9 REASONS WHY BUSINESSES & ENTREPRENEURS FAIL

Last year a business owner came to me with a promising project with lots of fresh funding. He wanted marketing help. I quickly realised that he was micro-managing every single detail: from the website, the SEO studies, each social media post etc. Instead of focusing on the macro he did a bad job and made the team feel terrible doing their job. I choose my clients, so I stopped working with him for these reasons. Now I got news his company went bankrupt (here in Nr 8 I describe his wrong-doing). As I predicted to my team, he got overwhelmed, stressed out and confused, mismanaged and broke. Throughout my 12+ years working with business owners all over the world I′ve seen a lot. Here I share a few insights how to go bankrupt more quickly:

1. START FOR THE WRONG REASON

You have already a good chance of succeeding if you start your business for the right reasons. These include having a passion, a positive mindset that keeps you going when others give up and a willingness to learn the skills needed to run a business. Not taking it for a hobby and not doing it solely for the money. 

Here is a case I′ve experienced once: a lawyer who worked for a successful law firm decided that he no longer needed to answer to a boss. He was the one closing the most successful clients, he thought that he could do better financially by stepping out on his own. What he failed to realise, however, was that although he had the skills to do the closing work, he lacked the skills to manage a business successfully. Over time, his enthusiasm waned. He shut down and, happily, went back to work for his previous employer.

Know that it will require much more than you would ever have expected. Be prepared to put in the time, work, energy and the financial investment. But if you get your business right it will be one of the most rewarding things you do in your life.

2. HAVE INSUFFICIENT CAPITAL

Starting a business without sufficient operating capital is almost certainly a death sentence. Many new business owners underestimate the money they will need and the time it will take to sustain a business. Also plan for paying for the support you will need from mentors, coaches and your continuous business education. You will need it.

3. DO BAD/ WRONG/ NO PLANNING 

Take whatever time you need to create an effective business/marketing plan. It doesn’t have to be pages long. Do your market research.

To increase your chance of success, conduct a competitive analysis as part of your overall market analysis. Assess your competitor’s strengths and weaknesses and implement strategies to improve your competitive advantage. Even if you already have a business. Review this step to become more successful.

4. BAD MANAGEMENT & NO LEADERSHIP

Effective management and leadership skills are essential to business-building success, and a lack of either can lead to confusion and conflict within the ranks, poor morale and reduced productivity. This also involves leading and managing yourself first! 

5. EXPAND TOO QUICKLY

The ones who have too many ideas, want quickly more than one product, too many sales funnels, too many different strategies, another city, country... they think big but too fast. Getting confused, overwhelmed, stressed out, do bad planning, and overestimating resources leads then to bankruptcy. They burn and crash like a a failed rocket launch.

6. FAIL TO ADVERTISE AND MARKET

A saying goes: “When business is good, it pays to advertise; when business is bad, you have to advertise.” MARKETING IS THE NR 1 THING TO DO.

Many companies go out of business purely because the owner failed to promote and market. The “if you build it, they will come” mentality doesn’t work in an age when consumers can choose from among a multiplicity of options. You have to get your message seen and heard.

Which channels to use will depend on your target market. Be found online, be findable on Google, have a modern website, use social media daily, start an email newsletter, advertise. 

7. DO NOT DIFFERENTIATE

You’ve heard of the terms, “Unique Value Proposition” (UVP) and "USP/Unique Selling Proposition". These terms describe the qualities, characteristics, products or services that differentiate a business from its competitors. The problem is, too few businesses actually have a UVP or USP, or they fail to make it clear what theirs is, probably because they don’t know themselves nor the market well enough.

Make it clear how you create value and what differentiates you. Design products and services your really customers want. Once you know the UVP and USP, communicate it clearly, to customers and staff.

8. FAIL TO OUTSOURCE AND DELEGATE

As an entrepreneur, you may think, “No one can do it better than me.” or you want to save money and make your own website, SEO and spend hours on Social Media. You may think “If you want something done right, you have to do it yourself.” Or, “I can’t trust anyone else with this responsibility.” That attitude can lead to overwhelm and burnout. My advice is to outsource or delegate inside the company. A leader has to concentrate on the tasks that contribute to the growth of the company, like casting vision and really leading. 

9. HAVE AN UNPROFITABLE BUSINESS MODEL

Just because you have a business idea about which you’re excited doesn’t mean it’s a good one. That’s where creating a business plan, conducting marketing research and seeking the advice of others can be a lifesaver. Ask yourself: Is there a large enough customer base for this product or service? Do they actually WANT what I offer? Do they have disposable income to spend for what I sell? Is there a proven revenue model? How long would it take to bring the business to market and at what cost?

Want to be successful in business?

Get in touch with me and my team and I will make sure you have a successful business on the short, mid and the long term.

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