Business coaching services

15 of the main reasons for business failure – are YOU guilty?

There are many reasons for business failure. But here are 15 of the most popular.

Please examine each reason and ask yourself a very powerful question? Am I guilty, at least to some extent?

No 1 Not getting paid quickly enough?

How do you get paid? Do you have to get paid that way? For many businesses in the B2B market the answer is after 30 days, but it does not have to be that way. Nothing is written in stone. You can negotiate these terms.

No 2 Paying others before you get paid?

If you are like me, then you are a good guy, with high a high moral code and who wants to pay people as soon as possible. But it is essential that you can either afford to do so, or you can get paid sooner in order to do so.

No 3 Failing to carry out effective market research?

‘I have a great idea for my a business’, people tell me. ‘How do you know?’ is often my response. All businesses need to do some market research, particularly if they are about to launch something new.

No 4 Failing to build a team who have the essential skills in operations, finance and marketing?

Most business owners are skilled in the operational side of their business. They hire an accountant to take care of the financial side of their business. They then leave the marketing to someone who does not have the time, training, or experience. In other words themselves! This is quite often ineffective.

No 5 Not aiming for growth?

If something is not growing, you can be almost certain it is dying. You MUST aim for growth in your business.

No 6 Allowing cashflow to become a problem?

Keeping your eye on the money is not a should, it is a must!

No 7 Poor sales and marketing?

Most of the hundreds of businesses I have worked with over nearly three decades have been poor at sales and marketing.

I recently spoke in front of 500 businesses and asked them - who is responsible for sales in their business? 97% of the room put their hands up. I then asked – who in the room has undertaken any form of sales training in the past five years and about 2% of people put their hands up. I have no doubt that the same response would have taken place if I had asked about marketing.

I wonder if this has anything link with the fact that over 80% of businesses fail within the first five years?

No 8 Directors overspending on non essentials?

As directors we have access to ‘money’ and sometime lots of it. Remember this it’s not the money you earn, it’s the money you keep that matters. As the old saying goes “Turnover is vanity, profit is sanity”.

No 9 Shortage of working capital?

Being prepared for a rainy day is essential in both business and personal finance. Businesses with good working capital are stronger and more likely to succeed.

No 10 Poor management procedures?

There is a big difference between people dependant and systems dependant businesses.

If a business is built upon strong management systems and procedures and those procedures are written down, then the business is more likely to succeed.

No 11 Lack of effective marketing skills and knowledge on behalf of the business owner?

Marketing is the lifeblood of every business, even if that business does not do any marketing. Essentially all businesses are marketing businesses. The sole purpose of a business is to make a profit and there are only two ways of increasing your profits.

Firstly, you can reduced costs, but there is only so much you can cut.

Secondly, you can increases sales and the good news is you are unlimited in this.

No 12 Lack of quantification of the businesses sales and marketing?

Without doubt this is another common reason for failure. Wasting money on poor quality, high risk marketing is not a good idea. But a far worse one is not to measure your marketing at all.

Sir John Harvey-Jones said, when he first took over at ICI, and they were losing millions of pounds “I know for a fact that we are wasting about 50% of our marketing budget. The trouble is I don’t know which 50%”.

No 13 Reliant on one, or two customers?

I have lost count of the number of businesses who have come to me after they have lost one client who happened to provide 75% of their turnover.

Simply put, don’t have all your eggs in one, or two baskets.

No 14 Under pricing?

Most people under charge. In other words they do not charge what they are worth.

No 15 Not sure of your fugures?

Not knowing how much the business owes, or is owed, spells disaster. As a business owner you MUST – Keep your eyes on the money!