Why Businesses Fail (and what you can do about it)
by Maria Marsala
No one sets out to fail! Most business owners read all the
statistics (maybe more than once) before they open their
doors. Many know the reasons why businesses fail. But some
businesses operate under this paradigm: "failure can never
happen to me because I know better." Is that you?
What most business owners miss is looking at the reasons for
business failure and turning them into action steps to help
overcome the odds of failure. How do I know? I once thought
I knew better, too!
Bear in mind that even "adolescent" businesses fail.
According to the SBA statistics, 90% of small businesses
fail within the first five years. Many businesses aren't
producing enough income because the business owners aren't
"business wise." They may be excellent at a specific task -
consulting, programming, massage therapy, web site design,
copywriting, etc. Or they have a great product. But wise
about the "business" of business, they are not!
In the past five years of my business, not one client
(including those who have been in business for more than 10
years) provided me with a business plan to review. Not one!
Two of 100 clients have had marketing plans, but marketing
plans don't work without a business plan and other focus
type tools, too. The other common (95%!) mistake I see (and
help my clients correct) is pricing their services very low
as a way to gain market share and new clients. So low, in
fact, that a potential buyer will perceive the service or
product as being cheap and of low quality, even when the
provider offers years of expertise. NO ONE wants to hire a
business that is cheap! Inexpensive - yes; affordable - yes;
cheap - no, no, no!
The most common problems business owners experience stem
from simple functions like streamlining, organizing,
information resourcing, marketing, planning, visioning,
languaging, communication, technology and ecommerce.
Example: If you know that most businesses fail because they
don't have a usable business plan, develop your own business
and marketing plans and use them daily; don't create one
that gathers dust on a shelf. I use the One Page Business
Plan Book or Interactive CD by Jim Horan. It helps business
owners create very realistic, focused, and well thought-out
business and marketing plans, including scorecards to help
you anticipate and avoid business problems.
Example 1: Recently, a client turned down an opportunity to
teach computer classes on a subject she could easily teach.
Using teaching to market her business is on her marketing
plan. So why not? Well, the proposed classes weren't going
to help her get business for her primary business, they
weren't going to attract her ideal client, and the pay was
much lower than her usual hourly rate. She felt confident
about declining the offer. Of course, that same week, other
new business - the type she really wanted - came her way!
Example 2: New client knows she wants to create a business
plan. She also has a strategy of increasing her income by
joining four organizations with networking opportunities for
her to meet her ideal clients. She joins the first two
groups - total cost: $400.
As she starts her business foundation work, which includes
the One Page Business Plan, she realizes that her ideal
client isn't whom she originally thought it was! Some
clients might be found in the two groups she's already
joined, but not her ideal clients. As a new business owner,
she wants to spend her time around her ideal clients, first
and foremost. Planning just a little more for her business
would have saved her $400 in membership fees.
What other simple things can you do to build a solid
· Use a one-page plan daily to create your to-do list and
monitor your business.
· Create an Ideal Client Profile and Elevator Speech and
define a niche for your business.
· Read one of the "E-myth Revisited" books by Michael
· Go with your strengths. Hire individuals whose strengths
ARE your weaknesses to "fill in the gaps."
· Remember that there is no need to repeat the SAME mistakes
others have made.
· Know what your business exit strategy will be.
Most business owners don't know what they don't know. Get
assistance by hiring non-biased professionals who help you
realign with your vision, create plans and financial
scorecards to monitor your business. Look for someone who
can suggest resources to help you and your business grow.
Someone who's been in your shoes and succeeded. Start
looking at how having a partner - a business consultant,
coach, counselor, strategist, organizer or planner - can
help you grow your business.
Ready to learn more about business success? Take a look at
the articles I found on business failure that are posted
Learn to overcome the costly (both in money and your time)
errors that other business owners have already made. Give
your business a fighting chance to continue to succeed.
© 2004 Maria Marsala, business builder who helps women-owned service businesses increase their bottom line in less time. A former Wall Street trader and manager, she used her business expertise to create 6 S.I.M.P.L.E. Business Steps, a program developed to help her clients succeed in less time. Learn more at http://www.ElevatingYourBusiness.com
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