10 Reasons Why Businesses Fail
“Imperfect action is better than perfect inaction” — Harry Truman
Many of us wish Entrepreneurship were a full-blown course and be either a college or high school requirement. If you learned how to be an entrepreneur via the “hard-knocks institute”, I am sure it was an interesting ride. So, if I had the chance to tell future generations what the most toxic ways are to hurt a business, here we go:
1. Target Audience
Anyone who wants to start a business can be a target audience for a another one. However, the target audience for a particular business will depend on the demographics listed below:
For example, a business that sells products to consumers can have a target audience that includes people who are interested in a particular hobby. A business that sells services to pet owners may want to zoom in a specific area, lifestyle and hobby. It is your job to nail down who is your ideal avatar. The truth is that many entrepreneurs don’t have a clear vision of who their ideal “customer avatar” is, and that can transpire in another business areas.
2. A Weak Marketing Strategy
Another factor to consider when targeting your business’s audience is how you plan to market your product or service. For example, a business that sells products can target consumers through advertising and social media. The trick here is that we know that certain channels are more inclined to target a specific age range, hobby, and activity. Simply fine-tune your social media strategy and stick to the one that your ideal customer is more likely to show up the most.
If you can ask your current customers which social channel they like, please ask away! Also, find out what other channels or influencers they are attracted to and follow your clients, this is important. This way you can see for yourself what they like and you can find the answer of those critical questions that will come up when drafting your ads, themes, branding, etc.
The truth is that testing and more testing may be needed, you may find that a combination of a few channels may do the trick. This is the part where tweaking and refining your social media campaign is needed, but it is so worth the effort once you see it work! You will feel as if you won an Oscar (without the drama of course), and the best part is that the traffic will be mostly organic and ready to hear from you.
The infographic below from first100hits.com illustrates some of the concerns in this article. They are not exactly the same but they are connected in a subtle way. Also, let me clarify that there is not an specific order of the reasons listed in the article. The infographic below though seems to explicitly add them in this order:
3. Lack of financial Planning
If you have the creeps every time tax time is approaching, then this is a symptom that your business finances may need CPR and get in check quickly. Always use a financial tool and now we have a million choices (Zoho, QuickBooks, Monday, and so on) and decide if you can learn how to do light maintenance on your account or if you outsource.
There is also training that will help you get familiar with the financial tool of your choice. We always tell our clients to start small and if you have a good system and financial knowledge, light bookkeeping should be added to your daily tasks. We know that this may not the case for everyone and outsourcing may be the better choice. The point here is that this is an important decision and needs to be made early on during your business evolution.
Some business owners treat their business as a never-ending ATM machine. Avoid that by not comingling your business with your personal expenses. Keep both accounts separate at all costs, and make sure that you only deduct what is allowed and approved by your financial professional.
4. Family Matters
Lack of accountability when recruiting family members or friends. The main goal is to keep the business afloat and prosper eventually. The team is as strong as your weakest link so yes, even the adorable aunt Dorothy could be costing your hard-earned business lots of money. Make sure to clearly define roles and responsibilities for all of your staff, especially family, and write these job duties as specific as possible, step by step if possible. If you are not a writing wizard, consider outsourcing a good writer or HR specialist. Also, take a look online and see job descriptions that are close to what they will be doing. This is where you will change these and add your specific goals for every position.
5. Excessive Overhead
Excessive overhead, rent, and unnecessary subscriptions are often the major culprit of this important number. Look for options to co-rent, downsize or if possible, take your business online or delivery-based approach (think UberEATS). If you and your accounting professional feel is the right move, consider paying per hour and not under payroll but only and only if it makes sense.
6. Poor Staff management
The best examples can see in Gordon Ramsay’s Kitchen Nightmares. If you want an encyclopedia of examples of bad management in a restaurant, binge for a weekend and apply those learning lessons to your business. What not to do can also be a great teacher and poor management can be further investigated by answering these questions:
- How is your business environment (a.k.a. vibe) when you come into the office?
- Are you meeting individually with your staff and see what can you do to improve their working conditions?
- What are you doing to keep your staff motivated?
- How are you delegating the daily tasks?
- Are you enforcing a policy of accountability without being a tyrant?
- When was the last time you staff had a professional development training, team activity or recognition?
