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10 Reasons Why Most Businesses Fail
DavidJackson
subscriber Posts: 143 Silver Level Member
There are a variety of reasons why most businesses fail. Following are the ten most common reasons:
1. They don`t have a business plan. They build a website without having any sort of business plan. That`s putting the cart before the horse. Develop a business plan first, then build a website.
2. They`re incompetent. You`d be surprised at how many businesses there are out there being run by principals who don`t have a clue about running a business. Don`t embarrass yourself. Educate yourself, before starting a business.
3. They`re undercapitalized. Unless you`re an experienced sales and marketing person with the ability to improvise and create, it`s very difficult to start a business without any money. Granted, with the advent of the Internet you don`t need as much money to get started as you once did. But you still need money.
4. Poor website design. First impressions are everything, and the first impression that is presented by many businesses is a poorly designed website. Internet browsers are an impatient lot. Instead of hanging around trying to figure things out, they simply click-away and move on to the next site.
5. Poor presentation of product or service. You`ve probably heard the saying, "Presentation is everything." Truer words have never been spoken. How well you present your product or service will ultimately determine its success or failure.
6. They don`t advertise. You can have the greatest product in the world, but if no one knows about it, you won`t make any sales.
7. They don`t ask for the order. As unbelievable as it may sound. I`ve actually seen ads where the company presented its case for buying their product, and never once asked for the sale. If you`re a household name like Pepsi or McDonalds, you can get away with that. Otherwise, follow the excellent example of John Scherer, CEO of Video Professor. At the end of every commercial he says, "Try my product!"
8. They`re in it strictly for the money. Businesses that exist to serve their customers approach business entirely different than businesses that exist to serve themselves. Don`t kid yourself. Customers can sense the difference, and if you`re the latter, customers will avoid your business like the plague.
9. They don`t learn from their mistakes. Some businesses continue to make the same mistakes over and over again. Albert Einstein once said, "The definition of insanity is doing the same things over and over again and expecting different results."
10. They don`t take advantage of trends. Things change rapidly on the Internet. However, many businesses don`t recognize and take advantage of that change. For example, Twitter is red hot right now, and while I personally choose not to Twitter, I recognize the fact that some of my readers do. Therefore, I give them the ability to receive their updates via Twitter when they subscribe to receive my blog updates. That`s taking advantage of a trend.
Anyone reading this, feel free to add to the list. All contributions are welcome!
David Jackson
DavidJackson4/10/2009 1:37 PM
1. They don`t have a business plan. They build a website without having any sort of business plan. That`s putting the cart before the horse. Develop a business plan first, then build a website.
2. They`re incompetent. You`d be surprised at how many businesses there are out there being run by principals who don`t have a clue about running a business. Don`t embarrass yourself. Educate yourself, before starting a business.
3. They`re undercapitalized. Unless you`re an experienced sales and marketing person with the ability to improvise and create, it`s very difficult to start a business without any money. Granted, with the advent of the Internet you don`t need as much money to get started as you once did. But you still need money.
4. Poor website design. First impressions are everything, and the first impression that is presented by many businesses is a poorly designed website. Internet browsers are an impatient lot. Instead of hanging around trying to figure things out, they simply click-away and move on to the next site.
5. Poor presentation of product or service. You`ve probably heard the saying, "Presentation is everything." Truer words have never been spoken. How well you present your product or service will ultimately determine its success or failure.
6. They don`t advertise. You can have the greatest product in the world, but if no one knows about it, you won`t make any sales.
7. They don`t ask for the order. As unbelievable as it may sound. I`ve actually seen ads where the company presented its case for buying their product, and never once asked for the sale. If you`re a household name like Pepsi or McDonalds, you can get away with that. Otherwise, follow the excellent example of John Scherer, CEO of Video Professor. At the end of every commercial he says, "Try my product!"
8. They`re in it strictly for the money. Businesses that exist to serve their customers approach business entirely different than businesses that exist to serve themselves. Don`t kid yourself. Customers can sense the difference, and if you`re the latter, customers will avoid your business like the plague.
9. They don`t learn from their mistakes. Some businesses continue to make the same mistakes over and over again. Albert Einstein once said, "The definition of insanity is doing the same things over and over again and expecting different results."
