Businesses can fail for many reasons; here are the three me most commonly come across.
by Hannah Peddle, Manager at The Neriah Group
In the 12+ years we’ve been providing our talent acquisition and management consulting services, we’ve seen many businesses rise and fall. It might shock you to learn that the reasons are quite consistent across industry, niche, company size, and location.
Key Reason Businesses Fail: Sales & Marketing
This one might cause your heart-rate to increase, but there’s no need to fret. Contrary to popular opinion, you don’t need a big ad budget to properly market your business. However, you do need a surplus of discipline.
Let us explain...
The ultimate purpose of sales and marketing is creating revenue, right? Right. But there is so much more to it than simply the bottom line.
When we get down to the building blocks, sales and marketing are really all about building connections - both in-person and online.
Here are a few important questions to ask yourself as you discern the way forward:
--- Who are your clients?
--- Who is your competition?
--- What is your target market willing to pay for your product or service?
--- Where are your potential clients?
--- Who is already engaging with your ideal clients?
Based on these questions, you’ll define your brand, create a strategy, decide which networking events to attend, and choose the social platforms to invest in. After all, you want to be where your potential clients and referral sources are because if you can’t reach your audience, you can’t find success.
Expert Tip: One of the most powerful ways to be where you customers are is your Google Business Profile. For many businesses, this tool is the key to tapping into their local market.
As you can see, sales is more about the organization, strategy, and discipline than it is about flash; it’s a daily grind that you have to be disciplined about.
Key Reason Businesses Fail: The Team
I'm sure we’ve all heard some variation of, “you become who you surround yourself with.” Most people can confirm this statement from personal experience. But how many of us extend this principle from our personal lives to business?
It’s true: the people you bring alongside and into your business venture will determine the success or failure or your venture.
Many people fall victim to one of these two pitfalls:
Going Alone:
When first starting your business - and even as you continue to build it - it can be tempting to go alone.
However, just because you have a small budget, you only have a couple customers, or you are incredibly intelligent and gritty doesn’t mean you can and should do it all alone. Yes, you are intelligent and driven, but there are a finite amount of hours in a day and you are not an expert in everything (being fairly good at something is different than being an expert).
Bringing others on board provides encouragement and accountability, protects against burnout and unnecessary - and potentially detrimental - errors, and offers top notch quality across your entire business.
Bringing the Wrong People on Board:
Just gathering a team isn’t enough, however; you need the right team.
It’s common for business owners and leaders to involve those who are comfortable or convenient. For example, your brother does your books, your friend does your website, and you create the logo with your spouse.
This can seem great...but operating this way is also ripe for error and relational strain, and can severely limit your opportunity for growth.
Alternately, we suggest engaging fractional support for things such as accounting and tax. Also, consider bringing in consultants for a fresh, outside prospecting and depth of expertise.
As you grow and need more assistance, we encourage you to outsource as much as possible (ie. finance, web design, social media, legal, hr, recruiting, and even sales). This keeps your overhead low without sacrificing quality.
Key Reason Businesses Fail: Finances & Financial Management
Finances can easily become the elephant in the room - especially when things aren’t going great and we’re afraid to know the reality of the situation.
As tempting as this is, it is a huge no-no for business owners.
It’s imperative to understand:
--- the costs of starting and running your business before starting the venture;
--- how to properly price your product or service;
--- how to calculate your “burn rate” (the rate at which you burn through cash).
Additionally, a word on managing your books: Few businesses are truly simple enough for you to do your own books while also running your business. As a rule, we advise people to find someone else to do their books. Otherwise, there is just too much room for error or oversight.
We always advise business owners to seek the help of a tax expert. Small mistakes with taxes can result in large penalties or money left on the table. A good tax professional will more than make up for their fee with the money they save you on taxes.
Too many business owners operate in isolation. It’s a lonely, hard world if you face the challenges of running and scaling a business without the encouragement and reinforcement of a team.
Don’t go alone; you don’t have to.
Allow others to join you and take things off your to-do list so you can function on the critical tasks related to your product or service.
You have something great to offer the world; let others help you do it.
For more tips on managing and growing your business, check out our full list of articles.
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