Business Failure – Not an Option! Part 2
Business Failure – Not an Option! Part 2
So here are ten more reasons as to what can hinder your success in your business endeavors.
1. Ignoring your competition: Customer loyalty is a thing of the past, and because of that, we need to carefully monitor our competition. Don’t be ashamed to copy their best ideas (as long as you don’t violate patent law). Another technique in dealing with this is to dedicate time each week or month to devising new methods, products or services for your company. You want to be out front in this race, not always trying to catch up to the other guy. This is one of the only ways to make it in this world where the consumer has more choices than ever, and no loyalty.
2. Location: As we have all heard, there are three things that are important to a successful business: 1. Location 2. Location 3. Location. So when considering where to place your business, two main things to consider is how easy is it to get into your location coming from all directions and how much traffic flows by it each day. Realizing there are some businesses that do not depend on this, of course, this is not as important an issue, but for those that it does affect, it is of the utmost importance.
3. A closed mind: This is something that can make or break your company. We all go into business with certain pre-conceived ideas, most of which may be wrong. The point here is that we need to keep our eyes open, listen, and seek counsel or mentorship. You may want to consider going to seminars related to your industry, network with peers in your industry and community, read books, visit websites. There are so many resources in this regard, but the most beneficial would be to seek a mentor to consult with in those times when things don’t go the way we thought our pre-conceived ideas should. Sometimes what we think is a great idea, is not something that works or sells in the real world at all. I think all of us have experienced that on some level. Why not learn from someone else’s mistakes, rather than take the time to re-invent the wheel.
4. Overexpansion: There are many factors that can tempt us into over expanding prematurely: wanting to be first to market with a new product, taking on added overhead too quickly, demonstrating revenue growth to anxious investors, and many other things, which can cause us to over extend ourselves financially. This is a strong temptation and can cause your business to struggle or even fail, because you have not let your actual revenue growth dictate your expense needs. This is a fine line to balance, but be aware and be careful.
5. Failure to Change with the Times: The only constant in life is change. In our extremely competitive, technology driven and “constantly changing with new ideas by the minute” world, we have to be able to change with our times. You may be a business that has flourished for years, but with the advent of some technology or change in your industry, you could certainly fall. We have seen this happen now, where huge worldwide companies have fallen because they could not change with the times. Things change quicker now than in any other time before. Be flexible, open minded, look for and recognize opportunities, look for ways to generate new interest. Your old approach just may not be applicable, you may need to give your product a new look, so that the new generations will be interested. These new generations coming up as adults, are not loyal to anything and will go to what sparks their interest and realize their attention span is just not that long. So in order to make it, we have to be constantly changing and looking for new opportunities, whether you have been in business for decades or just a few years, this is very important. This may be where you need to use consultants, market researchers and go outside of yourself in order to get that new blood in to look at things outside of the box.
6. Over investment in fixed assets: Sometimes when starting out or trying to expand, we can over invest in fixed assets. We need to carefully look at what we are spending and be mindful of our reserve cash or seed money and not to spend it on assets at the expense of these two reserves before positive cash flow is happening, either in general or for that particular expansion. A good rule of thumb is to spend on “needs,” not “wants.” It is always wise to get a second opinion on spending of this nature, and if you find it hard to justify this expenditure to a second opinion person, then you have your answer right then, that it is a “want” and not a “need.”
7. Personal Use of Business Funds: Not only is this a huge IRS mistake, it is a quick way to get yourself into a bad habit that can take your company down in very short order. If you are not looking at your financials and monitoring your company’s progress carefully and you start to use business funds for your personal use, this can be a slippery slope that you will not recover from. The best policy is just not to do it under any circumstances. Decide ahead of time what your pay will be, and stick with it. When your company becomes very flush, you can increase that pay and then stick with that, but to get into the habit of just taking money in order to cover personal expenses or for personal things, is a habit that once hooked, is extremely hard to break and will kill your company.