10. They don`t take advantage of trends. Things change rapidly on the Internet. However, many businesses don`t recognize and take advantage of that change. For example, Twitter is red hot right now, and while I personally choose not to Twitter, I recognize the fact that some of my readers do. Therefore, I give them the ability to receive their updates via Twitter when they subscribe to receive my blog updates. That`s taking advantage of a trend.
Anyone reading this, feel free to add to the list. All contributions are welcome!
David Jackson
DavidJackson4/10/2009 1:37 PM
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Comments
I`d also add to this "They Don`t Have the Right Mindset."
It`s amazing how many people end up sabotaging their chances for success simply due to the mental "gunk" they`ve got going on inside.
Good point, Christine. I agree with you about having the right mindset. Thanks for your contribution!
David Jackson
DavidJackson2/11/2009 1:29 PM
Thanks, Craig! Unfortunately, something had to be left on the cutting room floor. But I agree with you about the importance of follow-up.
David Jackson
DavidJackson4/10/2009 1:41 PM
Exactly. I could have easily done 20 reasons, but I liked the way 10 sounded. Besides, I can always do a sequel.
David Jackson
DavidJackson2/12/2009 7:12 AM
Thanks, Kathy! Yeah, #9 is my favorite as well.
David Jackson
I agree with you on numbers 2 thru 10, and can challenge you on 1. I think that every business needs a good business plan "We all consider this as the back bone of the company" But, how much of backbone can you have when you are a start up? Having a business plan doesn`t necessarly means that you are going to be successful? The business plan is a simple tool to guide you.
Secondly, you don`t need a business plan to build a web site, what you need is a "technical plan" or a technical manual that depicts how you are going to process order (if youre a shopping cart) Also known as a flow (process) diagram.
You need to stop looking at a web site as a business.... It is not a business it is a business tool. A marketing tool, and most of all Affordable adveritising.
One of the questions that I`m usually asked is: Are you an Internet company? (just because I`m online) No I am not an internet company, I am a company period...
Now back to the business plan... It is better to create business goals at first.
It can be a simple or elaborate business summary, address the most common issues and how you`re going to address them. Add in a simple marketing plan as well, and jump on your dream.
Along the way, take notes (weekly) start adding your notes to your brief summary and continue along. At the end of the your two year mark some 730 days later you should have a perfect business plan with a solid back bone... this is called experience.
Don`t you just love the financials on a business plan and how many people get carried away fluffing up the numbers? Here you have someone without any experience in the market putting down that their company is worth 1.5 million dollars in their first year... Now lets be realistic here... Can someone without experience, a company that was never heard of make 1.5 million in sales? their first year? What Entrprenuers need to do when addressing their business plan is stop painting rainbows and get down to business... after all that`s why you`re an entrepreneur... because you like to take big risks.... you`re not afraid of uncertainity or failure.... Nuevolution2/12/2009 10:40 AM
I agree with you on numbers 2 thru 10, and can challenge you on 1. I think that every business needs a good business plan "We all consider this as the back bone of the company" But, how much of backbone can you have when you are a start up? Having a business plan doesn`t necessarly means that you are going to be successful? The business plan is a simple tool to guide you.
Secondly, you don`t need a business plan to build a web site,
Edgar, I appreciate and welcome your challenge, but respectfully disagree with your assertions. First of all, you most certainly do need to have some sort of business plan or plan of action, before you start a business.
No, it needn`t be a super elaborate business plan, unless you are seeking bank financing. But you do need some sort of business plan nonetheless. Why? Because a properly constructed business plan is like a roadmap to your goals. Let me explain.
Imagine being in a strange city without a map or GPS. Sure, you can ask strangers for directions, but you know how that works. If you ask 10 different people, you`ll get 10 different sets of directions, and end up even more confused and lost.
Or you can bypass asking for directions altogether, and wander around aimlessly, like a "chicken with your head cut off." And eventually, you may get to where you want to go. But with a map and a clear plan of action, you`ll get to your destination a lot faster.
And while it`s true you don`t need a business plan to build a website, if you incorporate the purpose and/or goals of your site into your business plan, you`ll have a much clearer vision of your goals, which will enable you to achieve them that much faster.
