Why businesses fail - make sure yours doesn't!

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We set up our business because we have skills to offer to the world. We’ve spent, probably, an enormous amount of time during our professional lives developing and honing our skills to become experts in our field.  

When we’re doing this work, we’re either in our Zone of Excellence or our Zone of Genius – phrases batted around quite a lot these days but they were created by Gay Hendricks in his book, The Big Leap. (It’s a great book, have you read it?)  The Zone of Genius relates to fulfilment, success and finding ‘your calling’ in your career. Often, we set up our business because we have this ‘calling’ and we want to share our skill, expertise, offer with those who need it.

So we launch our business ‘Here we are’ we shout aloud excitedly on social media, ‘I’m ready for all the customers I can handle!!’…

However, according to smallbusiness.co.uk, even though 91% of businesses tend to survive their first year, only 4 in 10 businesses are still trading after 5 years.

Undoubtedly, there isn’t going to be a 100% success rate, some business owners recognise that they’re not cut out to run their own business, for some their circumstances change and others are lured back into employed life. But for those of us who really want to make this work, what goes wrong? We’re experts in our field, we know our stuff backwards. Why are these the statistics and how can we beat them? 

Well first, of course, we need to know why businesses fail.

According to Forbes, these are the top 5 reasons

1.    Not really in touch with customers through deep dialogue

2.    No real differentiation in the market (lack of value)

3.    Failure to communicate value in a clear and concise fashion

4.    Leadership breakdown or founder disfunction

5.    Inability to nail a profitable business model with proven revenue streams

Do any of these resonate with you?

It’s an important question because if they do, then you must do something about it now.

Forbes points 1-3

These are very much about our marketing. Interestingly in research that I’m currently carrying out, asking small business owners what their biggest challenges are at the moment, the majority reply with marketing and/or attracting new clients.

Marketing: “The action or business of promoting and selling products or services, including market research and advertising.” (Oxford)

That’s all it is – but to some, marketing is a real enigma. I totally get that. If you’ve never had to market anything before, then it can seem so daunting. But let me tell you this – you really can’t sit behind your laptop waiting for customers to find you, they won’t – they’ll go to the person who’s marketing their business – showing up, showing the customer exactly why their services is needed.

Here are a few questions to ask yourself: 

How often are you talking to your customers? What tools and processes do you have in place to enable you to talk to your customers – to ask questions and find out what their needs really are? Are you talking to them every day? When I say customers – I mean either potential, current or past.

How are you differentiating your offer? Based on what your customers are telling you that they want, how do you then stand out from the crowd? What’s so different about you? What’s so different about the way that you can meet your customer needs?

Are you talking in your customer’s language? Or are you talking in business jargon? And are you talking directly to your customer either in physical or written form? Do they understand you?  

It takes time to hone these skills but it’s not rocket science either – and having conversations with your ideal customers will really help you with the language you need to use and the points of your business that you need to labour.

Forbes point 4

This is about you– you’re the leader of your business. Have you been a leader before? There are so many skills you have to have as a business leader. From understanding how your business works to customer relations. From thinking big to doing the nitty gritty. From process design to implementation and testing. Lots of business owners get so overwhelmed at this stage – because they’re doing it alone.

Now is the time to develop your own skills. You can’t lead your business in the way that you’ll need to by just being an expert in one area – I’m afraid you need to learn the art of business, and that’s learning about all the marketing stuff we’ve already talked about, sales, finances, IT, processes, etc – and you need to understand it to the point of either being able to carry out these functions yourself or outsourcing them but still leading the process in your business.

Forbes point 5

This is about your offer. It’s about understanding how you can make money with your area of expertise in different ways. Thinking about the customer journey, how and why people buy. What do they want from you and what can you offer them?

It’s the marketing that you did in points 1-3 coming into fruition. You know what your customers want and so you can offer them different options at different price points – and crucially, you have an offer for those who’ve been clients already, you can offer them more, the next step for what they’re wanting. After all, past clients are most likely to buy from you again.

So – how does all of this make you feel? Are you working on these 5 points so that you don’t become a business statistic - one who fails in the first 5 years?

It feels quite brutal doesn’t it? But if you’re here, you know that help is at hand.

My 1-1 Signature coaching programme, Smart Business currently has places avaialble to start in September. In this programme you will explore and develop all of the areas above in your business and more. Learn more about Smart Business here. If this is something you’re keen to tackle right now, then please book at free call with me by clicking the button below.

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Hi, I’m Fay!

I’m a business coach and adviser and I’m here to help you grow your business with clarity and confidence.

I’ve worked with business owners just like you for over 20 years.

I know that you started your business for flexibility and satisfaction and to live your purpose. You have a fabulous business idea that your ideal clients should love.

But you’re frustrated becuase it now feels daunting and overwhelming - there’s so much to do and you’re just not sure if all these things you’re doing are the right things.

I do know how you feel, and I’d love to take you from this confusion to creating a clear direction to develop the business you’ve always had in mind.