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Top 20 Reasons Why Companies Fail & How to Avoid This Fate!

Let’s face it you’ve always wanted to be your own boss, and now that you are, you might wonder why owning a business is so hard. Struggling to manage a business and keeping it in a responsive, efficient and successful mode is not uncommon. In fact, it is necessary at times because that’s how your business challenges you to be creative and find options, you’ll learn ways to troubleshoot, build management and leadership skills as you mature to build roots into your business. But you must figure a way to overcome issues and setbacks and overcome them fast. You start fixing issues by thinking optimistically. As a small company too, it helps to understand the difference between small, and large companies and knowing how very different the issues are. Below, you’ll find a list of 20 frequent struggles that business owners go through. Regardless of who you are, or what role you play, you’ll identify with most, if not all of them.

 

1. Hire the Right People
– You are hiring people but find a high turn-over rate or dissatisfied employees. A number of things could be amiss, but I’ve found that compensation, improper atmosphere or management treatment are the common indicators of high turn-over rate. Hiring the right fit for your company and a candidate who is best to work with your brand is important. However, you must exhibit a management style that commands respect and show respect to your staff or team members. Everybody wants to feel like they are important, no matter how menial their job is.
– Small and medium-sized business owners need to build a strong team of reliable people. The need for the right people to help a smaller business is much different from a billion-dollar corporation. In a small company, employees may experience something new and different every day. They need to be comfortable in an environment that is consistent and generate trust. You must build a culture that employees feel there are working in a system of strong foundation. Having some sort of written operation manual is key to help employees feel like they belong to an established company. Keeping things clear, concise and simple is beneficial to build trust, satisfaction and staff retention.
-Most small and medium-sized business owners struggle with finding the right hires quickly. Introduce the company culture early, optimize the hiring process constantly or centralize your hiring in one platform. There are plenty of hiring tools out there in the HR tech community that can expedite the recruitment process. They can do everything from making it easy to showcase your company open jobs, to provide a platform to post to multiple job announcements at once. I would suggest to also use personal connections and networking opportunities to spread the word about open positions.

2. Business Planning
Not having a written plan for your business is like not having a clear success plan. Lack of planning is by far the main cause of business failure because everything hinges on this. Having a business plan keeps you in check and keep you learning more about your business and also be ahead of it in planning. When you don’t have a business plan it’s easy to stop learning. A business plan is like a game plan or road map that will help you to become focused and productive. You must craft a business plan by having the start and end in mind. There has to be a continual process to your business in order to learn, adapt and survive. Carving out time to continue the learning process will ensure that you stay current, but more importantly, you’re able to take advantage of new innovations in your market, which will make your job and business run smoother. Nothing in your market stays static, and a business plan help you to stay ahead of the game.

3. Pursue the Best Opportunities
Many owners of small and medium-sized businesses believe they should go after every opportunity to gain more customers in every kind of niches. Doing this can actually ruin your business. If you are too focused on pursuing customers that are actually a poor fit for your company, you may miss out on the ones that would have been perfect for you. You save time to increase revenue, build better customer support and grow quicker by focusing on the right customers. Develop a list of key customer traits of your target customers, so you can filter out and recognize the ones that are suspect. Don’t be afraid to be picky and walk away from opportunities that are not well-suited to your core business.

4. Time Management of Operations
-You’re spending, and wasting, too much time on repetitive tasks – use a software to automate everything you do. There are many free options, just google and you’ll find them.
-You are regularly losing track of incoming, high-quality leads – use a CRM (Customer relationship management) tool to track and follow up with leads.
-There aren’t clear processes and protocols and your company’s operation is creating inconsistencies, unproductivity and time wasting. Create policies, procedures and processes, then ensure that your entire staff is crystal clear on them. This will help them manage their time and build productivity.
-There are too many prospective customers and not enough time in the day to follow-up with them all AND do your daily work.  Look to technology – marketing automation is the only solution.  There are many cost-effective tools and free tools in the market.

5. Stay Organized
Small and medium-sized business owners juggle a lot of plates and wear many hats and balancing or keeping them straight can be a challenge. Small companies are long on ideas and short on resources. If you don’t have a personal assistance then use free technology like google calendar to help you stay on top of everything and alert you on important tasks and meetings.

