Written by: Paul Arnold, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
The first step to improving your business is to understand why businesses fail and don't fall into any of those five traps. According to the 2018 Forbes Finance Council study, 20% of businesses fail after one year, 50% by year five, and 65% by year 10.
The top 5 reasons businesses fail are as follows.
No market need because nobody wants what you are selling
Not enough capital: one-quarter of business owners say they aren’t able to obtain the funds they need to operate their business; there is not much you can do if your business does not have sufficient capital to operate
Not the right team: either they had no partner to balance them out, or the founding team could not find the right person to launch the business
Competition: In some businesses such as technology, there is a lot of competition. While it is important to be aware of your competition, one must avoid being obsessed or run down by it.
Price: if you price your product too high, you’ll push customers away and if too low, you won’t be able to turn a profit.
By understanding the top reasons businesses fail, it can help you learn valuable lessons to position you and your business for a greater likelihood of success. By employing these principles in your business, it will enable you to create a 6-figure business in less than 5 years. Once you are established, you can further refine the systems, and strategies and focus to double revenue, freeing up time and create the business of your dreams. To build your perfect business, follow these principles. It is also important to have an accountability partner to inspire you and achieve success. An accountability partner can either be a business coach or consultant. You can also use a group accountability team, such as a mastermind or business club.
IS IT A GOOD IDEA?
Take a step back and do not fall into the 1 trap of why businesses fail, which is to create a product or service where there is no market need. Before you launch your wonderful business and focus hours upon hours on growing your business, let’s step back to examine your product or service. Often, we become enamored with our idea and want to invest all of our time and money into promoting our business venture.
We imagine that others will see our beautiful business just as we see it in our own eyes. The fact is that everyone else is busy in their own lives, facing their own problems. Ultimately, they will only invest capital in your product or service if you have a sound business brand they know, like, trust and that can benefit them personally.
I encourage you to step back at first. Try to find someone in the same field or a similar business and discuss your concept with them. I am not suggesting giving all your trade secrets away. I want you to hear from another’s perspective. Most business owners would be flattered to be asked for advice and would be happy to share their ideas on the viability of a similar product or service. Even for established business owners, feedback will only help you improve by gaining a qualified outside perspective.
There could be excessive costs to market your product in a competitive industry. If you were trying to launch an energy drink or new clothing line, you would be up against companies with million-dollar marketing budgets and mass production. If you were launching a personal training business, you will also be up against established national gyms and personal trainers. You want to make sure you have done a reality check to examine the viability of your product or service to ensure success.
Watch some episodes of Dragon’s Den or Shark Tank. Examine episodes where the entrepreneur is trying to launch a board game or an energy drink. The first problem is these people usually think their idea is worth 10 times more than can be proven through sales. They usually have unrealistic expectations of potential buyers of their product. They may not have sufficiently examined their competition.
An entrepreneur may launch a board game without considering Hasbro, an established board game corporation now modernizing classic games like Monopoly and Game of Life. If you are starting an energy drink, you are going to go up against Coca-Cola and Pepsi, which already have established billion-dollar brands and distribution. However, if you are launching a beverage with the ultimate goal of selling your company to Coke or Pepsi, you are on the right track!
To learn more about 20 important business principles, order Business Strategy Success Principles at BusinessStrategyPrinciples.com. Also available through Amazon and Morgan James Publishing.
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Paul Arnold, Executive Contributor Brainz Magazine
Paul Arnold published his first book Business Strategy Success Principles, to help business owners and entrepreneurs have an action plans to grow their businesses and enjoy and easier life. Paul has started six businesses over the past 14 years, with 30 years in sales and marketing. He is a business strategy coach and runs a book writing workshop, Adapt and Overcome Innovation and Change Strategy Summit.
