Hello everyone, and welcome back to my blog! In today’s article, we’ll tackle an important subject, which is on the minds of a lot of aspiring entrepreneurs – why there is some business failure, while others succeed.
For every business that succeeds, there are at least ten that don’t. It’s a simple fact. Otherwise, everyone out there would be a business leader, and there wouldn’t be anyone to employ. But why does it happen? Why do businesses fail?
Despite popular belief, businesses rarely fail due to one significant fault. More often than not, it’s a combination of multiple smaller factors, varying from company to company.
Here is my take on the 13 Most Common reasons for business failure
Lack of competitive advantage
Think about it – why would your average customer pick a bland, generic, and widely unknown coffee shop over something as popular as Starbucks? Not only are they an established, world-renowned brand, but they also offer an exceptionally diverse assortment of coffee and coffee-related goods.
If people can buy the exact same product or service elsewhere, chances are that you won’t get much business. If you want to succeed as a business leader, you need to be creative, innovative and offer benefits.
Lack of strategic planning
Even if you don’t happen to have a detailed business plan from the get-go (and let’s be honest – very few aspiring entrepreneurs have that), you still need to be able to think ahead. If you are to get anywhere in life, you need to know where you want to go. This will then allow you to figure out the steps necessary to get there. And yes, it really is as simple as that.
Lack of understanding about the market
Customers are always ready to offer feedback. If someone was exceptionally pleased or displeased with your product or service, they will be the first one to point out the strengths and weaknesses of what you’re selling.
Always keep the customer in mind, and this will allow you to generate better and more engaging products.
Not Having the Right Partners
A good and productive partnership can be of great help to a growing business. Humans, however, are complicated. We’ve all got our separate interests, drives, and motivations. When the ideas, mindsets, and goals of the people behind a business align, there is nothing that can stand in their way. Sadly, this is not always the case. A lot of companies begin and grow with the help of partnerships. Still, eventually, the ideas and interests of the founders start to clash. And this can have devastating consequences for a company.
Lack of business acumen
If you’re looking to become a successful business leader, you need to be able to understand and appreciate the costs. Think about how much it actually costs to run a business. About how much an employee needs to be able to generate to sustain their own position. All of these factors should eventually find their way into the pricing of your products and services.
But how does one improve at this? It’s quite simple, actually – just look at other successful examples! Study and understand how and why successful products are priced in the way they are. The more you understand, the more opportunities you’ll find!
Lack of a long-term vision
A lot of business leaders erroneously assume that they need to shoot for the stars and everything less than that equals failure. Ironically enough, this train of thought has led to the business failure than you can imagine. Don’t get me wrong – aiming to get far eventually is excellent, and I wholeheartedly support the notion. Trying to get too far too fast, however, is a recipe for disaster. Rushing will just lead to overestimating the capabilities of your team or the number of resources that you’ve got to work with, and you can imagine how well that will go.
Too much micromanagement
As I’ve already mentioned before, you simply can’t be personally involved in every little aspect of your business. There aren’t enough hours in the day, and you don’t have enough energy to sustain that in the long run. So sit down, strap in and prepare to resist the urge to poke your nose through the door every five minutes to check upon them.
Not hiring the right people
Finding the right people for your business can be an incredibly challenging endeavor. Some would even go as far as to say that you need specific talents to be able to attract them. Once you do find the right people, however, it’ll be a game-changer.
But who are those “right” people and where do you find them? This might come as a shock, but you might’ve already found them without realizing it! What you’re actually looking here are people who are:
- Willing to admit their faults and improve
- Ready to follow you on a long journey
And so, if you’ve been following my networking advice, then you’ve probably already met quite a few people who match the description. Now, it’s just a matter of approaching them and getting them passionate about your business!
Still, I’d like to remind you of something fundamental (and something that I sometimes forget as well):
No matter how intelligent or experienced your employees are, they can’t read your mind!
You can’t hold people accountable for things that you didn’t take the time to train, explain, or correct! Or, well, you could, but you shouldn’t!
Lack of capital
Many aspiring entrepreneurs spend weeks dreaming about wealthy investors coming out of nowhere to give them money on a silver platter. But you know what they say – it’s easy to make money if you’ve already got money. The hard (and most rewarding) way of doing it is to make money if you don’t have it! That’s precisely what separates the good business people from the mediocre ones.
Money is never an issue for a skilled and motivated individual. Given enough time and passion, anyone can amass the funds necessary to start a business or achieve their dreams. The “I don’t have money so I couldn’t do it” mentality is just a way of saying “I’m lazy and I don’t want to put in the effort”.
Failing to adapt
In business, just like in nature, being able to adapt is a vital survival skill. Remember – you’re not the only one trying to sell your products and services. There are countless other businesses, just like yours. And if they adopt while you’re busy twiddling your thumbs, they might end up taking your customers and market share away from under your nose!
But how do you avoid this?
Diversify. Be constantly aware of the fact that tomorrow, your product or service might be entirely unattractive for today’s ideal customers. Do your best to think ahead and always have a new, innovative product in the works.
The inability to sell
What can you do to differentiate yourself? How does one stand out from the crowd?
You learn how to sell. You leverage your people skills and your entrepreneurial charm to convince your prospective clients that you are indeed the solution to all of their problems. That with you, they’ll never have to worry about a thing in their life.
The better you are at selling your ideas, products, or services, the better your business will do in the long run.
Trying to do too many things at once
Diversification is vital for the long-term survival of a business. Still, it should only come after you’ve achieved a certain level of stability. Once your team knows exactly what they’re doing and why they’re doing it, then you can start considering expanding towards new fields. In the world of business, every action that you take should be in consideration of the bigger picture. Take a step back and have an objective look at your company. Remember – business is not a race, it’s a marathon. So, take it one step at a time and don’t rush.
Lack of passion for what you’re doing
Before we wrap it up for today, I want to talk a bit about passion.
You know, passion for what you’re doing, the thing that I keep going on and on about in every single business article?
This right here is why – if you aren’t truly passionate about what you’re doing, you’re setting yourself up for failure! No business can succeed and grow if the people in charge aren’t excited about the venture.
You shouldn’t be in it for fame, glory, or money. You should be in for the passion. If you don’t love your business, you’re going to find yourself in a downward spiral with no way out. Times will inevitably get hard, problems will keep piling on, and if running your business feels like a chore, you will eventually stop giving it your all. You’ll fall back into the mentality of “just getting it over with” for the day. And that’s when your creativity and ingenuity dry up. That is how having a business failure.
This is what separates real entrepreneurs from ordinary people. We see the world and everyone around us differently. We care about the products, the services, the customers, and the employees. It is our way of contributing to a greater cause. To better the world and the lives of those around us. We want to build a better future, and we want to solve problems. And that’s why we’re in business. Check out my other blogs such as, “12 Ideas On How To Have A Successful Life“.
And what about you? Have you ever faced one of these problems in your business career before? How did you handle them? What do you think are the best approaches for dealing with them?
As always, if you liked this article regarding why there is a business failure, please consider sharing it with your friends. If you think that I’ve missed something, or if you happen to have ideas or experiences of your own to share, do not hesitate to let me know in the comments below!
Thank you all for reading, and until next time.
Stay Green and Motivated!
Recommended for further reading:
- Stock Market Investing For Beginners: The Investment Guide
- Mindset – Updated Edition: Changing The Way You think To Fulfil Your Potential
- Keys to Success – Napoleon Hill
- The Subtle Art of Not Giving a F*ck: A Counterintuitive Approach to Living a Good Life
- How to Make Money in Stocks: A Winning System In Good Times And Bad