You can’t help but notice the shuttered-up gates and closed-down storefronts where businesses once stood. Businesses can fail for a variety of different reasons. According to data from Investopedia, about 20% of businesses fail within their first two years, with an additional 45% during their first five years. If these numbers seem daunting to you, then you need to learn how you can set your business apart, to save your business.
Landscaping businesses fail because they don’t have enough capital, fail to understand the changing market, aren’t in the right location, have not marketed themselves properly, or simply don’t want to put in the time. Read on to understand the most common reasons why businesses fail, and how you can alter your business to avoid these pitfalls.
If this article is starting to stress you out, don’t be. There are steps you can take to make sure your business doesn’t fall prey to the things that end up shuttering many other businesses. So, take a deep breath and read through this article carefully, so you can maneuver around the problems that brought down a line of business owners that came before you.
Not having enough capital
Who would’ve thought that money could be a problem for a new business owner? If you didn’t read that with a sarcastic tone, you should. Unsurprisingly money troubles are one of the most common causes of businesses having to close down. So, if you’re starting your own landscaping business, how can you avoid this?
For one, do your research on exactly how much money you need before starting your business. While it always sounds like a great idea to cut corners and get started with the bare minimum, this will inevitably bite you in the butt in the long run. According to Forbes.com “most new businesses need 18-24 months to reach profitability”. So, if you start your business dumping your life savings into it, then don’t make a profit off it for almost two years, you need a plan as to how you will be paying for rent and other bills for the next two years. Otherwise, you may end up like the thousands of others who had to close down their business, to pay for their living expenses.
This is something that will be an important step when making your business plan. Make sure you set aside savings for paying bills and rent 12-18 months in advance. While I know that doesn’t sound very easy to do, this ensures that you don’t have to worry about where the money will come from to cover this month’s bills, and you won’t have to choose between rent or your business. If setting aside savings to cover this much rent while also opening a business is not practical, consider taking out a business loan to cover the expenses of the business, while your savings go towards living expenses.
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Failing to understand the changing market
Another reason why businesses fail is because they do not change. Maybe they’ve had a hit with a single product or service that had some popularity early on. Now their entire marketing plan is based on trying to get consumers to buy that one product. The market has changed and clients have moved on to the next shiny new thing. But they are still stuck trying to get the same product to sell to a market that does not want it anymore.
It is always important to stay flexible and change as your audience changes. Especially if you’re in the landscaping industry. Keep doing your research and scoping out what your competitors are doing so you can keep your prices and services up-to-date and competitively priced. Nothing will lose you your business faster than over-pricing your jobs compared to your competitors.
Opening in the wrong location
Often, businesses fail simply because the location didn’t work out in their favor. There isn’t a demand for their service, or on the flip side, the market is over-saturated and there isn’t the need for a tenth landscaping business in the area. So, they either don’t get any business because clients in the area don’t need landscaping businesses at the moment, or they aren’t getting any business because there are already nine other established and well-known landscaping businesses in the area, and no one is willing to take a risk on the new kid in town.
It is always important to keep in mind what the demand vs supply looks like in the area you are considering for your new business. There needs to be a need for what you are offering for you to successfully make a profit off of your landscaping business. If not, you may run the risk of shutting your doors before getting your name out to the public.
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Poor marketing plan, or lack thereof
Marketing yourself and getting your name out there in today’s extremely competitive world, is more important than it’s ever been. While tried and true tricks like word of mouth and fliers are still sure to get you some attention, a lot of communication these days is done through social media.
The problem is, that a lot of business owners fail to utilize marketing to get their attention or don’t understand how to in the first place. If you aren’t confident in your social media skills, it may help to reach out to a friend or family member that you can hire for cheap to help you in this area. Social media can cast a much wider net than just word of mouth, and hashtags can help you get the word out across the globe in seconds.
Not willing to put in the time
A lot of times, new business owners get into things having unrealistic ideas on how much they have to work. They feel that since they are the boss, they will be working a 9-5 making all of the big decisions, while their team does the rest of the work. This is usually not how that works, at least not until you are a very established company and you have the means to work like this.
New business owners will tell you they worked anywhere from 45-80 hours per week trying to get their new business to take off. Including nights, weekends, and holidays. Many new owners are in for a shock when they find that their business responsibilities are constantly clashing with their social life. Eventually, this catches up in either their business duties slipping through the cracks and failing or their social life getting neglected. Ultimately leading to the decision that the business must get shut down, to fix things.
How can you avoid this from the get-go? Be realistic about your expectations on how much you will be working going into things. Ask yourself if this is a commitment you are willing and able to make. Be practical about things, if you don’t want to work more than 45 hours a week, see if you can find a business partner whom you trust to share the responsibilities with you. This way instead of just working 80-plus hours works a week, you can split the work between you and your partner.
How to keep your business safe from closing
Now we’ve taken a look at the most common reasons why businesses close. The question you should be asking yourself at this point is whether these things will be problematic for you in opening a business, or if you have ways to deal with them. You’ve probably heard this quote before, but the key to success is preparation. If you can sit down and make a plan to work around these pitfalls, then your business will be one of the 25% that lives to see its golden age.
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Frequently Asked Questions
How can I maintain a work-life balance, and still open a business?
Ahh, the great work-life balance. It’s not that you can’t open a business and still have time to see friends and family. You just need to be able to prioritize the needs of your business over your nights out, to ensure you don’t fail to meet important deadlines. As I mentioned above, if work-life balance is important to you, then consider opening a business with a trusted co-owner. This way, you have someone to divvy up the work with!
How to determine location when opening a business
Make sure you choose a place that has a high demand for the services you are offering. Do some research online to see if there are a lot of requests for the landscaping services you provide. Google other landscaping businesses to see how many other ones there are in the area. This will give you an idea of whether or not the market is over-saturated, or if your new business will be met with good demand.
To learn more on how you can start your own landscaping business, check out my startup documents here.
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Meet Shawn Chun: Entrepreneur and Landscape Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a landscape business owner at a job site, driving down the road or anywhere else I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Landscaping Business Boss: I want to help landscape business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.