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"Why New Businesses Fail, and How to Avoid Their Mistakes"

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What's the failure rate for new businesses? Studies and research vary with each other, but on average, it's close to 80%. Yes, only two out of ten small businesses will survive their first 18 months of operations. Many factors can be the cause: the lack of experience, the idea that simply doesn't work, or on the other hand, a good idea not executed well, and many other things that can be as simple as being unlucky.

However, studies also suggest that a pattern exists, that may differentiate between the 80% failures and the 20% successful ones.

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What actually made the difference?
Here are the top things failing businesses do, and how to avoid their mistakes:

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1. Failure in Communicating Your Value

When you have your business idea, of course, you believe there's some value to it. Otherwise, of course, you wouldn't start the business in the first place. The thing is, your perceived value will not be perceived as so by the others unless you communicate it well.

Don't get me wrong; not all business ideas have the same value. Some businesses don't have too much of a value, yet they communicate it well and succeed. Many have great values, yet fail to communicate it. And yes, some are simply not valuable at all.

So ask yourself? Do you believe your business offer some value and solve some problems for your potential clients? If you believe so, can you explain it in less than 30 seconds clearly? Try it with your family, friends, partners, peers, anyone that might give you an honest and objective feedback. If they failed to capture your message clearly, so will your customers.

2. No Dialogues With Customers

Who will give you the most honest (and most of the time, harshest) feedback? Like it or not, they will be your customers. Not your parents, not your spouse, not your best friends, your customers. Yet, most new businesses failed to address the importance of doing a clear dialogue with their customers.

Many channels are available, and no, 140 characters Twitter and customer feedback card doesn't really count. Face to face conversations, when available, is always the best option.

Depending on your business, the answer may vary. But find the best way to communicate with your customers as soon as possible.

3. Not Being on The Right Time

There are many cases when your business is actually a great one, yet your market is simply not ready for it. It can be caused by many things: the current technology is too expensive, the demand not yet manifested, and many more.

Many businesses failed this way, only for other business with the exact same product or service to be successful the next few years. There's nothing much you can do about it, except maybe to compromise; can you simplify the product, or release a fraction of it for now? Can you change your business model? Can you delay releasing your product while still somehow survive (finding investors)?

4. Overexpansion

The enemy of many successful small businesses is overexpansion. When the opportunity to expand arise, it will be tempting. Your earning will be higher, your business will accelerate faster, your brand will be more reputable. Yet the question is, are your team, and ultimately yourself, ready?

Many businesses fail because they expand too quickly, or too ambitiously, where otherwise they will still be a successful business. Expansion is a nasty business, and will need a lot of preparations, skills, and money. Don't forget that you and your team will initially work double (or more) than before. Would they be ready for the necessary sacrifice? Can you provide a raise? Can you elect another team quickly? Consider those things before you decide to expand.