7. No SWOT Analysis
A lack of research before opening, not scouting the area, checking competitor status and pricing, demographics, and so forth can make you lose focus of the audience you are trying to serve. The awesome thing nowadays is that it is all available online. In the early days it was way harder and a lot of driving around was needed (yellow pages, anyone?)
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The SWOT analysis is quite simple, it is a checklist (sort of speak) that lets you identify:
- Strengths
- Weaknesses
- Opportunities
- Threats
The idea is to bring all these factors in writing, right in front of you, so you can visualize where you stand and how can you take advantage of your strengths to the fullest, and mitigate the weaknesses. There is something magical about writing, we think.
8. Inconsistency
Inconsistency is one of the biggest enemies of any business. It is the reason so many startups fail. It is the reason so many businesses never take off.
For example, not sticking to a social media platform and instead, spreading yourself thin using multiple ones could be a dangerous path, and to fix that, just focus on one at a time until you can handle enough without you heading to the burnout zone.
The reason inconsistency is so destructive is that it creates chaos. It creates a lack of trust. It creates a lack of stability. It creates a lack of predictability.
Inconsistency makes it difficult for customers to trust the business. It makes it difficult for employees to trust the business. It makes it difficult for the business to predict future trends.
There are a lot of productivity tools like Trello, Asana, Monday and even the good old Excel Spreadsheet that can help you keep track of the ongoing tasks and boost your consistency.
9. Impostor Syndrome
A lot of people who experience imposter syndrome grew up in families that placed a strong emphasis on achievement. Parents who alternate between excessive praise and condemnation run the risk of instilling fake feelings in their children. Pressures from society only make things worse. This is detrimental to your business because it will stop you from trying new ways of marketing yourself, and what is worse, these feelings can lead to fear of success.
Remind yourself constantly about your strengths
Make a list of your strengths and potential improvement areas, and keep it on your notes on your phone or on a wall in your office. Repeat them to yourself before you make a presentation or market your business.
Acknowledge your experience
Do not limit your search for assistance to individuals with more experience. For example, tutoring or working with younger pupils might make you more aware of your progress and the wealth of knowledge you possess. Always look back at your accomplishments and all the recognitions and reviews your business has. One of our major motivators could be reading all your positive reviews from past customers and keep boosting your confidence.
Nobody is perfect, and that is ok
Let me tell you a story about our journey because it is the best example that I can think of how perfectionism can stop your way to success. Before the pandemic, we were doing training in person, and we developed an amazing curriculum for businesses that needed our help. In the meantime, we were debating about getting fancy equipment for our YouTube channel, scouting for the best video editors in town, and making one excuse after another looking for perfection. Analysis paralysis kicked in and this could be dangerous. Covid-19 hit, and we were forced to act quickly and deploy our YouTube channel and made it work. We worked with the resources that we had and make a pledge to make sure the videos were the best they could be, with no fluff, no fancy effects, and plain good information. This decision was the best decision we ever made, and if you are thinking of opening your own channel do not wait for everything to be perfect because it will not be, and that is okay. The time is now, people are very aware that quality content and knowledge that helps them fix a particular problem is way more important than any fancy editing or movie-like graphics. The only investment you want to make. A high-quality microphone and a lot of them will not cost you more than $100.
10. Zero Adaptability
Looking back at the times when COVID hit, a lot of businesses failed to adapt to the new normal which was pushing their business online and making sure that their presence was the best it could be. Since we train in those areas, we had an immense number of people and businesses trying to adapt to social media marketing, how to build their websites, how to improve their SEO, and other tasks that for them seemed impossible and they needed an outsider to help them based on the resources they had. This is a lesson about adaptability beyond our wildest dreams. COVID was the biggest lesson about the survival of the fittest, not to mention the emotional rollercoaster when we deal with loss.
In short, I hope that this article motivates you to succeed even more and do not be afraid to test marketing channels, change products, improve systems, change strategies, experiment, and look for a second opinion from an expert. Experiment as much as you want because the beautiful thing here is that you can go back to what worked and tweak it, so it works even better. Resilience is a key component so your business can thrive and resist the everchanging trends.
Please comment below if you feel there are other reasons businesses fail not listed in this article. Also, let us know which one of these reasons do you feel are the most important in your opinion. Thank you for making it all the way here!
Originally published at https://iknowledgeschool.com on June 29, 2022.
