5 Causes of Colossal Failure in Business...
Why do so many businesses fail?
It's a touchy subject, heart breaking stuff.
In today’s world a whopping 8 out of 10 entrepreneurs who venture out to start business FAIL within the first 2 years. 80% absolutely crash and burn.
Why is this? Is there anything we can actually learn from the woeful failures within these small businesses that can be applied to our own individual business aspirations?
In my last few years of business, and through my personal exposure to many entrepreneurs via my business Beon Group Australia I have witnessed plenty.
On face value the primary reasoning for this colossal failure is that these businesses simply run out of cash. But of course, this runs so much deeper, with the cracks in the foundation of the business starting well and truly before the final day of collapse.
Here are 5 reasons for this failure and most importantly, what YOU can do to avoid it yourself...
1. Zero connection with clientele – No deep dialogue
Something special happens when an entrepreneur sees a possible opportunity in the market or conceptualises a brand-new idea for a product/service. They RETREAT to a cave!
This is truly a horrific move. In fact, the worst move an entrepreneur can make. Having an absolute understanding of your customer is imperative to your success. In my experience, this is the worst move an entrepreneur can make because complete understanding of your customer is imperative to the success of any business. In my opinion, these entrepreneurs need to be walking at least 1,000 miles in the shoes of their clients. Not 5, 10, 20 or 100… ONE THOUSAND MILES!
Your customer holds the keys to your success deep in their behaviour, pain, values, dreams and in all of the things that they are trying to accomplish.
Real dialogue with real customers via a channel that SUITS your ideal target market is irreplaceable.
Think about it, would you rather talk to your ideal clients now and find out that you might be wrong about their needs? Or would you prefer to talk to them in 12 months time, after thousands of dollars have been spent to only find out that you were wrong anyway?
2. Your UVP (Unique Value Proposition) is EVERYTHING – No differentiation = No business.
With the way the world is these days, there is a plethora of choice when it comes to a specific product/service that a consumer might be looking for. Instead of your competition being amidst 1,000 other providers, you will be up against 100,000.
So basically, this means there’s just significant noise and chaos, with zero unique quality, ALL fighting for the bottom scraps. More often than not, this is a killer of business & leaves entrepreneur’s skimping along.
So, what’s the solution to this?
Well, first of all I ask that you agree with me right now that this is a huge area of concern that must be addressed. Entrepreneur’s that take this lightly do end up in a lot of trouble.
It is as simple as getting Osterwalder’s value proposition canvas, sticking it on your wall & working it. Get into it and really discover the true value that you bring. What makes you unique, and different to others in the marketplace.
Example: I write different to a lot of other “business blogs” – Mostly because I’d prefer that you all feel as though you’re having dialogue with ME & not just some generic content. Thus remaining unique in the land of blogging and content creation. You may or may not like the writing style, however, I’d rather be true to the way I communicate and so attract my ideal client.
Stop wasting time - go and get clear on your UVP immediately.
3. Failure to communicate a UVP in an easy to understand, and compelling fashion
Ah, the old “failure to communicate” disease.
So many entrepreneur’s work hard to discover a point of difference… they dig deep, get creative and find something they have that others don’t.
Brilliant... but what good is knowing that if it’s not communicated effectively?
Without your UVP being clearly communicated, you’re just blatantly suffering from missed opportunity. The message must be clear, concise and compelling. I have seen so many people step into business and have absolutely no idea how to clearly communicate, and thus perish.
Solution Time!
Simple... Learn how to communicate better.
Referring back to point 1 in this article, if you are truly engaged in communicating with your ideal clients, (dialogue, not monologue), you will learn the language of YOUR customer.
i.e. If your ideal client speaks Spanish, stop speaking German to them. ACTIVELY listen to the words being used and use them back.
Focus on asking yourself these questions:
PROVIDE CLARITY: are your customers unclear about who you are and what value you bring to them?
BE CONCISE: are you borderline clear? do you ramble on about your message?
BE COMPELLING: are the words that you’re using going to persuade your ideal client to actually take the action that you want them to?
4. Founder dysfunction. Yep, it’s a thing.
Poor decisions are an interesting thing. Let’s take a minute to reflect on some of the world’s most well-known athletes. Lance Armstrong and Mike Tyson BOTH fell short from remarkable success because of poor decisions. You see this kind of activity all the time in the media. "There goes another one, right off the deep end he/she goes". Some might call it wasted talent.
Let’s now compare these elite athletes to start up entrepreneurs who go down hard, but don’t have their names splashed across headlines of tomorrow’s Sydney morning herald articles.
We have to acknowledge that their reason for failure is sometimes very similar.
Self sabotage caused by extremely poor decision making and horrible leadership skills.
The Solution to this...
Life is a game, you either win, or you lose. Me personally, I prefer to win any day of the week.
Your business is your baby.
You are the FOUNDER.
You are THE leader.
Simple...
Do you struggle with anger issues? The world does not care, solve it with anger management.
Do you struggle to strongly relate to people? The world really doesn‘t care, gain the skills necessary to do so.
People that succeed in business DO THE WORK. They spend the time doing the personal development. I am yet to hear about a venture capital investor that doesn’t take the time to investigate a founder/their team before whipping out the money to invest in their business.
It is truly a wonder that there are still so many business owners out there that have amazing ideas, but lack the ability to execute on their ideas. Without this ability they simply crash and burn.
Don’t be one of them. There are no two ways about it. Do the work, get the result.
5. Lacking the ability to lock down a business model that is profitable, with proven revenue streams
It’s completely possible to tick all four above boxes, but still miss the business model boat. In the end, this is the sum total. If you fail to achieve a product/market fit where money is actually made, you’re on a fast path to a steep decline.
Yep, here comes the magic solution:
If you are a start up, you need to be able to move quickly without spending a huge amount of money to discover your magic. Experimentation, Marketing very lean and using methodologies like Minimum Viable Products is so critical. Run tests!
Move quickly, think quickly, if you’re going to fail, fail quickly. Doing this will help you to nail your business model.
Otherwise, you are in the 80% bracket my friend… you are no different.
Successful business, means differentiation, strategy, leadership, forward thinking, and clear communication.
Bonnie Young, Director
- BGA