Why some business fail!
Entrepreneurship is a tough place to be and every year many businesses fail. I see it all the time with friends starting businesses and filing for bankruptcy almost as soon as they started. It does seem like the bust follows immediately, even before there is a chance for a bubble. The bear sure charges harder than the bull in the world of entrepreneurship.
After seeing many people fail and having run a reasonably sized business myself, I have since noticed a pattern and some key indicators about why the bad news always seems the constant factor, let us take a look at some of the reasons.
1. Starting a business no real market research.
The better way to explain this is with a personal story, there is this friend of mine who opened a business right away with a rent of 4K a month. He just dived in, spurred on by the belief that taking a bold step is fundamental to success. With no market research, he came to the table with only his money and a faith that if he put in the hardwork he would be fine. He didn’t take time to follow what the market trends were saying nor even to study the market niche he was stepping into. It turned out that there was a similar business just round the block and which was already well rooted in the community for a solid 20 years.
The business round the block no doubt had the target clients firmly in its grip having been around for all these years; well your guess is as good as mine about what happened to my friend. Unable to break even, it didn’t take time before he closed shop.
2. Having no solution for a market need. This is yet another very important point that potential entrepreneurs overlook. I see many people start businesses for the singular reason that their intuition feels it’s a good idea. But the question then is, what indicators did you consider in forming this opinion? Did you look at market forces or potential clientele in coming to your conclusion? Did you do a survey or interview of who your potential customers would be and what they would want? Successful businesses are driven by finding out the yearnings of the market, then stepping in to provide that need. You will be surprised that sale booms are not rocket science, if I want something and you have it, I simply buy it from you.
These days, people saturate a particular niche, creating unnecessary competition and market glut of whatever they sell. So when next you want to start a business, do well to talk to your target market, talk to maybe a 100 persons in that market to find a need and come up with a solution for it.
3. simply copying other people. This is similar to the previous point. I have seen many times where one person sees another make much success in a market niche, for instance, Facebook ads and with a flash, they too are running Facebook ads. They fail to consider that this other person is already dominating the market with a strong position and huge chunk of that market. The clarity you get from making this consideration would help you to better design an effective strategy that would give you a fighting chance and let you wrestle some of that dominance. And the only way to wrestle is to bring something different to the table, something to entice the customers to patronize your services instead. If you simply do what my present vendor is doing, why would I want to leave him and come with you, especially since I don’t know you and you haven’t gained my confidence?
4. Focusing on the wrong things. Most entrepreneurs misplace their priority when it comes to making business decisions that would ensure sustainability. Some entrepreneurs feel that decorating their office space, getting new furniture or adding some other materialistic items would attract customers and push up sales. While it is good to make your workplace look nice, modern marketing strategies have gone beyond allowing the structure attract the customers. The advent of social media and digital platforms means that you can deploy some online strategies to build your clientele by going after them yourself instead of letting them come to you. Such strategies includes generating business leads, whether B2C or B2B and closing those leads. Hence the focus should be on increasing visibility and market penetration using digital tools. In this regards, you need a digital marketing coach.
5. Lack of sales skills. I made this mistake for many months in the beginning of my business, jumping on sales calls and never understanding how to handle sales objections. I didn’t realize that there was an attitude to successful salesmanship, a certain carriage, a tone and a particular poise. You need to build confidence in the person listening to you from the start, revealing a boldness, in-depth knowledge and clarity of vision with respect to what you are doing.
Back then, I used to sound like an idiot with low monotone, trying to sell on a 10 min call and making lots of mistakes in the process. I didn’t know how to push through objections, allowing other people to dominate the call, not recording my calls to listen to later on etc.
It is pretty important that you listen to your sales calls to see how you could improve on your sales pitch, more importantly, you should study those successful calls that got the results. This way, you can see what works and what doesn’t.
By Madison Renteria