Half of businesses fail in the first five years. You’ve probably heard of that statistic before and like most people, chose to ignore it because let’s face it, it’s too depressing to think about.
However, ignoring the grim reality that most businesses do fail isn’t going to help your business succeed. You need to understand why businesses fail so that you can avoid making the same mistakes.
Luckily for you, I’ve gone and had the biggest failure of my life, so you don’t have to. I’ve had a lot of success and I’ve experienced catastrophic failures too. I know what it feels like to land that BIG client and I know what it feels like when everything you’ve built crumbles beneath your feet.
I would be so bold as to say I’m an expert in the matter, which is why I’m writing this post and sharing the top reasons why your business will fail. I’m not saying that your business is destined to fail, I’m simply stating the top reasons why most businesses fail so that you can be aware of them, understand them, and can avoid them.
Let’s get into it!
1. There is no market for the product or service you’re selling
Ouch! This one hurts, I know. But you’d be surprised to learn how many businesses start by selling a product or service that nobody wants to buy. They’ve convinced themselves that the product or service they’re trying to sell to people is so amazing that it’s going to fly off the metaphorical shelves.
The problem is that they haven’t carried out proper market research or, you know, asked their potential customers if they would want to buy the product or service they’re selling. Then, the great moment of truth sets in, and the business owner realises that they’ve built a product or service that doesn’t have a market.
Bad times. But… now that you know about this big whopper of a mistake, you have no excuses. Do your product research. Make sure there’s a market for your product or service and you can avoid this top mistake why businesses fail.
2. Not being able to sell to your target client or customer
Are you afraid of coming across as too ‘salesy’ or ‘pushy’?
Well, snap out of it. You’re in business to SELL. If you’ve done your market research right and you’ve discovered that there is a market for your product or service, that means there are people who want to buy from you. So, why are you so afraid to actively sell to people?
If your product or service solves a pain point or a need for your target client, they will want to buy it. You won’t have to oversell the product or service and you won’t have to go door to door, begging people to give your product a chance. Those are all common misconceptions around selling.
The human race loves shopping. We love to shop. It’s like a hobby for some people. So, all you have to do is make sure that your selling experience to the buyer is as exciting as possible. If you give them a great experience, they’ll keep coming back for more. And, they might even send a few referrals your way too.
3. Cashflow calamity
Unfortunately, having enough cash isn’t guaranteed. Yes, your business might be the best thing to happen to your small town in decades and yes, it might have started incredibly well. But now, for whatever reason, you’ve run out of cash.
Cashflow calamity essentially means you’re making less money than you are paying. It’s not a fun situation to find yourself in and it’s tough to dig yourself out of this one. There are many reasons why you are low on cash, including pricing yourself too low.
You need to price yourself according to the value that you are offering. If you want to find out how to put a price on your value, check out my blog post and video on the topic here.
4. The Superman or Superwoman complex
The Superman (or Superwoman) complex is a common phenomenon whereby you (the business owner) assumes that nobody in the world… no, the universe, can do all the things as well as you can. You’ve grabbed the invisible superhero cape, swooped it over your back, and you’re ready to spearhead the business forwards on your lonesome.
Does this sound familiar? If it does, don’t beat yourself up about it. Many business owners think that they can do absolutely everything themselves without any help. Of course, this way of thinking puts you on the fast-track to burnout. My advice is to just… stop doing that.
The truth is that other people CAN replicate what you’re doing. I know you might not want to admit that right now, but if you take the time to train people properly, and you have the right systems in place, other people will be able to replicate what you do.
If you’re doing everything in your business, you don’t have a business. You have a freelance contracting job and that’s it. You need to delegate tasks within your business so that you can focus on growing the business, rather than being stuck inside it.
5. No vision or strategy for your business
If you don’t have a vision of strategy for your business, how do you know where you’re headed? Or, how to get there?
You need a vision and strategy for your business. There are no excuses for not having either of these things. Both are super important and yet, so many businesses fail to come up with a vision and strategy. Not having a vision or strategy is one of the top reasons why your business will fail, so don’t brush them off.
A vision embodies the destination of where you’re heading. You need a clear vision so that you can accurately plan how to get there. A strategy is like a map that plans how you’re going to reach your vision by making strategic decisions and navigating any obstacles that may arise. If you want your business to succeed, which I’m sure you do, make sure that you have a clear vision and a strategy for your business.
