Everybody wants to run a business. Not everybody can run a business. It takes a special combination of resiliency, intelligence, ideation, and sweaty equity to get a business from an idea, to fruition, to profit.
In this article I will provide you with some of the most common reasons why people fail as business owners, and some strategies for you to avoid the same pitfalls as your contemporaries. (Read: Your Competition)
Ineffective Marketing of Your Product
“If you build it they will come.” Not so much anymore! Sorry Kevin Costner, but these days you need to do everything in your power to get people to even so much as try your product or service.
As the world becomes more digital, traditional methods like television, newspaper, and radio are seeing sharp declines in their share of the media world. That goes for your company’s advertising too!
Not Enough Financing
We’ve mentioned before that times can get tough. The economy is doing well now, but that doesn’t mean it always will.
Not having enough cash on hand is a dangerous game to play when you own a small business. In case sales begin to decline, a major piece of equipment needs to be replaced, or other unforeseen circumstances occur, make sure you’re able to secure the money you need now to be safe tomorrow.
Lack of (Written) Strategy
You may know everything about your business down to the finest details, but that doesn’t mean your employees and partners have the same understanding.
Without a written business plan to refer back to, your business is susceptible to running improperly. Management may come up with their own (possibly conflicting) methods, but you’re the one who will face the consequences down the road. Make sure everybody knows how you want things to run and be certain that your plan is written in black and white.
Management plays a key, arguably the most important, role in your business. Be sure you choose the right people to run your business. When you have the right people in management, your business will run a million times better.
It takes a leader to make an army unstoppable.
Alexander the Great may have had great warriors, but who was it that pushed those warriors to their best ability? The same concept goes for your managers. It is important that you employ intelligent people who will get the most from everybody.
A Bad Business Model
Not only is it important that you have your business strategy written down, you need to be confident that it makes sense too.
If you’re trying to sell floppy disks in the year 2019, it won’t matter how well you’ve marketed or how detailed your written strategy is.
Take a long, hard look at yourself and ask if what you’re doing is in fact a smart, sustainable, and profitable business plan.
Too Much Growth at Once
When the sun shines, you want to go out and do everything. Play some baseball, head to the beach, maybe do some hiking, and before you know it, you’re sunburnt, dehydrated, and lost on the mountain. That can be the danger of trying to grow too quickly.
When you spread yourself too thin you aren’t able to manage operations. This can cause problems like too little cash flow, business operations not scaling to new size, hiring the wrong people, and more. (It’s almost as if growing too much highlights the other weaknesses that are already prevalent in a business…)
No Disaster Plan
You get an urgent call from one of your employees: Your business caught fire! You get there and find out the inside was a total loss. Your files, inventory, and place of business is destroyed. Your insurance will cover the cost, to replace the materials. But, you won’t be able to replace everything.
70% of businesses wouldn’t be able to survive a disaster like this because of the important documents that they’ve lost. One key fix is to make sure you’ve digitized your form and document system, so your business is still safe even if the hardcopies of your files get destroyed.
Out of Touch with Customers
“Like, you just don’t understand me and what I’m going through.” A phrase almost any parent has heard from their moody teenage child’s mouths is ironically appropriate in regard to your customers.
In a report by Digiday, 42% of consumers reported they’d had a conflict with a company in the past year, and more telling: 63% said they didn’t feel understood.
Ask yourself: When’s the last time you were in your customer’s shoes and saw what the process was like for them? If you were them, would you be convinced to buy your product? Why or why not? Checking in and asking questions like these every now and then will make it easier for you to connect and relate to your customer base.
Lack of Uniqueness or Value
Even if you are one in a million, that means there are still 7,000 around the world who are just like you. Isn’t that swell?
The truth is that it’s hard to really stand out in the world today (or in your local community). Your business can no longer survive off of “quality at an affordable rate.” Anymore, that’s considered the bare minimum for a business.
You need to have something that nobody else in your competitive field has, or at the very least, you need to present a unique aspect of your business to the public.
Just because you’ve got the chops to sell ice to an Eskimo, doesn’t mean you should. Why would you sell something that people have no use for!?
If you’re in an area that is over saturated with competition or has too low a demanding population, your business cannot survive. Just as a lion will go great distances to find its prey, you too must find where your customers are and put yourself in the best (literal) position to be the business of choice.
Expenses are Too High
Money goes in, and money comes out. You can’t explain that! Or can you?
Any business should have a regularly updated ledger showing the cash flows going in and out of the business. When you look at your expenses, you should see one of two things:
A huge expense jumping off the page that has no right to be as high as it is, that’s the easy one.
Or, a collection of small and reasonable expenses that are in no way small or reasonable.
What do you warn your children about eating out too much? “If you eat out that much, you’ll never have money and you won’t know why.” Well, the same that goes for your expenses.
Find those not-so-little-when-you-think-of-it expenses, like printing for example, and cut them out. If you spend $50 a week on paper and ink, that’s $2,600 eating into your bottom line a year.
Switch to digital documentation and forms and start getting lean on expenses.
Make the Smart Decision
There are many different ways that your business can end catastrophically. The important thing to do is to take preventative measures and ensure that your business will be able to weather any storm.
One way that you can do that now is to automate the forms that your business uses. Get started for FREE with naturalForms.
naturalForms – Smart Forms for Smart Business
naturalForms is an innovative software company based in Dayton, Ohio, USA and is the leader in natural input technologies providing an end-to-end mobile data capture platform that automates the collection of natural input (such as handwriting, photos, notes, drawings, and signatures) instantly at the point of entry. Information captured with tablets or other mobile devices is immediately converted to digital data and seamlessly integrated to backend systems. Straight-through processing eliminates cycle time delays and human data entry errors, creating an unsurpassed workflow optimization and significant cost savings. naturalForms’ solutions are used around the world, delivering value in multiple industries. To learn more, visit http://www.web.naturalforms.com.