Before you apply for Small Business Administration (SBA) program, you should closely identify your business first. Failing on recognizing your own business will surely hold your application from being approved. I can say the below lists are strongly related to SBA loan requirements. Understanding several of the problems before you start your business will help you avoid them. Hence, here they are:
Owner’s character not suitable for running a business
Business owners who are reluctant to make decisions or who don’t have self-discipline have a higher chance of failing. Businesses operate on relationships. Customers need to trust the owner so they will be comfortable doing business with him or her. A business owner that has issues getting along with people will be at a disadvantage.
Poor choice of business opportunity
Some areas in the marketplace are saturated. For instance, it seems you can’t drive a city block without seeing a pizza place, an instant print store, or a video shop. Having many competitors signifies that you will need something great to offer customers that your competitors don’t. These are high-risk business ventures, due to the fact there are plenty of them.
Insufficient start-up capital
Many businesses start without enough money in reserve. Chances are, finding customers and producing sufficient revenue to support the business will require longer than you expect. However, if you make good decisions when expending start-up capital, you may require less money than you initially estimate. At first, invest your cash in people and things that will lead to sales, not in “flash.” Forget the extravagant office and the newest gadgets unless they are essential to make sales. Sometimes renting or leasing equipment will save you money during the start-up period. Consider this question before you purchase anything: How will this expenditure result in sales?
Bad selection of location
If you are locating your business outside your home, pick your spot according to where your customers live, shop, or stop by. Do not base this decision on proximity to your home. Don’t take a space for the reason that it happens to be available on the first day you’re looking. Attempt to leave your emotions out of the decision. This is especially vital for retail businesses. When you’re considering a potential place, consider this question: Will this location result in sales?
Lack of know-how about bringing in customers
You have to have a strategy to get customers to try your product or service. You can’t just give lower prices than your competitors and be successful. Bear in mind, customers are creatures of habit. They need to have a reason to switch their spending habits.
Failure to get expert guidance
It is crucial that you consult an accountant and, depending on your business, an attorney. Save yourself grief by getting and hiring an accountant in the initial stages. Your business may also need other professionals. Maybe you have expertise in the business you have decided, but you are probably not a specialist on every aspect of your business.
Inadequate experience in product or service
Some people dive into a business without finding out how that specific industry works. Because of this, they may build a pricing structure that won’t allow them to generate a profit. Or they might create an inferior product or service. Successful business owners often have experience in the industry or spend some time to understand it completely before taking the jump.