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The Not-To-Do List: 5 Reasons Why Businesses Fail

Starting your own business can be a scary leap into the unknown.  And there are good reasons why.  So many people fail to launch and grow a successful business for a  myriad of reasons and here I have highlighted five that appear to be the most common among fledgling entrepreneurs.

This is essentially my list of what not to do when starting a business.  Here you will find wisdom from the mistakes of others.

1. Getting out of touch with customers

If you are not making every effort to stay connected with your target market by constantly keeping on top of their needs and demands, there is no way your product or service will meet the expectations of your customers.  With today’s technology constantly evolving, consumer trends change rapidly, and business owners must remain ahead of the curve for their business to succeed.

Gary Vaynerchuk says that if the first question you ask yourself is not 'What are my customers' problems?' then you have already lost the battle.

With today’s technology constantly evolving, and consumer trends changing rapidly, business owners must remain ahead of the curve to succeed.

There is no excuse today for not knowing everything there is to know about your customers (and even your competitors).  With easy to use and accessible analytics at your finger-tips, finding information about individuals or the size of a market is easy. Once expensive market research can now be carried out in minutes using Twitter, and the data you gather will give you a strong baseline  of information to better serve your customers.

2. Not identifying your unique selling points (Your 'USP')

To stand out from your competitors, you need to either identify an untapped demand and capitalise on it, or find a way to set yourself apart from the rest of the pack. Find what makes you different and commit to it.  In other words, before you can market yourself,  determine what value you bring to the table that others do not.

For most people your USP will be your 'story'. Yes, your product or service can also have various USPs but it is YOU and your unique story that will have the biggest impact on your customers. People who do not know you will connect with your story first.

The fact is that before anyone buys 'from' you, they must buy 'into' you.

3. Failing to develop leadership abilities

If you are the founder of a business, that means you are at the helm of that business. You can no longer afford to make poor or haphazard decisions.

Business owners who want their companies to be successful also need to focus on developing their leadership abilities.  Investing in personal development is just as important for business owners as investing in advertising or human resource management. For you to develop leadership skills you may need to consider improving interpersonal skills, or develop an understanding of anger management.

I love reading books and going on seminars about personal development and leadership skills. Being a leader does not necessarily mean being someone's boss or a 'team leader'.  It means to inspire others and to practice what you preach, i.e. to lead by example. It means to do what you say you will do and then to add value to someone else's life. We are all leaders in some form, whether it be in a personal or professional capacity.

4. Being unprepared for growth

Most entrepreneurs want their businesses to grow, but what happens when a business grows too quickly? It can all fall apart without preparation. If a business is setting itself up for growth, it has to be prepared to handle the extra work and deliver it to the customers. If a business cannot step up to the plate when an opportunity for expansion strikes, poor performance and a subsequent bad reputation could sink a promising start-up.

This is something we hear about all the time when, for example, a small business runs a deal on Groupon and suddenly gets an influx of sales; usually more in a day than they make in a few months. The business can not handle the extra sales, is unable to fulfil the new orders, and implodes, all because they did not prepare for growth.  Cancelled orders, unpaid bills, lack of raw materials, staff or stock: all will have played a part in the demise of the business, and all could have been solved by good leadership.  

5. Lack of  capital

Business owners need to be realistic about numbers. To run a start-up you must have capital, albeit not as much as you probably think.  Generating income is not always as easy as it seems, and for businesses that are just starting out, it is critical to forge ahead swiftly while spending as little money as possible. Tools and methodologies such as Minimum Viable Products, Lean Marketing and Experimentation will be hugely helpful in this regard.

Once you have found the passion, and demonstrated your commitment to exploring a viable business model, there is nothing to stop you achieving your dreams.  You too can launch a successful business and create your legacy in years to come.

Words from the wise - just remember to stop, look around and learn from the experience of those who have come before you.

Suraj Sodha

Suraj Sodha

International Speaker & Internet Entrepreneur

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