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“I have given up! I can’t go on like this!” If you are thinking that; don’t quit just yet. We will explore failures in business and how to avoid them.
Many business owners are going out of business in 2020 and you need to know why so you can avoid the same outcome in your own business. In fact, did you know about 20% of business start-ups fail in the first year? About half the remainder result in failures in business within five years of operation, and only 33% of these surpass the benchmark of 10 years. And to make things worse, Covid-19 has made things even more devastating for many businesses.
So, why do failures in business happen? What are the main factors driving this? Before I say, “I have given up,” how can I change that? Read on to find out in this article.
Why Entrepreneurs Say, “I Have Given Up?” – Failures in Business and How to Change That for Your Business
Lack of a Clear Vision
Vision is crucial to every successful business. Without a clearly stated vision and mission of the business, there will be no direction for the business and no enthusiasm to work towards success. Vision serves as a roadmap, a pointer, to shed light on what the business hopes to achieve. Vision can be used to measure the success of your business today in relation to where you want to be in the future.
Without having a vision is like navigating through the seas without a map. You can bet you’ll have a failure in business, after having wasted time, energy and money. So be sure to clearly state the vision of your business. Include what you hope to achieve and where you hope to be in a definite time frame and work towards that.
No Specificity in the Target Market
Many entrepreneurs say “I have given up” due to lack of a defined niche – a specified target market for the business’ goods and/or services. To succeed, there must be specialization towards a particular target market. If you intend to serve all classes of persons, then you can rest assured that you will meet no one’s needs. Your work must be tailored to meet specific needs of a specific population, be it globally or locally.
It will profit you to target a smaller market population or niche and satisfy this small market exceptionally well. Make your business stand out as an expert in a particular service or a supplier in a particular product. You’ll more likely make a name for yourself in the process.
Lack of a Strategic Business Plan
The written strategic business plan is crucial to how your business operates – it’s the strategy of the business. Do you have a well thought out and well-calculated strategy for your business?
The business plan clearly includes the target market (see above) for the business, the vision of the business and how you intend to attain that vision. It also spells out your financial projections, staffing and specific products and/or services that will be offered by the business.
Without a written strategic plan, there will be no strategy, and your failure in business will be likely. Devise your strategies carefully, plainly express it in writing and run with it!
Lack of a Well -Strategized Marketing Plan
You will say “I have given up” if you lack a solid marketing plan. Now having established the overall functioning of the business: financial anticipations, possible staffing requirements, desired goods and/or services to supply, it begs the question, “How do you intend to market your goods and/or services?” This is where a marketing plan comes in.
The marketing plan defines the strategies that will be employed to market the products and services that will be offered by the business to the target market. These strategies should be well thought out, well-calculated and tested, and you’ll start to gain traction. What you sell will be successful in the target market.
Lack of Action to Back Your Ideas
It is relatively easy to create a plan. Having the ideas are one thing but taking action on them is the key determinant to success. You must take action on what you’ve conceived as a plan for the business if you’re to see results. You have to get on your feet and get things done. Plan deployment is everything.
I explain this to my coaching clients. Every business owner gets results from coaching. But some clients get spectacular results! These are the clients that take action between meetings; they follow through on their commitments and then do even more.
Maybe the ideas aren’t as great as you may have hoped. Well, you won’t get anywhere with getting ideas. It is far more preferable to make a decision and an accompanying step and have a failure in business, than to not take a step and just stick to the drawing board. With success, there must be action.
Lack of Commitment to Learning
To be successful requires constant research and learning, seeking out new knowledge to foster the business. You must learn constantly, seeking for new ways to market your goods and/or services. You must learn how to better manage the finances of the business, better avenues to invest more and so forth.
You need to be informed of what’s going on around you, business trends, trending goods and services and seek out new ideas to incorporate new consumers’ preferences into the business. The day you stop learning is the day you will say “I have given up.” Ray Kroc, the founder of McDonald’s corporation said, “If you’re green, you’re growing and if you’re ripe you rot.” Keep learning!
No Follow-up With Clients
When a business fails to follow-up with the clients, they are often perceived as not serious, inattentive and even unprofessional, and this is the highway to failures in business.
To succeed, you must pay attention to your clients, ensuring you don’t lose them. When you are reliable in following-up with your customers by replying to their calls, emails, respecting their appointments, you will win their favor. This will create loyalty to you and that’s a network that strengthens the business.
Lack of Consistency
To be regarded faithful at something, you must be consistent at it. Without consistency, you won’t win the loyalty and respect of your clients. You’ll struggle with the business. So, be consistent at what you do, and you’ll be amazed at the customer base you will amass with the passage of time.
