or are you solving a problem in a way that nobody else is solving it? There's got to be something that is different about you and what you offer that is going to set you apart from all of that competition, and you've got to be really clear on what that is from the get-go. So, before you do anything else, take some time to validate your idea.

Speaker 2: 8:23

Even if you've already launched, even if you've already done these things that we're talking about and they're not working, you can take a step back and do this pre-work right now. Talk to real humans, do some market research. I'm not talking about scrolling on Instagram to see what other people are doing and copying what seems to be working for them. I'm talking about having actual conversations with your potential customers and asking them what is your biggest challenge with whatever this thing is? Have you ever paid for a solution to this thing before? Did it work? Did it not work? What made you decide to pay for that solution? What was it about that solution that you thought this has enough potential to help me, that I'm willing to hand over my money, and what would make you say yes to buying something like this? When you get the answers to those questions from people who are your ideal client, you're going to be much better positioned to start marketing yourself and talking about what you do, creating things like a website or social media presence from that perspective that immediately sets you apart from your competition. If you skip this part, then you're really just guessing. And when you guess, you are going to waste a ton of time and energy and money figuring out what doesn't work before you finally find what does. So do yourself a favor and take the shortcut, all right.

Speaker 2: 9:52

Reason number two that I see businesses fail frequently Ineffective marketing strategies aka you're doing the wrong things. So many new business owners think that marketing means paying somebody thousands of dollars to build a fancy website, starting a podcast before they even have an audience, doing a challenge, a summit, a workshop, whatever it is, without having anyone to actually promote it. To running Facebook ads to people who have never heard of them. And let me be clear none of these are bad strategies. I have done all of these things at certain points in my business. Sometimes I did them at the right time, sometimes I did them before I should have done them, but if you're just starting out, these things are not your priority.

Speaker 2: 10:41

Marketing is actually very simple. In the beginning. People need to know that you exist, they need to learn how to trust you and they need to know that you exist. They need to learn how to trust you and they need to believe that you can help them, and the fastest, easiest way to do that in the beginning is to talk to people. Seriously, it's that simple Get out there, show up in spaces where your ideal clients hang out, show up where people who will be valuable to your network are spending time and really put the effort into building those relationships. Telling people what you do, who you help, how you help them, learning about what other people do and who they help, how you can collaborate with them, how you can support each other. Building your network at this stage of the game is one of, if not the most important thing that you can do.

Speaker 2: 11:32

But before you go out there and start meeting people and talking to them, you have to do the pre-work to be very clear on who you are, what you do, who you help, how you help them and what sets you apart from other people that do the same thing as you. If you're just another life coach talking about helping people get into alignment and find the flow and live more purpose-driven lives, you are going to blend into the background. If you are just another copywriter, another VA, another business coach, people are not going to pay attention to you, and it's not because you're not talented, it's not because you don't know what you're doing. It's not because you're not amazing. It's because they have no reason to pay attention to you over the other hundred people who are doing the same thing. So your job, before you go out and meet people and start talking to them, is to make it incredibly clear to yourself why you are the right choice and who you are the right choice for.

Speaker 2: 12:36

This means getting really clear on what makes you and your approach unique. Are you a no BS person in a space where usually there's a lot of yes, people? Are you more on the spiritual side? Do you blend business and human design? Do you have a proven method that other people out there aren't using or even aware of? What is it that sets you apart? The other thing that you want to get really clear on is who exactly you help, because if you're trying to help everyone, if you're trying to speak to everyone, you're going to end up talking and helping no one, and then what is the real transformation that you provide? No one cares about your coaching package, nobody cares about what's included, nobody cares about your 24-hour Voxer support if they don't already know what changes, after they work with you what your life is like right now. This is what your challenges are. This is how you're thinking and feeling and what you're experiencing, and this is what will change after you work with me. This is what will change after you start using my product. This is what will change after you attend my event. Whatever it is right. Be very clear on that so that you can clearly communicate it to people when you are out having conversations with them.

Speaker 2: 14:00

Instead of dumping money into things that might work down the road, try these things instead. Get on social media and start talking to people, instead of just posting pretty graphics that you made in Canva that make your Instagram grid look aesthetically pleasing. Join communities and actually engage in them, not in a spammy way, but by being helpful, being curious, being interested in other people. Go to networking events, whether they are virtual or in person, and practice introducing yourself. Practice talking about who you are, what you do, what sets you apart because that does take practice and then spend some time intentionally following up with people that you already know and letting them know what you're up to. Now. Your first sales are going to come from connections. They are not going to come from Google SEO magic or some super secret ad formula. They're going to come from connections and relationships that you can start building right now.

Speaker 2: 14:59

And then the third reason that I see most frequently that businesses don't succeed initially is because they don't have a business plan. They don't have any idea where they're going and or they have completely unrealistic expectations. A lot of people think that a business plan is this big, complicated document that you only need if you are pitching to investors or going in a boardroom to present it to people, or you're this big, fancy, multi-level, multi-million business owner. But the reality is that if you don't have a plan, you are just winging it. Winging it does not pay the bills. Winging it takes a lot longer to get to where you want to be.

