Why businesses fail - and how to make sure yours succeeds
1. A closed mind
I know. You have been thinking about your business/product for years and years. You (might) have talked to friends, looked at the world and decided that you have it all figured out. Your product/service is the best. Period.
Your product solves a major problem. Your graphics are tops (at least your graphics designer tells you so).
You have fallen in love with your idea and you are going to hold on to it until you die or go bankrupt.
You should consider an Advisory Board to broaden your perspective and gain the help and advice of others. These Boards can be free, meet with you monthly.
They can be a Mastermind Group as described in the best selling classic Think and Grow Rich by Napoleon Hill.
2. Sloppy or ineffective marketing
Or no marketing. Restaurants and retailers remodel a space, invest in equipment and inventory, and create a great menu. Then the doors are opened. Maybe a few folks show up for a few days.
I call it stumble in the door marketing. You take good to great care of the customers who make it in your door.
Then what? What do you do to get them coming back? Do you capture their contact information? Build a list to market to. A friend with a restaurant in Metro Denver build his list from 650 to 3,500 in a couple of years and his gross revenue from $650,000 to $1,8000,000 over the same time with a massive growth in profit. Just because he build a list and communicated with it regularly.
3. Ignoring the competition
You have identified a slight weakness in the biggest business in your niche. They have been around for 10 or 20 or 30 years. Whenever anyone mentions the product/service, they are who gets mentioned.
You think that because you have indentified a weakness, you can exploit it and exploit it you might.
However this competitor did not get big and last for decades by being stupid. They are likely doing many things correctly.
Make sure that the niche or weakness you have identified is cared about by the people in your market area.
4. Ignoring customer needs
You must listen to your customers. You must do exit surveys, you must do entrance surveys. Why do people use you and why do they quit?
What hours of operation do they need, what sizes, what colors, what days of the week do you need to be open?
5. Inadequate/incomplete business plan
Most busi
ness begin operation without a thorough business plan or one that focuses on the product and/or the numbers without adequate thought about how the product/service will be marketed, to whom and at what price.There is little thought about the Three Ms of Marketing: Who is the Market, what Media will be used to reach them, to deliver what Message?
6. Poor location
Small business owners often believe that if you open your doors they will come.
If the only way into your store is a left turn without a traffic light on a busy street, you are doomed. If there is no or limited parking, you are doomed. If your business is not a destination experience and you are at the edge of a market area, you are out of business.
7. Poor execution/lack of discipline
Owning, starting, and running a small business requires consistent action and implementation of strategies, plans and tactics. For example, your store has to be open promptly at the time you say you are going to be open.
You have to create and follow systems and processes which will deliver a consistent result for your customers.
8. No viable market for your product
In Boulder, CO, where I live, I see engineers and technology people create products with no thought of who will buy them. They are products looking for a problem to solve.
No one cares. No market research has been done. No one had done any market testing to see if anyone is interested. And what price they will pay.
9. Inadequate accounting system/no management of cash flow
Recently I spoke with a local commercial banker working with small businesses about the proportion of people he speaks with who have “workable” accounting systems in place.
His opinion based on his experience: three out of ten. And those who use them monthly: one out of ten. This is a major indicator of impending failure.
10. Hiring incompetent employees and not training them
Many small businesses have an inadequate or non-existent system for hiring new employees. They are not consistent in the process used to hire their employees. Hiring someone who can fog a mirror is suicidal.
Further, people come to you to you so you can deliver a specific result, whether it is a cup of coffee, a tax return, or a properly repaired pair of shoes. Turning your business (and your success) over to poorly hired and inadequately trained high school students will take you to the poor house or bankruptcy or both.
I hope you will learn from this and not make these typical mistakes.
To your continued success,
Reg Gupton
www.businesssuccessvideos.com
