It’s no secret that many small businesses fail in the first five years.
We have two questions for you:
Why do you think they fail? and
What can you do to prevent this happening to your business?
This article aims to help you to determine why your business isn’t growing. We have listed here the top 8 reasons why businesses fail.
1. Poor Business Systems
Systems are a key ingredient to any successful business. Systems are everywhere. On busy streets there are traffic lights. Red is stop and green is go!
In the business world there are two basic kinds of enterprises you can operate:
Do you know the difference between the two?
A talent based business purely relies on the talent of the people involved in the business. Say for example a Graphic Artist, or a Chef. A Talent Based Business can occasionally be risky your business is reliant on your, on your team’s, talents. This means a member of your team could leave you at any time. There’s a whole host of different reasons why someone could leave, and staff retention will be the subject of different blog post.
Needless to say, a team member leaving could cause you problems in your business. Believe me, we’ve direct experience of that when one of our Chefs decided to walk out an hour before a Christmas lunch for 40 guests. And if you’re the “Talent” in your business, then good luck trying to have a holiday, or a break. You are your business, and with out you being active in your business, the whole business (and the Cash Flow) stops…
A Systems Based Business on the other hand is a more ideal business work towards and to operate. The business operates with specific systems in place meaning there’s clear direction and procedures. That way your team has clear processes to adhere to and to follow. Think of McDonald’s, they don’t need a real Chef to cook the hamburgers. They have systems in placed. Although it takes more time and effort to create a Systems Based Business initially the reward can be well worth the investment.
Building a sales pipeline is critical to your business. You need to create effective ways engage with potential customers, and to generate leads.
Do you know that there are hundreds of businesses still don’t have great tool to attract or generate leads? And most business owners have no clear ideas on how to apply attraction marketing. As a business owner your business can’t just rely on luck or referrals to get clients knocking on your door. You need to create system to generate leads. So what is your attraction marketing system? What do you use to attract your ideal customer to your business?
3. Follow up
Following up with customers is something that most business owners are not always doing as well as the could.
We’ve seen it with our own coaching clients when they first start with us. Time and time again we’ll see Artists, Designers, and Creative Professionals invest heavily in trade shows, or exhibitions, collect contact details of hundreds of qualified prospects & potential customers, and never ever follow up, or make contact with any of them.
Crazy! Why spent thousand of dollars to have a trade show but then not follow up with the people you’ve met?
Finding legitimate ways to add value and keep yourself in front of them gives your prospects a reason to allow you to stay in touch. You’ll be amazed how well this works. This doesn’t just work for potential customers it works just as effectively for existing customers too. Just stay in touch (for legitimate reasons that add value) and many will buy from you again and again.
4. Consistency and Persistence
Ever heard the expression “One hit wonder”?
Is that you?
Here today and gone tomorrow.
Consistency is difficult to maintain because it’s about building on what you have already done even though the process or system you have in place can be monotonous. For example, building a Facebook Business Page can be exciting at the start. It’s fun to learn the process, see your Page taking form, and receiving new likes. After while though the process of updating the page and engaging with fans could become more of a chore and get boring. Especially if you’re not getting the results you’ve anticipated. Some business owners just give up and let go too easily (and some hang on too long too, but again, that’s another blog post). They may have encountered difficult times, got scared, and just lost hope. Unable to see the light at the end of the tunnel. Believe me, many business we started working with were doing it tough as they struggled with staying focused, before they found the help and advice they needed to become persistent and consistent in their businesses.
“What doesn’t kill you makes you stronger”
Did you know that when it comes to consistency and persistence 90% of the people will quit what they do. It’s the 10% who are consistent and persistent will get what they want in life. “Some of us arrive the foot of the mountain, decide to give up. Some are reaching halfway up and decide to go back down. Only those who persist and are consistent can get to the top to enjoy the amazing view!”~ Vinh Van Lam.
So are you consistent enough to do the tedious yet important things?
Are you persistent enough to now and keep going?
5. Self belief
Self belief is vitally important to the success of your business and in your life.
When you have positive mindset and believe in yourself you think better, act better, feel better, and lead better. By projecting your positive mindset your will attract the right clients for your business, your prospect clients can also sense it and you will attract them like a magnet. Buddha once said to his followers;
“The mind is everything; What you think, you become”.
You tend to become what you think, so you need to be careful about what your think you are.
6. Working “ON” and “ABOVE” your business
As a business owners sometimes we can get too comfortable and complacent.
Our business could go into auto pilot where we focus only “in” our business and not doing the strategy planning such as working “on” and “above” our business.
A business needs to be nurtured and consistently fine tuned. Working “in” your business is a given, this is where you make your products, create new ranges, see clients and generate sales. However working “on” and “above” your business are the two important ingredients that lots of business owners are not doing enough of.
Working “on” is where you plan to grow your business and working “above”your business will help you to take your business to the next level. Sometimes we spend too much time working “in”our business and working hard like a donkey that we totally forget the reason why we wanted our own business in the first place. This is how working “above” your business will help you tune into your desire and passion so you can be on track to achieve your dreams.
7. Cash Flow.
And perhaps the biggest one of all… CASH FLOW
It is extremely common for businesses to have issues, sometimes serious issues with cash flow. All they need is one difficult trading period, like low season trading, a big contract cancelled, or key personnel leaving the company, and the business falls into a pit. They simply don’t have enough cash to keep the business running.
As Business Coaches we work closely with our clients to define their cashflow situation. We give them tools to help them better predict, manage, and enhance Cash Flows, and establish systems that boost sales and reduce costs.
8. Ineffective marketing.
Learn how to marketing to your ideal clients. Always make sure that you track what went well and what not so well of each marketing technique you use. With marketing you need to test and measure and do more of the marketing that works for you.
So are you sailing too close to the wind in your business?
Now you understand the reasons why some businesses may fail, ask yourself these questions:
Do any of the eight reasons apply to you in your business right now?
Which area is your weakest?
Do you have plans in place?
At the end of the day it is your business. You have the power to turn your business around. None of the causes are impossible to fix. Some of the causes are related to business skill sets and you can learn to become better in what you do. Other more related to personal attitudes, habits and mindset which at time can be challenging but nothing is impossible. If you have will power to change then YOU CAN.
Don’t be afraid to ask, and to get help. Hire a business coach or invest on self-development like purchase self help books or enrol in personal development courses.
Get your free financial health check with your local community bank?
- To help you work out the best financial products and services to meet your needs?
- Are you happy with your current financial institution?
- Is your current financial institution hindering your financial wellbeing?
- Would you like to know how to save in fee and charges?
Your local PYROMNT Community Bank advisors can show you how to make most of your banking needs. We can maximise your savings and help you minimise your fee & charges.
Contact Your Local Community Bank Manager:
Phone: (02) 9518 9866