Entrepreneurship is not for the faint of heart. Based on the commonly reported statistics, the probability of failure far exceeds the probability of success.
If you listen to the supposed “experts”, following are just some of the more common reasons attributed to the extraordinarily high small business failure rate over time:
1. Lack of short-term and long-term planning,
2. Poor leadership,
3. No unique value proposition (nothing that differentiates you from your competition),
4. Losing touch with customers by ignoring their needs,
5. Being oblivious about your mistakes, and not learning from failure,
6. Poor management (inability to listen, micro-managing, working without standards and systems, poor communication skills, and lack of providing feedback to staff),
7. Lack of capital (to pay bills, loans, or other financial commitments).
8. Scaling growth too quickly (before your business is ready),
9. Having a poor location that makes customer acquisition costs too high,
10. Lacking the profitability needed to grow the business,
11. Poor inventory management (too little or too much inventory),
12. Poor financial management (not making decisions based on information provided to you from real data),
13. Inability to quickly pivot and make necessary adjustments, due to lack of focus,
14. Using business funds for personal expenses,
15. Overexpanding into new markets before you’ve maximized your initial target market,
16. Inability to control macroeconomic factors like business cycles, recessions, wars, natural disasters, government debt, and inflation,
17. Lack of a succession plan, leaving the business unprepared to fill openings created by retirements, unexpected departures, or death, and
18. Having the wrong partner.
I’ve started more failed businesses than I care to count, and some or all of the situations mentioned above existed in each and every one of my businesses. But that’s not why the businesses failed. All the reasons “experts” tell you why small businesses fail are symptoms, and not the actual cause. POOR BUSINESS EXECUTION is the one and only reason why small businesses fail. When I got tired of failing and paid attention to how successful companies execute their businesses, I finally succeeded!
I’ll cover this in much greater depth in future blog posts, but successful companies share successful traits. When I incorporated these traits into an entrepreneurial venture, shockingly I discovered that these things actually work! Successful businesses are launched around a passion for doing something. Successful businesses identify novel solutions for overwhelming customer business problems, then laser focus on becoming the dominant provider of this solution for their customer. Successful businesses creatively align with customers, complementors, competitors, and suppliers to create an expansive force of highly devoted advocates for their brand. Successful businesses focus on monitoring and measuring metrics that predict what will happen in the future, not what has happened in the past. And finally, successful businesses focus not only on “getting the right people on the bus”, but also on “getting the right people on the right seats on the bus”. So, if you want to succeed, E-X-E-C-U-T-E for success!
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