6. You focus on the ‘fun stuff’ too much
What do I mean by this? Are you not allowed to have any fun running a business? Of course you are! The problem comes when you focus on the fun stuff so much that you don’t focus on the things you really should be focusing on.
We are all guilty of this one in both our personal and professional lives. We would rather focus on things that we’re good at, things that excite us and ignite our passions rather than focusing on the rest of the business.
As the CEO of your business, you NEED to focus on all of that ‘boring’ stuff. You need to consider the strategic path that will bring you to the destination that you’ve assigned as your vision.
7. You don’t have systems and processes in your business
This is one of the most common reasons why your business is likely to fail. Without having the right systems and processes in your business, you will struggle to remain consistent, you won’t be able to measure progress, repeat things, and you won’t get other people to repeat those things either.
Systems and processes are CRUCIAL. If you hire someone that seems like a perfect fit for the role and then you get rid of them because they were a massive disappointment, that’s on you (in most cases). If you don’t have the right systems and processes in place, how is anyone supposed to know what to do or what is expected of them?
Successful businesses build themselves around systems and processes, so why aren’t you? Get on it!
8. The wrong people are doing the wrong things
Building the right team around you is crucial. You also need to make sure you hire the right people to do the right jobs within the business. Hiring the wrong people can be quite damaging for your business and it can even create a toxic work environment.
In some cases, the ‘wrong person doing the wrong thing’ could be you as the business owner. I’ve seen this happen time and time again where the business owner gets in the way of their team members and doesn’t let them do what they need to be doing. So, be careful that you don’t fall into that trap.
Here’s a piece of hiring advice that I want you to take very seriously…
Hire slow, and fire fast.
I know it can come across as a little brutal but it’s such good advice. You don’t want your first hire to be for a huge role within the company. Make your first hire for a smaller position to reduce costs… just in case they turn out to be the wrong person for the job.
It’s important to hire slowly. Take your time and make sure that you find the right people for the right toles. If you’ve hired someone that isn’t contributing to the business in the way that you expected them to, don’t keep them hanging. Let them go sooner rather than later.
Building the right team is crucial. If you don’t have the right team, it could be the reason why your business will fail.
9. The speed and rate you’re able to grow and adapt
Are you growing too fast or too slow?
You might think that growing too fast can’t be a bad thing, but you’re wrong. If you grow too fast and you’re not equipped or prepared to adapt as the business grows, you could slip up and this can lead to drastic consequences.
You must be able to adapt to the changing environment and the market around you. Other times in business, you’ll have to remain consistent and stay on your current course. Either way, it’s vital that as the CEO of your business, you have your finger on the pulse of what’s happening, and you know when to slow down and when to pick things up a notch or two.
10. You have the wrong type of passion
It’s great to be passionate about your business and to really love it. But, when people say, “you should build a business around your passion,” I can’t help but roll my eyes and silently scream inside.
Simply put, you shouldn’t build a business around your passion. That is not good business advice and will only set you up for failure. Instead, you should build a business around a clear market need and then, find a way to merge that with your passion. There’s no point building a business around your passion if it doesn’t make good business sense.
You can’t build a successful business if there is no market need for your business. Yes, you need to be passionate about your business. But you also need to make money. So, make sure that you find the right type of passion for your business.
Bonus reason why your business will fail
I’m just going to sneak this last one in because it’s still important, even though it’s pretty simple and that’s the inability to say no.
I get it. Saying no can be difficult and almost impossible for some people but it’s so important that you get better at saying no.
You can’t and shouldn’t say yes to everyone. If you do, you will feel like you’re drowning, and you’ll end up burning out. Plus, for every yes you give someone, there’s probably many more ‘no’s’ you’re giving to other people and opportunities. So, use your ‘yes’s’ wisely and get better at saying no.
We’ve come to the end of the list of top reasons why your business will fail, and I hope that you have a better understanding of these things so that you can avoid making the same mistakes in your business.
If you want to learn more about starting a business, you can hang around here for longer and check out my other blog posts or head over to my YouTube channel, where I post video versions of my blog posts for the world to see.