Failure to Understand Customer Behavior
Many failures in business occur because owners fail to connect to customer needs at a particular time. To be successful, your goods and/or services must remain relevant to the customers. When your business fails to identify customer behaviors of the times, you are already set on the path to business failure. This is because the goods and/or services of the business may no longer be of help or need to the customers. That’s not what you’re shooting for.
So consult with our customers, send out surveys, conduct interviews if you have to, but get in touch with the needs of the customers. For example, in this age, your business should accommodate methods of cashless payments and possible door-to-door delivery in line with current regulations to curb the spread of the COVID-19. Failing to identify this may continue to require in-person contact for all goods and services offered. Many customers will shop at businesses where they feel safer.
You can also review competitor sites, social media and other outlets just to be sure to get this right. There’s no point starting a business that isn’t relevant to the population – that’ll just be a waste of time, energy and resources.
You can’t be successful in business when you can’t keep accurate inventory of your available goods. When you run out of stock regularly and disappoint customers, you can rest assured you’re being perceived as not serious or incompetent by the clients. They may even never use your services and products again, and that, my friend, leads to failures in business.
So, get your records straight. Keep clear track of what you have and don’t have and spare yourself the embarrassment. Invest in a point of sale system to help you track your inventory.
If you need extra staffing to get this done, then make the investment. When you keep track of trending items and keep them in stock, you’ll trend as well as a known supplier. That sets you up as far as success is concerned. But when shortages are frequent, your brand diminishes.
Business Owner Fear
Fear brings torments and is a great snare to progress. Many failures in business happen because of fear in the owners. It takes courage to sell goods and services for a premium price on the hopes that they will be desired and acquired by the population. The absence of such will ultimately lead to you saying “I have given up.” Many businesses remain small and insignificant because of fear to take risks and increase the supply capacity. So, don’t be afraid to invest. Take the risk. It will be better to take a risk at progress and fail than to remain in your comfort zone. Remember, the person who never tries can never succeed.
Let’s look at the opposite problem: growing too fast!
12. Unsustainable Growth
There is a time for everything and nothing matures overnight. Many businesses fail because the owner tries to accomplish too much in too little time, trying to expand too quickly. Many times this ends in large debts which become a snare to the business owner. Debt can force you to close or slow down your business significantly. Trying to take on more than the business can handle can lead to overload and failures in business. Rather, be smart and consistent and steadily expand the reaches of your business with time. Get reasonable loans where necessary and establish well-defined plans to settle them. Learn to say no when opportunities tempt you to grow too fast.
Many business owners may mistake “gradual” or “steady” for “sluggish” or “lazy”. To be steady means you recognize you can’t make it overnight. To be sluggish means you relax and take things always at a pace of comfort and ease. To succeed, you must be aggressive in your business. You eagerly seek out manageable ways to expand the reaches of the business. Being sluggish has the tendency to retard the business. Customers may lose faith in your competence. Losing too many customers can cause you to say those dreaded words; “I have given up.”
Be smart to identify new opportunities and strive to maximize them.
Lack of Sales
The overall aim of a business is to make profit, and nothing drowns the business in failure more than dwindling sales of the business. Sometimes a lack of sales may be caused by uncontrollable factors like the prevailing atmosphere surrounding the COVID-19 pandemic. But frequently this comes into play because of the inattention paid to customer trends, habits and deviations in the market.
So, you must be proactive and vigilant with your sales. Watch closely your sales. Identify factors that hinder or otherwise bolster sales. This may often times require expansion in supply, diversion in the goods and services offered or increased staffing levels. Either way, you must be vigilant to identify problems and opportunities and take necessary steps to maintain and increase your sales.
Neglecting the Need for Administrative Tasks
The business is only as successful as its administration. When businesses fail, a great deal of the blame falls to the organization of the business. Therefore, pay attention to how you administer your business. If you need to improve your administrative skills, then invest to do so, and do it as a matter of urgency. Perhaps, you may need to hire more competent personnel to help administer the business for or with you. Either way, strive to have top-notch administration of your business.
Being restricted in the modus operandi of the business may hinder growth and precipitate the business towards failure. This may be born from the fear to try out new ideas or indulge new ventures. Or it could be your reluctance to explore new paths for the business.
Sometimes, business owners may even resist a new thing, even when the “the way we’ve always done things” is seriously hurting the business. Never be obsessed with your own ideas or some particular method. Be open to try new things. Perhaps you have been resisting the idea to engage in eCommerce of your goods and services. Maybe you resist adding or subtracting a particular item you supply simply because you started the business with that item.
Whatever your “sacred cow” is, be open to explore new possibilities. You may just find yourself stepping on the path to success rather than a failure in business. Remember, “insanity is doing the same thing the same way over and over and expecting to have different results.”