Speaker 2: 15:41

This is an analogy that I used to use with my dating coaching clients a lot, because I would say, if you don't know where you're going, if you don't know what you're looking for and what your end goal is, if you're not super clear on who that person is and what you want with them, it's basically like getting in the car and starting to drive without actually knowing where you're going. You're going to find some cool places to stop. You're going to find some fun places to eat. You're probably going to stop many places that you're like oh my gosh, why did we stop here? There's not even anything to see. Or I can't believe we paid $20 to get into this museum. It's literally the worst museum I've ever been to. Right, eventually, you might get somewhere that you're like, okay, this place is cool, maybe we'll stay here, but if you want to get to where you want to be in the fastest, simplest, cheapest, best way possible, you're going to need a plan. You're going to need a map.

Speaker 2: 16:35

At the very least, your business plan should answer these questions. Number one what is your offer? What exactly are you selling? And I'm not talking about the features of what you're selling. I'm not talking about what's included in the package. I'm not talking about what the actual product is. I'm talking about what is the offer that you are selling in terms of the experience, in terms of the result, in terms of the change that your client is getting. Number two who is your audience? Who are you selling to? Number three how are you going to get in front of those people? That's your marketing strategy. Number four how are you going to make money? So this includes things like your pricing, your revenue goals, your expenses, the money that's coming in versus the money that's going out. And five, what is your plan for growth? How are you going to scale or sustain this business over time? All of these things are important to know in the beginning, and that doesn't mean that your answers aren't going to change as time goes on, but you do at least need an initial roadmap before you get in the car and start driving.

Speaker 2: 17:45

And I also want to touch on one thing that I mentioned, which is managing your expectations. So many new business owners come in thinking that they're going to make six figures in six months because that's what some influencer on Instagram promised them. That's what some celebrity business coach said that if you paid them $5,000, they would give you the formula for making $90 million in 90 seconds. Right. And then, when they're struggling to make even $500 in their first few months, they panic, they think they're failing, they think they're doing it wrong, they think something is wrong with them. But the reality is that business takes time. You are not going to have overnight success. You will have slow months. You will learn things through trial and error. All of that is completely normal. So if you set realistic expectations and you have a plan to sustain yourself while your business grows, even if that means you have to keep working at your full-time job or taking on a part-time job. You are much less likely to burn out and quit when things don't happen as fast as you want them to. So we've talked about some of the big reasons that businesses fail.

Speaker 2: 18:54

Let's talk about how to actually make it past your first year. Here is your simple roadmap. Number one validate your offer. Before you start investing in branding, websites, pictures, anything fancy, make sure that people actually want what you're selling. Number two prioritize relationships over random marketing tactics. If nobody knows that you exist, nothing else matters. Marketing tactics. If nobody knows that you exist, nothing else matters. So focus on getting in front of real people and building real connections from the beginning. Number three make a plan, even if it's not perfect, even if it changes. You don't need a 30 page business plan, but you do need a simple roadmap with clear goals and strategies as a starting place. Simple roadmap with clear goals and strategies as a starting place.

Speaker 2: 19:43

Number four be willing to pivot. I know people are so sick of this word, but I don't have a better word for it. So be willing to pivot. If something isn't working the way that you thought it was going to, you don't have to keep pushing it. Some of the best advice I ever got in business was don't keep making the same mistake over and over again just because you spent a lot of time and money making it. Be willing to adapt, to tweak, to improve as you go and to say okay, I thought that was going to work that way. It didn't. What is something that I can change, rather than just throwing the whole thing out and starting over and see if that works? And number five is stop trying to be everywhere all at once. Choose a few specific marketing strategies to go all in on in the beginning, rather than spreading yourself thin by trying to do all of the things.

Speaker 2: 20:33

If you need to reference my podcast episode about shiny object syndrome, you might need to go back to that several times, because this is a very normal part of entrepreneurship. We say I'm going to grow my business on Instagram and in-person networking events. That's where I'm going to focus right now. But then we see that Susie launched a podcast and she's actually doing really great with her podcast. She's getting tons of downloads, she's converting it to paying clients and you're like I need a podcast.

Speaker 2: 21:01

And then so-and-so shows you a Facebook ad about how you can skyrocket your business by getting speaking engagements, and they will book the speaking engagements for you. You don't even have to do anything, they'll just do it and you just get the clients. And so you're like I need to hire them and start doing the speaking engagements and before you know it, you've completely forgotten about Instagram and in-person networking events because you've gotten so distracted by all of these shiny objects. So pick a few things to go all in on and stay the course on those things. All right, that's a lot.

Speaker 2: 21:35

You might have to, when your walk is over or your drive ends, go back and fast forward to some parts and write some of these things down, because I've given you a lot to think about and I gave it to you really quickly. But hopefully there were some things in this episode that hit home for you and I would love for you to share it with a fellow entrepreneur who needs to hear it, maybe somebody you know who's just getting started in business or considering starting a business. It's important information that I sure wish I would have gotten in the very beginning Could have saved me a lot of time, a lot of money and a lot of stress. All right, friends. Thank you so much for hanging out with me today. Now turn your phone off, go out there, talk to people and make some money. I will see you next week.

Speaker 1: 22:23

That's a wrap on this week's episode of Powerful Women Rising. Thanks for hanging out with us. If you love the podcast, make sure to subscribe, share it with a friend, write a review or buy us a coffee. Your support helps more women like you step into their power and grow their businesses in a way that feels real and true to them. Want to keep the party going? Check out the show notes for details on our next virtual speed networking event or join us in the powerful Women Rising community. Until next time, remember that building a business your way is the best way.