The other day my phone rang. It was from a woman who was referred to me by a client. The caller, whom I’ll call Suzie, had that familiar sound in her voice that she was about to hit the wall with her two-year-old business. And my client thought I could help her.
Suzie was burnt out, over worked and overwhelmed. And desperate.
She had been steadily losing most of her business over the past year and as a result depleted her entire savings, laid off her staff and was tapped out financially. And she was considering filing for bankruptcy, both personally and for her business.
Suzie was watching her dream business and life savings disappear in front of her.
Sadly, I confirmed what she feared most: hire a good attorney to help with the wind down and to start rebuilding her life. There really was not much else I could do other than give Suzie a lot of emotional support.
According to the U.S. Census Bureau’s Business Information Tracking Series, one third of start-ups close before the end of their second year in business. After the sixth year in business, over 60 percent are gone.
Top 10 Reasons Businesses Fail*:
1. Lack of experience
2. Insufficient money
3. Ignoring the competition
4. Poor inventory management
5. Uncontrolled or unexpected growth
6. Poor location
7. Over-investment in fixed assets
8. Poor credit arrangements
9. Low sales
10. Lack of proper planning
*– Provided by the Kaufmann Foundation at http://www.kauffman.org/.
Out of these ten reasons, #10 trumps all. Many of the other nine reasons go away with proper planning. Not all or all the time, but by far it reduces your risk and exposure.
You may have heard the axiom, “If you fail to plan, you plan to fail.”
Suzie, and many others like her, do not have marketing or sales plan, nor really ever researched her market or competition.
Is this you?
And while it is crucial for entrepreneurs to have the, “Ready, FIRE, Aim” mentality, it must come with SOME planning.
Entrepreneurs must balance risk and responsibility to themselves and their stakeholders.
So how to dramatically increase your chances of success is to plan out your business strategy.
Another study, from the U. of Arizona, found entrepreneurs who complete an entrepreneurship course or training program:
- Are three times more likely to start a new business
- Are three times more likely to be self-employed
- Have 27% higher annual incomes than other jobs they’ve held and own 62% more assets
I feel these statistics are interesting and valuable, but hide something even more important:
It is one thing to plan, it is another to execute.
You MUST get your planning completed and then executed. Take courses, I highly recommend this, especially BEST Coaches’ courses!
If you do not select one of our courses, fine. Just make sure you have a system to execute your plan you are creating.
Next week we are announcing a new four-month program for small businesses that focuses on state-of-the-art business training, planning, execution and support to ensure your success.
So that not only will you avoid these Top 10 reasons business’ fail, but you will comfortably succeed as the economy starts its recovery.
Action Steps for the Week:
Have you planned your next moves in your business?
If you have not done this or it has been over six months, here is what you need to plan ASAP:
- Rethink through your product and service and adjust it for today’s economy and competition
- Study your competition for any changes and new players, what they offer and their price points
- Determined your sales and marketing plan
- Work out your cash flow and revenue forecasts for the next six – twelve months
- Determine how you will execute your sales and marketing plan
- Evaluate your team—if you don’t have one or need more people on it, determine where are you going to find them and how will you compensate them
- Lastly, review how these adjustments will that impact your cash flow and sales plans
This plans powerfully can take time and clear direction. Please watch for next week’s announcement for our next and most powerful program of the year so far: our 4 month mastermind group that will do all this with you.