Absence of Data
To run a business and do it successfully doesn’t happen by chance or luck; it’s a deliberate, fully conscious effort with hard work. It includes applying a clearly defined business plan, strategic operations, and sound financial management from the time of inception and throughout the business. To do this requires data – up to date and real-time data.
You need to know what revenue you generate from your business even hourly. You need to know what and where losses are incurred regularly and what percentage of this revenue goes to cover bills, wages and taxes. Without such data you can’t successfully grow the business. You may even lose money without realizing it. Data is so important to a thriving business.
When you suspect failure or lapses in any aspect of the business, and need to take corrective action, you look to data for guidance. When it comes to deciding how much you pay staff, you look to data to assess that situation. That includes competitive data on what employees are being paid. You need to know specifically the amount of revenue you are generating and how much you can divert to that purpose.
Also, pay attention to non-operating expenses. These are expenses not related to core business operations like your operating profits. This may include aspects like interest you may have incurred on loans. All this cannot be done unless you are careful to keep data, and make sure it is secure.
Poor Management and Leadership
This is the #1 reason why new businesses fail. Leadership and management are about the attitude and mindset of the entrepreneur. The management of the business plays a major role in the success of the business. Without proper management, and management skills, there’ll always be room for failure. So, pay attention to this. Get help if you need to; hire a business coach to help if you need to. But be sure the leadership and management of your business is top-notch.
Some Tips To Avoid Failures in Business Amidst The COVID-19 Pandemic
Failures in business have escalated this year. With the prevailing COVID-19 pandemic and existing regulations, it follows that businesses must adapt to these changes, to ensure their businesses survive as well as they do.
Modify Your Plan to Accommodate the Pandemic
In the article above, we established the need to have a plan for your business. That said, with the prevailing atmosphere, revisit your plan and make adjustments for the pandemic. This may include emergency and contingency plans for the business. Such plans should also lay down ideas for the eventuality the virus persists for much longer. Determine what measures you will implement to ensure the well-being of the staff and goods you supply. Make plans for the eventuality of an outbreak in your business premises. In other words, “hope for the best, but plan for the worst.”
Try Working from Home, if Possible
With enormous restriction and advice to avoid contact with other individuals, try to establish a work-from-home policy, if your business can accommodate it. Develop alternative work arrangements for your employers as well as alternate methods to deliver your goods and/or services. This may just play into a need of the business for a long time, or an opportunity to try something new, as we discussed earlier. Either way, if you can pull it off, it will do you a lot of good and help keep your business in the game.
Keep your Staff and Managers Informed
Keep the information flowing. In such dark times, information is crucial to get things going. So, keep your managers in the loop of things and ensure they are up to date on the current status of the business.
Also, know the current status of the world and your country or state as far as handling the pandemic is concerned, and keep your managers and staff informed. You can always consult the WHO’s official website and other official new outlets to keep yourself and your team posted. Also, know the existing regulations in force in your area and strive to abide by them, be it bans on groups of not more than 50 or total lockdowns. And when you do your homework, update your managerial team, such that they can assess and deduce where the business stands in the pandemic and can make better suited decisions.
Utilize Technology for Meetings When Regulations Restrict Them
There are tons of apps to host video or audio-conferences without having to meet in the same geographical location. Make use of these! Have meetings as usual (more regularly) and disseminate information pertaining to the state if the business and updates of the pandemic (yeah, don’t just assume they all know this). Let them know what the business is doing to keep its head above the water and what measures are being implemented to ensure the safety of the staff team. This will boost the morale of the team and encourage them to keep investing their best into the business.
Re-evaluate Your Hygienic Standards
The Corona Virus Disease 2019 (COVID-19) can also be seen as a wake-up call to pay attention to your cleaning procedures and hygienic standards of your business. So, how often is cleaning done at your business? Do you have appropriate cleaning facilities (sanitizers) made available to all customers and employees?
Give careful thought to how you can improve the overall sanity of your business by incrementing the frequency of cleaning, ensuring the regular availability of proper sanitizers and disinfectants, regular checks on employees’ health, as well as granting leaves for any employees who may be sick. All this will mirror to confidence in your business, on the path of your clients and employees, who’ll be convinced you care about their well-being, and not just their money. This obviously translates to more business.
Take Advantage of Government Relief
As the war to subdue the virus rages on, many governments are stepping up to provide support and relief to businesses, in a bid to bolster the economy. Take advantage of such relief packages. This may come in the form of low-interest loans, tax-exemptions or tax-cuts, or cash packages to help sustain small businesses. So be informed of what’s happening in your community or state and look out for “Easter eggs” and rescue ops for your business.
So, there you have it folks. With these tips, you can be sure to sustain a thriving business in 2020, amidst the prevailing COVID-19 Pandemic. And avoid those dreaded words uttered by entrepreneurs who had failures in business; “I have given up.”