Though technology and e-commerce have lowered made the barriers to entry for entrepreneurs, the real work is no longer how to get in the game—but how to keep playing, well beyond those critical first few years. Here’s a look at what some research indicates about the most common reasons businesses fail, so you can proactively avoid falling prey to them.
They don’t have a known competitive advantage. Whether you’re first to market with an idea or the last on board, competition is a given. This reality isn’t necessarily negative, nor should it prevent you from building the business you envision. But it does demand that you clearly identify—and articulate—what sets you apart, and makes you superior. Whether it comes in the form of a tagline, a brand story, or a mission statement, it should be integrated into your company culture, told to your customers, and shared frequently and consistently with the public at large.
Research conducted by Gallup indicated that a hallmark trait highly talented entrepreneurs (which it defined as those who exceeded year over year profit growth by more than 20%, compared to business owning peers) were more likely to clearly articulate their competitive advantages to clients—and anyone willing to listen.
If you haven’t taken a moment to answer the basic question: What makes my business unique, and craft it into a concise, convincing and compelling statement that you, your team and your customers can embrace, take time figure it out—and make it your business mantra.
They don’t put themselves in the customer’s shoes. You have overhead, taxes and other fixed expenses. You may have limited negotiating power with your own vendors and suppliers. You’ve got staff to pay (and it would be nice to pay yourself once in awhile, too). All of these financial factors play a role in your customer’s experience: Hours operation, inventory, price, promotions, and whether you allow customers to return and exchange merchandise. From a numbers standpoint, considering the financial factors that impact your business makes sense. To the customer, they’re completely irrelevant.
Customers today have plenty of choices, including where to spend their money, how they want to contact and interact with a business, and whether they’ll share their love (or loathing) for your business with the world. If you do not make the customer’s experience stellar, bet on the fact that someone else will.
Make your decisions based on the customer’s experience, wants, needs, and other options. When you arrive at those solutions, find ways to make the rest of the factors mentioned above “work” accordingly.
They don’t utilize their employees. Entrepreneurs have a tendency to hire others who share in that desire to get their hands dirty and do whatever needs to be accomplished to make the business a success. Though there’s logic in wanting to hire “clones” of yourself, it’s a flawed strategy if you want to hire employees who will fuel your growth.
As Gallup’s research of more than 100 small businesses in Nebraska revealed, the most successful entrepreneurs know what they enjoy, and do well—and what they don’t. They hire other people to do the latter, so they can focus their efforts on the former. When your staff possesses skills that you don’t have (or that you don’t want to do) everyone wins. Employees “own” their work and outcomes, and will likely be more productive, engaged, and invested. You can optimize your time to achieve sustainability, and future growth.
They stay emerged in the entrepreneurial culture. Attending that networking event or industry conference may be the last thing you have the time (and budget) to do, but staying connected with those who walk in your proverbial shoes can be a key to keeping your business strategy current.
When you’re so immersed in your business, it’s tough to see the broader perspective that your customer has, and to stay abreast of what others—direct competitors or not—are doing to serve them. When you continually seize these small opportunities to be a better resource for your customers, you can stay one step ahead of the game.