8 reasons why businesses fail
Over the last 3 years I’ve interviewed over 2500 entrepreneurs about their business ambitions. As I listened, I sometimes had a sinking feeling that I already knew the business was off track and would probably fail. Here’s the top 8 things that come to mind that give me that feeling:
1. You're only doing it for the money
The business idea is based on some trend you’ve noticed that is making lot’s of money right now. It’s been written up as a big thing, you’ve noticed it and now you’re after it. This is almost like trying to catch a bus that you can see traveling in the right direction… It’s too late. The people who make money from industries that are making money are the ones who got into the industry before it was making money (I hope that made sense).
2. You've never worked in the industry as a fully paid employee
One of the surefire ways to make a successful business is to have worked in an almost identical business to the one you want to start. In addition to all the thing’s you learn, you also spot the key aspects that need to be improved and you develop an understanding of the suppliers and contacts you’ll need. I’ve often said to people who are considering starting a business to go and get a job for 90 days in a similar business (even a menial job); It improves the odds out of sight.
3. You're risk averse
Every business requires you to take risks. A lot of entrepreneurs go backwards before they go forwards. If the idea of putting an untested advertisement on your credit card in order to see what happens, makes you feel uneasy, starting a business is probably not for you.
4. You're bland, boring, same and predictable
If you’re unique selling proposition is based on being slightly better, faster, cheaper or friendlier it probably won’t be enough to make an impact. If you get the feeling that your business is boring, you need to figure out how to make it interesting.
5. You're not continuously crunching your numbers
Business owners that do well constantly crunch their numbers in their spare time. They construct spreadsheets that allow them to play with price points, costs and margins. When asked, they have a good grip on their actuals and their projections. Those who struggle often can’t tell you things like their break-even point, their gross margin or their cost per lead.
6. You aren't willing to front your brand
If you say “I don’t want to be known as the face of this business” for any reason, it’s probably not going to take off. Not unless you have a LOT of money behind the business. When a new business enters the market, people want to know who’s behind it. If you won’t front your business, you’ll be beaten by the person who will.
7. People don't know you exist
My belief is “you are who Google says you are” so at a very basic level people who are searching for you should get consistent, accurate and credible information about you. Beyond that, you must reach out to people and let them know you are there. Ads, cold calls, PR, events, etc are all part of a healthy business strategy for getting known; spend the money or go broke waiting for the phone to ring.
8. You're trying to do too many things
Your business can probably get 1-3 things right over the course of the next 5 years. Google for all of it’s hundreds of experiments over 15 years gets very few to become successful money makers – Search advertising still represents 96% of their income. If you aren’t focused on one key thing, you’ll probably be average at quite a few things; which is dangerous. Look at the success of Twitter who focussed on a fairly minute and featureless broadcasting tool but dominated that little segment; they are now worth 4x the value of the Royal Mail (UK).
Daniel Priestley is a successful entrepreneur, event producer and author of ‘Become a Key Person of Influence’ – www.keypersonofinfluence.com.au
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