8. Selling to the wrong people: Sometimes we think the bigger our market niche, the more money we will make, when in reality the exact opposite is true. You want to find your niche and sell to that, not try to sell to “Everyone”. Also, as you are establishing your client base, realize that there are people you should just not do business with. You should feel free to say no to clients that are more trouble than they are worth. You will save yourself time, headaches and money, and free up time to work with better or the best clients. This goes along with the same principle that if you have to loose money to do the job, then this is a client to say no to. You can’t constantly be loosing money on jobs/projects and stay in business. Just work with the clients that make you money and you can develop a strong relationship with.
9. Failing to Focus on Value creation: Our businesses exist in order to provide value to both us and our customers. The better we understand what value we are trying to provide, the better we will be able to focus on our strategies for our business and the more successful we will be. It is not just selling stuff and hoping for the best, you do have more control than that. Our society does not need more selling and more stuff; it needs and wants genuine value. Especially in our internet world, it can be very hard to find genuine value for your dollar. Once you have established your focus on what value you want to provide, then find a cost effective way to promote and provide it. This again is a balance, but doable and will provide great success in your business and you will not be one of those statistics.
10. Trust your Gut! Intuition is just as important in business as it is in any other part of life. Most of us think that you can only work on logic in business, but the truth of the matter is you do need to trust your gut. If you are looking at a big business deal that on paper looks good, but your gut is telling you to not go forward, your intuition is reading the person, not the paper, and when it comes down to it, the paper is not who you will deal with, it is the person. Because the human element is involved in every relationship in business that we have, we want to make sure we listen to our intuition or our gut, because that is what reads things that we can’t see on paper. So therefore, intuition is a critical part of the decision making process in business. It is always important to get a read on the other people involved in any deal you consider. This also applies not only to deals with customers, but who you hire, both, as a contractor or as an employee, any relationship in business.
So, we hope you have found this helpful, enlightening and encouraging. The main thing that we want you to take away from these Tips is that you have full control of your business and you can make it happen, and it does not have to be that you are in the category of the 56% of businesses that fail in the first 4 years. Take hope! Be encouraged! Make it happen! Open your eyes, be honest and you will see your business flourish.
Business Failure Not an Option Part 2 - To learn more about this author, visit Jacquie M. Adkins's Website.
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Last month we looked at ten of the most common reasons as to why businesses fail. This month we are going to look at ten others. There is a reason that the statistics are so high as to why businesses fail, but the good news is all the reasons are within your control and we can, by choice choose to succeed and avoid being the statistic.
So here are ten more reasons as to what can hinder your success in your business endeavors.
1. Ignoring your competition: Customer loyalty is a thing of the past, and because of that, we need to carefully monitor our competition. Don’t be ashamed to copy their best ideas (as long as you don’t violate patent law). Another technique in dealing with this is to dedicate time each week or month to devising new methods, products or services for your company. You want to be out front in this race, not always trying to catch up to the other guy. This is one of the only ways to make it in this world where the consumer has more choices than ever, and no loyalty.
2. Location: As we have all heard, there are three things that are important to a successful business: 1. Location 2. Location 3. Location. So when considering where to place your business, two main things to consider is how easy is it to get into your location coming from all directions and how much traffic flows by it each day. Realizing there are some businesses that do not depend on this, of course, this is not as important an issue, but for those that it does affect, it is of the utmost importance.
3. A closed mind: This is something that can make or break your company. We all go into business with certain pre-conceived ideas, most of which may be wrong. The point here is that we need to keep our eyes open, listen, and seek counsel or mentorship. You may want to consider going to seminars related to your industry, network with peers in your industry and community, read books, visit websites. There are so many resources in this regard, but the most beneficial would be to seek a mentor to consult with in those times when things don’t go the way we thought our pre-conceived ideas should. Sometimes what we think is a great idea, is not something that works or sells in the real world at all. I think all of us have experienced that on some level. Why not learn from someone else’s mistakes, rather than take the time to re-invent the wheel.
4. Overexpansion: There are many factors that can tempt us into over expanding prematurely: wanting to be first to market with a new product, taking on added overhead too quickly, demonstrating revenue growth to anxious investors, and many other things, which can cause us to over extend ourselves financially. This is a strong temptation and can cause your business to struggle or even fail, because you have not let your actual revenue growth dictate your expense needs. This is a fine line to balance, but be aware and be careful.
