THERE ARE endless volumes of information on how to achieve success in both life and business. However, today I want us to discuss the issue of FAILURE. If you are wondering why, consider the following quote:
“If I don’t go to the place that I can die, how can I learn how to avoid it?”
This quote was stated by one of the world’s wealthiest men – Warren Buffett.
In essence, what we can deduct from this statement is that if we want to avoid failure it is of great value to us to find out, what causes failure in the first place.
Several highly successful business leaders all agree that there are THREE PRIMARY REASONS why businesses fail. So here they are:
- The business model is not based on solving a market need:
Many people establish a business, based on what they love doing, without checking out if the clients they are seeking to attract feel the same way about what they are offering.
The other day one of our members who was an employee decided to step out and establish her own business. Not having previously research her demographic she was planning to introduce services that would be considered somewhat dated and deficient by today’s consumer expectations. While, these services would have been popular 8-10 years ago, they would not meet the mark for today’s consumer. Her services would therefore not compete well in today’s market.
All experts agree that the number one principle that will determine the success of a business is to research a market need or problem for which you will provide a solution. This means you need to go beyond a great idea of what you think is popular to determine more specifically, what problem consumers in your demographic would be happy to invest in and gain a solution.
This also applies to existing businesses. If what you are offering was delivered exactly the same way over 5-6 years, you may find that your clients now consider you are ‘stuck in the past’ and not sufficiently up-to-date with new advances. From our own research, most struggling businesses are as a rule, somewhat outdated in what they are offering. As they say, business is not for the faint-hearted. So, what is reason number two?
- They don’t monitor their cash-flow
Every business needs to ensure that they have sufficient cash-flow to meet their obligations and to ensure they have a little in reserve for any contingencies that may arise.
It is amazing how many businesses do not monitor their cash-flow and don’t ensure that all their expenses are included when calculating their pricing structure. We highly recommend a competent bookkeeper who can help structure your cash-flow projection in line with how it will meet the demands of your expenses. It is a really worthwhile exercise to ensure you employ a financially-skilled professional who at the very least, can work out your financial planning and give you a realistic account on what revenue you need to generate to ensure your survival. It is amazing how knowing this can make such a difference to your mindset in how you manage your business. OK, so what is the third reason that businesses fail? Here it is:
- They don’t assemble a good team
Your business can only run as efficiently as your staff. If you have poor quality staff, they can sabotage the success of your business. Hiring the best staff that can help generate sufficient revenue for you will free you to be able to manage performance and work on the business instead of just working in the business.
Staff can also make or break your reputation and one of the most valuable intangibles of a business is its reputation.
While you may be working on implementing new business strategies for growth, it also pays to review these three issues and ensure they don’t contribute to your downfall. Always remember, that APAN is also here for you for any advice or support that you need.