6. Deal With Government Protocols
For those living the United States, the federal government provides assistance for small businesses, but many business owners aren’t aware of these services. Every state has at least one SBA office, where small business owners can turn for free assistance. Find out the protocols and assistance in your country. You can hire a CPA, if you don’t have one, they have to keep abreast of changes and are a big help. Instead of a high retainer for a CPA of Tax Attorney you could have hire one on an ’as-needed’ basis to keep costs down.

7. Procure Sufficient Capital and/or Savings
Without capital, it’s impossible to get your business off the ground, at times, and in the U.S. economic struggles have kept banks from making loans to small businesses in recent years. However, the SBA offers loan programs that can help you get the money you need. Another option that has become popular in recent years is crowdfunding, which involves raising capital through online campaigns. Crowdfunding has emerged as a viable way to raise money to support early sales and allow organizations and people to invest in your company.

8. Find a Mentor
Although no two businesses are exactly the same, there’s great value in talking to someone who’s been in similar shoes. I recommend that business owners look for forward-thinking organizations that are small business advocates, providing networking and other education programs. In the U.S. the Small Business Association and the National Small Business Association are good resources. The SBA also has volunteers willing to help and has developed a mentor program. Its SCORE Association pairs experienced small business owners with those looking for guidance. You need someone to help guide you rather than doing everything by yourself and at times if comes down to paying for a mentor or coach. But you can opt on starting your own Mastermind group, off-line or online. This is a group of like-minded businessmen or women, who are driven to win-just like you. With a mastermind group you can build an environment of indirect mentoring, where each member is helping one another.

9. Have Strong Conviction
The single biggest challenge for small and medium-sized business entrepreneurs is having complete conviction in their product or service. When things become tough, they don’t have the conviction to push through the problems and their business will fold. They need to believe in their concept, that it is something than can become profitable. With conviction, all obstacles in your way are less of a struggle. Without conviction, even minor setbacks can be insurmountable.

10. Competitive Advantage
Economy of scale or distribution makes it harder for small and medium-sized businesses to compete with companies that have established distribution and influence. Most businesses that fail, suffer from inadequate marketing, so they can’t compete. They are either strapped for cash or lack experience or do not prioritize marketing in their business plan. Marketing must be constantly #1 on the list of activities of a business to compete and achieve success. Marketing gets cash into the bank, without it a business doesn’t stand a chance. Another part of this is the lack of tracking metrics and learning from analytics. For example, a product-based business must track each marketing activity to measure effectiveness, so that you can implement better strategies to sustain competition.

11. Become Sales Oriented
All business owner must be sales oriented to succeed in business. This is an absolute must otherwise you will not survive. You must learn to pitch and to negotiate – even if you never did it before. This is scary for some entrepreneur, but this is a very useful skill. The good news is that if you are good – you will have an easier time overall. You should become more sales driven as a business owner even if you are not in charge of sales. The fact is, as long as it’s your company sales is your responsibility. It starts by looking at sales strategy in a positive way – as an extension of you and your mission to grow. This will help you to like it and be motivated so you can know what to expect from your sales manager or sales team.

12. Motivation
Being motivated can be very hard for most people and this is also a factor that affects business owners. If you don’t have motivation as a business owner everything will feel hard especially for those who have to do almost everything for themselves. From marketing to handling clients to hiring freelancers, the list in unending and they must master it all. It’s hard to keep on going without seeing any results. This is why the key to staying motivated is working on your mindset. You have to have a tough mindset, because motivation is not an emotion it is moving towards your goal because you want to achieve it and you understand you must be disciplined, focused, resolute until you accomplish your goal.

13. Prepare New Product Launch
You are launching a new product, but you have little knowledge or information for market and industry analysis. You are not able to come up with the right brand message that will position their product effectively and convince your audience that they need your product. Instead of positioning your product, position your audience by promoting the best features and benefit of your product to your most ideal customer. Find the problem of your ideal customer and create your marketing message around solving that problem. Conduct proper research about your target audience, their demographics, their stereotypes, etc. Without proper research, you’re going to end up targeting the wrong audience and missing out on your most lucrative are stable customers. There are many tools to help you conduct better market and audience research before you launch your product. The Marketer’s Almanac by Think with Google, for example, is a free resource that lets you find out useful data on customer and market trends and shopping habits. Otherwise you can invest in tools like Survey Monkey, and create in-depth surveys to understand your market. Another thing that’s helpful is creating your own surveys by crafting your own questions to better understand demographics and analyze the data to refine your understanding of your target audience.