5. Failure to Change with the Times: The only constant in life is change. In our extremely competitive, technology driven and “constantly changing with new ideas by the minute” world, we have to be able to change with our times. You may be a business that has flourished for years, but with the advent of some technology or change in your industry, you could certainly fall. We have seen this happen now, where huge worldwide companies have fallen because they could not change with the times. Things change quicker now than in any other time before. Be flexible, open minded, look for and recognize opportunities, look for ways to generate new interest. Your old approach just may not be applicable, you may need to give your product a new look, so that the new generations will be interested. These new generations coming up as adults, are not loyal to anything and will go to what sparks their interest and realize their attention span is just not that long. So in order to make it, we have to be constantly changing and looking for new opportunities, whether you have been in business for decades or just a few years, this is very important. This may be where you need to use consultants, market researchers and go outside of yourself in order to get that new blood in to look at things outside of the box.
6. Over investment in fixed assets: Sometimes when starting out or trying to expand, we can over invest in fixed assets. We need to carefully look at what we are spending and be mindful of our reserve cash or seed money and not to spend it on assets at the expense of these two reserves before positive cash flow is happening, either in general or for that particular expansion. A good rule of thumb is to spend on “needs,” not “wants.” It is always wise to get a second opinion on spending of this nature, and if you find it hard to justify this expenditure to a second opinion person, then you have your answer right then, that it is a “want” and not a “need.”
7. Personal Use of Business Funds: Not only is this a huge IRS mistake, it is a quick way to get yourself into a bad habit that can take your company down in very short order. If you are not looking at your financials and monitoring your company’s progress carefully and you start to use business funds for your personal use, this can be a slippery slope that you will not recover from. The best policy is just not to do it under any circumstances. Decide ahead of time what your pay will be, and stick with it. When your company becomes very flush, you can increase that pay and then stick with that, but to get into the habit of just taking money in order to cover personal expenses or for personal things, is a habit that once hooked, is extremely hard to break and will kill your company.
8. Selling to the wrong people: Sometimes we think the bigger our market niche, the more money we will make, when in reality the exact opposite is true. You want to find your niche and sell to that, not try to sell to “Everyone”. Also, as you are establishing your client base, realize that there are people you should just not do business with. You should feel free to say no to clients that are more trouble than they are worth. You will save yourself time, headaches and money, and free up time to work with better or the best clients. This goes along with the same principle that if you have to loose money to do the job, then this is a client to say no to. You can’t constantly be loosing money on jobs/projects and stay in business. Just work with the clients that make you money and you can develop a strong relationship with.
9. Failing to Focus on Value creation: Our businesses exist in order to provide value to both us and our customers. The better we understand what value we are trying to provide, the better we will be able to focus on our strategies for our business and the more successful we will be. It is not just selling stuff and hoping for the best, you do have more control than that. Our society does not need more selling and more stuff; it needs and wants genuine value. Especially in our internet world, it can be very hard to find genuine value for your dollar. Once you have established your focus on what value you want to provide, then find a cost effective way to promote and provide it. This again is a balance, but doable and will provide great success in your business and you will not be one of those statistics.
10. Trust your Gut! Intuition is just as important in business as it is in any other part of life. Most of us think that you can only work on logic in business, but the truth of the matter is you do need to trust your gut. If you are looking at a big business deal that on paper looks good, but your gut is telling you to not go forward, your intuition is reading the person, not the paper, and when it comes down to it, the paper is not who you will deal with, it is the person. Because the human element is involved in every relationship in business that we have, we want to make sure we listen to our intuition or our gut, because that is what reads things that we can’t see on paper. So therefore, intuition is a critical part of the decision making process in business. It is always important to get a read on the other people involved in any deal you consider. This also applies not only to deals with customers, but who you hire, both, as a contractor or as an employee, any relationship in business.
So, we hope you have found this helpful, enlightening and encouraging. The main thing that we want you to take away from these Tips is that you have full control of your business and you can make it happen, and it does not have to be that you are in the category of the 56% of businesses that fail in the first 4 years. Take hope! Be encouraged! Make it happen! Open your eyes, be honest and you will see your business flourish.
Business Failure Not an Option Part 2 - To learn more about this author, visit Jacquie M. Adkins's Website.
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David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
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