David Jackson
DavidJackson2/12/2009 2:42 PM
You`re planning what you`re doing. That`s all that matters. It need not be a traditional business plan. Just find something that works for you.
You`ve obviously done that.
David Jackson
Im going to use your own example. If are telling me that because you have a business plan you`re not going to get lost along the way? we both know that you don`t have much experience... correct me if I`m wrong ... and I do apologize .....
Again, a business plan is not a map, it is what it is... it sets in details where you want to go.... but it doesn`t tell you how to get there...
Barose ,just confirmed that she had a business plan and I`m going to quote her "I did create a
business plan before I started (and kept tweaking), but once I got
started, it seemed like all plans went out the window. Well, not all, but many. I had NO idea what I was getting myself into when it comes to marketing and advertising."
As a business owner you have to be prepared and understand that there will be times when you are presented with challenges [obstacles]. And although, we try to comb out every obstacle in the business plan there are times when you get hit with the unexpected, there is no time to open your leather binder [with your so called business plan] and check.
It is wiser to create a list and name it "MY BUSINESS GOALS", and tackle every obstacle and reach your goals "I will call these milestones".
Along the way take notes, and learn.... AND, before you know it.... like I said 730 days later, you will have the "perfect business plan", it takes about two years [at least from my personal experience] to learn how to how to navigate [run a business].
Im going to use your own example. If are telling me that because you have a business plan you`re not going to get lost along the way? correct me if I`m wrong ... and I do apologize .....
Edgar, I never said that if you have a business plan you won`t get lost along the way. I said having a business plan will give you a clearer vision of your goals and enable you to get to your destination that much faster. Generally speaking, that`s absolutely true and I stand by that statement.
David Jackson
DavidJackson4/10/2009 1:47 PM
You are entitled to your opinions, no one is fighting with you.... The last I remember, you were being challenged on your 10 rules... well not all 10, just number one....
I`m going to quote rule number 1: They don`t have a business plan. They build a website
without having any sort of business plan. That`s putting the cart
before the horse. Develop a business plan first, then build a website.
Assuming rule number 1 is solid and you live by this rule... Barose, just told us that some of it went out the window... Why? because she was confronted with marketing. Another issue, I know plenty of people with nearly good looking web sites that are making tons of cash.
If I were to use your rules I think rule number 9 sticks out like a sore thumb... As a matter a fact is NUMBER ONE RULE....
David, you were being challenged. Never did I discredit you.... I was pointing out to you that having a business plan is not always what it seems... If not having a business plan was so crucial to a business, why am I still around 7 years later? But I can tell you this... I have a long list of "Business Goals", which get added to the business plan when I have the time.
David Jackson
DavidJackson4/10/2009 1:48 PM
I do agree with Number 9 though... does that make you feel better... its not about agreeing or disagreeing.. it was a challenge... and you fell short on explaining why you think rule number one is rule number one.
Believe me, I totally agree with you that everyone needs a business plan... Just not in that order...
I know plenty of people without business plans that are very successful even in these though economic times, they are breaking sales almost every minute.
But yes your 10 reasons do hold up, but like I told you not in that order...
Rule Number 9 should be rule number 1...
That`s exactly what I said. You should have a business plan, and a properly constructed business plan gives you a clearer vision of your goals.
David Jackson
DavidJackson2/12/2009 5:14 PM
How about water balloons at 20 paces??? Sometimes I think we need better plans on how to interact with each other.
The truth is as anyone who is succesfull in business would know... is that barose is closest to the truth. Yes you need a business plan, but your first plan will go buns up as soon as you really start to learn about your market, challenges, mistakes in what you "thought" you knew. So your business plan is going to constantly evolve. It`s not something you do once and call it done. I know companies that revisit their plans on a quarterly basis. What with all the mistakes I`ve made I could probaly push that to once a week
So David nice convo starter(but buck up man its` just opinions, everybodies got a couple).... Edgar way to debate (but let`s turn it down a notch)... barose hang in there man! And let`s not confuse a business plan with a marketing plan. Maybe that could be another 10 point list??? not that I`m trying to get you two started again.
all the best,
That goes for you too, Dave. Stop talking down to people!
David Jackson