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 needs to be aware that a target audience is going to be very unique depending on your type of business. However, the target audience for a particular business needs to be carefully analyzed. The illustration below show you some of the areas your business needs to look at:
For example, a business that sells products to consumers can have a target audience that includes people in a particular area, professional or lifestyle. A business that sells services to other businesses can have a target audience that includes a specific problem businesses face that you as the expert will solve. It is your job to nail down who is your ideal avatar. If you are still unsure on how to approach this, look at your previous customers that were really amazing to work with, and see what traits they have in common.
2. 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, if your business falls in a particular niche you will want to do your research and see where they mingle virtually the most (Facebook groups, LinkedIn groups, IG, etc.) . However, we know that certain types of social media are more inclined to target a specific age range, hobby, and activity. Simply fine-tune your social media strategy and try to aim it at your ideal customer based on their comments, what they seem to like and what kind of content they are most inclined to.
If you can ask your current customers which social channel they like, 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 where they go, like and comment, and answer the critical questions you need to dig deeper into what works for your particular situation.
Testing and more testing may be needed but it is so worth the effort once you see it working! 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 explode. These are the customers that will be waiting for your next offer, post and updates. They will also spread the word about your brand so nurture them and always ask for their feedback as well.
The infographic below from first100hits.com illustrates some of the concerns. Even though some of them are not listed in this article they have some sort of relationship and connection with what we are saying:
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 it 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 rather outsource this task. We also have clients that learn the basics of accounting, learn how to check their profits and losses, making them feel empowered because they can see in a glance where their hard-earned money is going.
There is also training that will help you get familiar with both the financial and marketing tools of your choice. We always tell our clients to start small and if you have a good system you will know what to delegate and what to maintain. Of course this is highly dependable on resources, time invested and priorities.
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 separate at all costs, and make sure that you only deduct what is allowed and approved by your financial professional. If you struggle in this area, look for professional advice from a financial expert.
4. Family Matters
Lack of accountability when recruiting family members or friends is unfortunately very common in every business. 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 your staff, especially family, and write these job duties as specific, step by step, in the best way possible. If you are not a writing wizard, consider outsourcing a good writer or HR specialist. Another way is to look at examples of job descriptions and make sure you adjust them to your business.
5. Overhead Costs
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 your time attended training to improve customer service or technical skills?
From our experience with business owners, the team morale is always up and vibrant whenever a good training takes place in the workplace. For example, when we performed an Excel training to a group of 90 employees, they were very happy to know that they learned a skill that will make their work more efficient, and they learned the material in a way that was relatable to what they do on a daily basis.
7. No SWOT Analysis
A lack of research before opening, not scouting the area, not checking competitor status and pricing, demographics and so forth can make you loose focus of the audience you are trying to serve.
The SWOT analysis is quite simple, it is a checklist (sort of speak) that lets you identify:
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 and make them smaller, the best way you can.
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 using multiple ones could be a dangerous path, and to fix that, just focus on one at a time until you and your team can handle enough without you heading to the burnout zone. Double-down on what works, stick to it and progress will be inevitable.
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.
In short, inconsistency creates chaos. Chaos creates uncertainty. Uncertainty creates stress. Stress leads to burnout and depression.
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, putting yourself out there 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 al your positive reviews from past customers and boost 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 on 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, with 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 where 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 strategist, experiment, 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. As you can tell we love quotes so let’s finish with one of our favorites:
“Success is not final, failure is not fatal: it is the courage to continue that counts” – Winston Churchill
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