14. Customer Care & Retention
The most common issue that ‘s inherent in small business – is customer care. Usually the business owners are trying to support their customers themselves, so they don’t have enough time and struggle with time management and lack of resources. Every customer deserves a full range of support in spite of the product or service you provide. Most company owners start with a nonchalant mindset, like, “I have started my company to provide this service or created my product, let’s see how best I can fit it into a market.” This approach does not care about or consider the customer.  You must approach business not only having a customer in mind and how to best solve their problem, you must also plan how to take care of them and retain them long-term with the best of your ability. A lot of company are quick to get customers but when they don’t take care of them they will not retain them. Customer retention is vital to your success.

15. Niche Building
You’re spending money to market, but there’s no clear (R.O.I)  Return on Investment for the money spent. Essentially, you’re wasting dollars and living on hope. It’s likely to not work in the long-run. Your target market isn’t clearly defined so you try to sell to everyone. Define your primary and secondary target market first, then go after them relentlessly. Tracking each channel of marketing and doing the calculation of cost vs revenue, is the only way to gauge how well you’re doing or if you’re doing the right thing.

16. Mindset Building
You act out of a fear of failure, rather than the desire for success. People who start a business need a mindset that is vastly different than that of a 9-to-5 employee. The will to persevere and persist, the ability to think outside the box and get creative and the commitment to developing discipline and habits that propel a business upwards – all these are integral to business success. If you have the will, you’ll find a way.

17. Be Prepared for Set-backs
Setbacks happen to everyone at some point in life and a business owner is no exception. Business owners have to face the fact that they will need to be prepared to cater to problems to bridge the gap. Facing setbacks has to be viewed as a natural path to success and dealing with them in a healthy manner is really important. Find out the core reason for the setback, learn from the mistake, look at the situation as a learning process, then make a firm decision to be focused on finding the right solution.

18. Get rid of Rigid, inflexible Models
Business needs to be adaptable to market needs and requirements and technological changes. The business owners must invest time and resources into market research, to stay on top of current and expected changes that directly impact its survival and future profitability. Study your customer behavior, find ways to build customer retention and find ways to innovate your services and diversify your product offering. Encourage customer feedback as a part of staying in touch with their needs and experience with the services or products you are selling.

19. Strong Financial Management
Some businesses fail in spite of having good sales and cash coming in because of irresponsible fiscal practices. For example, not re-investing revenue back into the business, spending frivolously without planning, not planning for asset replacement, not budgeting for continuing research and marketing, not preparing for future growth and expansion. Figure out your numbers so you’ll know how to re-arrange or adjust expenses, mark-down or increase prices, while learning cost-effective marketing techniques and use them.

20. Do Not Be Overworked
You are working hard but on the verge of burnout. Find ways to delegate, like hiring an Assistant to help with certain tasks. Small business owner mostly run their business single-handedly with very little or no managerial help. As a result, they are too busy taking care of routine business, leaving very little time to think about large objectives such as business diversification, profitability improvement, cost optimization etc.

 

These are just a few of my insights. Throughout my tenure I’ve gained the insight to easily detect what led to my clients’ problems and the warning signs of failure. Struggling in your business is one thing, but too many times the warning signs were left unchecked and escalated into huge problems to fix and oftentimes failure. You ought to know the first signs of impending failure, so you can solve them before it’s too late.

I’ve also learnt what strategies and solutions work and what doesn’t work and how to turn a business around from complete disaster. Through case studies I have also developed a list of over 150 warning patterns of failure, and here my top 12 to watch out for and do whatever it takes to curtail.

THE FIRST SET OF WARNING PATTERNS THAT YOU SHOULD START EXAMINING:
1. Weak Management Style & Leadership
2. Absence of Strategic Growth Planning
3. No Cash Flow Plan
4. Foggy Unique Selling Proposition
5. Old-fashioned Marketing Operations
6. Reliance On A Few Customers
7. Lack of Industry & Competitive Knowledge
8. Little Ability to Track Business Performance
9. Lack Knowledge on Hiring and Retaining Right Staff
10. Bad Internet Positioning and Reputation
11. Poor Customer Relationship Management
12. Inadequate Organizational and Time Management

If you need to utilize my strategic solutions to start growing your business contact me directly here. CONTACT ME HERE.

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