Why do most businesses fail?

When plans are made, various aspects have to be scrutinized to ensure that the business prospers. The product is the “HERO”. No matter how hard you try, the entire plan is bound to fail if the product does not deliver. Never rate a product on the basis of hunch or personal assessment. It is a common mistake that 9 out of 10 people make. The best way is to get it tested with a group of people who are not associated with the founders, then a test market with a bigger group and you are ready to go.

The market needs margins; therefore, the pricing has to be made with such precision that when the channel partner gets their due, the company must have significant retention with them. Do not ever think that if you move into the market with a competitive margin (lesser than the market), you will get good response. While the offtake may be good, you may bleed internally and finally choke out. There have been companies who have made pricing in such a way that, when they went ahead to work on discounting, the more they sold the more they lost. The market hits like a sting. There have been cases where after the discounting was withdrawn, the sales dropped drastically. Now, you are stuck. On one side you have created a customer segment that will not buy your brand (because you are tagged discounted) and on the other side, if you run discount, you are at loss.

Where will you sell also matters a lot. Your benchmarking has to be accurate. Which demographic segment, what will be the behavior of the outlet where your product will be placed and how it will be placed has to be jotted down well. If your selection is wrong, then there will be fatality. The way the industry has been behaving, they are now started charging fees for placing their product in their store. If you make mistake, the drainage of cash will be too high.

The business plans usually have every aspect detailed such as – research, costing, market placement, manpower, quality, possible PnL and so on. With these data with they move ahead with the launch. Whatever they planned, they execute it perfectly. But once the placement is done, the results are not in line with the business plan. Everything goes for a toss. The alarm starts ringing and there is panic everywhere. Losses mount and then reach a level where the organisation that was once looking promising now looks gray. The heated meeting room takes off on the sales team. Blame game is very common in every session. The question is why? why? why?

This must sound familiar to many companies who have entered the market. One year after the launch is the time when the heat begins. People who like to short-cut leave. They know that now the problem will come so better be out. But are people the problem? To some extent, yes but they are not the only problem. The bigger problem is right there in the plan that was created. While everything was done with detailing, one thing was missed. This one thing is the sad story of many companies. They just ignore the pillar of their business. You can never create a business till the time you do not build on this pillar. They are the reason why you will either succeed or fail. Still did not get it. They are your “customers”.

If you have not created ways to acquire and retain customers, no matter how perfect the plan is it will fail. Now, look at the AITEA model. A-Awareness; I-Interest; T-Trial; E-Evaluation and A-Adoption model. The first three ‘AIT’ is in your control. You can make a great product, through promotion create awareness. With visibility and other tools, you can make the customer interested. Then you can conduct trials, both dry and wet to get them to buy the product. That is all in your hands. That is what every salesman does – place the product according to the benchmarking but he cannot force the product on the customer. In fact, if you force, you create a bigger problem. With the ‘AIT’ done correctly off-take happens, the customer picks the product. Now the next thing is evaluation and adoption. By this, it means when a customer picks the product, his interaction with the product can never be controlled by any company. Therefore, it is rightly said by some marketing personnel, every success story boils down to this – you are at the mercy of the customer. The customer after the pick up will do evaluation of the product based on his personal taste and preferences. If the product meets his expectation, he will adopt it. When he adopts, the product will feature on his regular buying list. Such a company will always win.

Management that keeps the customer last on the list suffers. The customer is the pillar of any business. Most of the time she is also confused. This confusion arises because of the many brands that are continuously trying to lure her. When the focus of the company is only on persuading her to buy your brand, the sales improvise. Sometimes, as a consultant, people ask me how many times we have to do it. My answer is simple, till the time you have not won her trust. When she becomes your regular buyer, then you can reduce, but not stop spending.

We as entrepreneurs have to understand that till the time we do not create and retain customers business will struggle. Therefore, the maximum effort has to be made only on demand creation. It is a grilling discussion that is needed. The sales team knows very less about it. They can at a max place the product and create visibility. It is the duty of the company to get the customer to buy their products. No matter how well funded you are, it is customer who is going to take out cash from his pocket to buy your product. You may have all the cash in the world but it is the “customer who is the king”. Keep it deeply engraved in your mind.

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