Why Do Businesses Fail?
When you’re starting the endeavor to become a business owner, you have a lot of fears that may take up space in your thoughts. One of the biggest fears that many new business owners have is the fear of failing as a business.
As a new business owner, you want to make sure that you’re doing everything in your power to ensure that your business is one of the successful ones. In order to know what to do, you need to first figure out what it is that you need to not do.
You need to take a look at why businesses fail and make sure to create a business model that avoids those issues. Here’s how you can do that.
Before you open your own business, you need to take a look at the statistics. Unfortunately, 70% of small businesses fail. That’s quite a big failure rate.
So what is it that so many businesses are doing to fail in their respective markets?
What it boils down to is that there are a few ways to be successful, but there are many ways to fail.
Here are a few of the biggest culprits of small business failure.
1. Not Having a Crystal Clear Vision
One major reason that businesses fail early on is that they fail to set aside the time to envision a clear strategy for their business plan as a whole. If you don’t know where you want to go as a small business owner, then you have no chance of succeeding.
We’re not talking about a basic sentence about what product you’re selling. Having a vague statement communicates to your potential customers that you only have a vague idea of what you’re doing. If you don’t believe in your business, why should they?
To avoid this, you need to take the time to learn how to write a vision statement. for your small business. Use specific goal-setting techniques and put together a statement that encompasses the true core of what your business is. Putting in this work to define measurable goals on the front end will pay off big time in the long run.
2. Not Connecting with the Right Target Audience
Without customers or clients, you don’t have a business. In order for customers to patronize your business and your services, they need to know about you as an entrepreneur and your business.
This is why, in order to have a successful company, it’s so important to understand how to create a brand identity properly and to understand who your target market of consumers are.
Once you identify those two things, you need to connect with your customers where they already are.
A common reason why many businesses end up failing flop is because they do not utilize all of the marketing strategy tools that they have at their disposal. They don’t use all of the social media platforms that we have available today to connect with as many prospective customers as possible. And, utilizing marketing tools does not require a massive marketing budget.
They don’t know their business, so they don’t know how to tell the story of that business – business storytelling – on social media or other marketing avenues.
3. Lack of Good Leadership
A business is only as good as its management team. With poor leadership or a poor management team, many businesses are doomed to crumble under the pressure of a competitive market.
Even the most motivated self-starter type of employees will get burnt out and lost if they aren’t being managed and led by a competent and ambitious leader. The same goes for a leader that’s inconsistent or disorganized.
It also shouldn’t go without saying that leading well doesn’t necessarily mean leading with an iron fist. Think about a time when you had a tyrant of a boss. One that, no matter what you did, it was either wrong or not good enough. Did you feel motivated to do your best work, knowing that you would get chastised no matter the result? Probably not. This is another example of poor leadership that could negatively affect your employees.
As the owner of your small business, it’s up to you to lead your team in an authoritative but congenial manner. You aren’t their best friend, but you aren’t their school principal, either. Hire a team of people you trust and then trust them to do the work. Be the boss you would want to have.
4. Failure to Build Community within Employees
In order to be a good leader, you need to make sure that every member of your team feels included, valued, and incentivized to do their best work.
To achieve this, you need to create a sense of community among your employees.
Many businesses end up failing because of a hostile or even uncomfortable work environment. Nobody wants to dread coming to work each day, and if your employees don’t enjoy being there, they will find other avenues. Lack of employee motivation is a common reason why businesses fail. This can leave your business without a workforce, resulting in failure.
5. Failing to Adapt When the Market Changes
No matter what type of business you’re running, every market is bound to change from time to time as people and competition change. If you’re stuck on the idea of running your business in the exact same way as you have for the past few decades, your business will get left behind as times change.
It’s important to never get too stuck in your ways. If you feel the market changing, you need to do everything you can to change with it. Engage in business collaboration, pay attention to how your customer base responds to things. Never stagnate.
6. Not Delivering True Value
Lastly, not understanding the true value of your business condemns your business to failure. Take the time to understand your business value proposition and act accordingly.
As a good rule of thumb, it’s always better to underpromise and overdeliver than to do just the opposite. Leave customers and clients pleasantly surprised instead of underwhelmed and disappointed to keep your business in that successful 30%.
Key Takeaways & Action Items for New Business Owners
In conclusion, starting a new business is a risk. Don’t let a common business mistake be your downfall. Incorporate these key practices into your business strategy to maximize your chances of success:
- Create a strong vision statement and brand identity
- Strengthen your leadership strategies
- Focus on building employee trust
- Notice how the market changes and adapt to it
- Understand your business value proposition and how to leverage it
An Easy Solution to Make Sure Your Business Has a Chance at Success
If you want to make sure that your business has the best chance possible to have success and longevity, check out Maui Mastermind’s business consulting services. They can provide you with the necessary tools you need to run a successful business.