What is it that separates a successful enterprise from one that is doomed to failure? Why do some businesses take off and go from strength to strength, while others never really get off the ground? This question will have preoccupied the mind of many a nervous new business owner preparing to pitch for funding or going through the pages of their business plan. As it turns out, there is no magic alchemy to what makes a successful business. There is, however, plenty of common ground to be found among companies that fail to make it past the starting blocks. Here are the common fail factors to avoid if you’re hoping for a long and successful company history:
Not Understanding The Why
In the modern day, when economies are truly global and connected thanks to the advent of the world wide web, it’s not longer just enough to do a thing – produce a product or offer a service. Businesses, and the consumers who buy into them, now need to understand why they do what they do. Any enterprise that has passed into legend and become a huge enterprise – your titans of commerce and tech such as Amazon, Apple, Google and Uber – understand from the top down why they have come into being and what change they seek to make in the world. This is the way to make an enterprise whose mission and values are bigger than a single product, and that can span generations. Without a core purpose, something that both employees and customers can buy into, a business doesn’t seem authentic and is unlikely to survive for long. Of course every business needs to make money to survive. But if profit is the only purpose, then all you have to compete on are product and price, a race to the bottom that doesn’t work in the long term and engenders no customer loyalty. Spend time defining your why, working on your mission and communicating that to everyone you deal with, and in return you’ll gain engagement and advocates that will sustain your business through the peaks and troughs of the market.
Employing The Wrong People
In practical terms, a company is only as good as the people it employs. These are the human factors which colour interactions and ultimately determine the success or failure of the venture. So the fine art of recruitment should never be an afterthought. Recruit based on skill set and what that individual can bring to the company, rather than reducing it to a tick box list of standard job requirements. Knowing the competencies and the personality traits required for a role is a central trait of a good leader, but too many small businesses don’t possess this insight. Perhaps due to rapid growth, recruitment is done in a hurry, without due regard to longevity, succession planning and the mix of skills and personalities in the business already. Understanding what your company needs at any given time is a constantly shifting process, but get it wrong and you are likely to suffer with high turnover, dissatisfied staff and customers and a higher recruitment bill. Avoid this by recruiting the best or working with a recruitment specialist to ensure the right fit for your business.
Selecting The Wrong Legal Framework
Starting a business involves selecting a legal framework to operate in. But the matter of selecting a sole proprietorship vs LLC can have serious repercussions. Being a sole proprietor makes more sense in cases where personal liability isn’t likely to be a big worry – one where there is a lower risk of being exposed to legal action, or where you do not need much funding – as they are relatively simple to establish. Many entrepreneurs are reluctant to form a corporation, as it’s comparatively more costly and quite complicated, but it does give you more protection in terms of absolving you of any personal liability for the companies debts or court judgements against it. There are also more tax breaks to be found if you go into business as an LLC (limited liability corporation). Things such as lawsuits can easily be the ruin of a business if the right legal channels have not been set up.
Not Understanding The Market
Many businesses owners are so excited about their new, game-changing concept, that they neglect to carry out the proper due diligences ahead of launch. Successful leaders must combine passion and vision with meticulous planning skills to ensure that their new venture is a success. A robust business plan is needed to cover all eventualities – preferably one that has been independently assessed. Although all plans necessarily contain a certain amount of guesswork in the form of projections, these must be educated guesses based on current market realities and information. And, while being ambitious is certainly a good quality, a great business plan is quite cautious and realistic rather than indulging in flights of fancy and best-case scenarios.
Not Marketing Effectively
Far from being a nice to have or an add on, effective marketing is the lifeblood of a successful business. You can have the best in market product or a revolutionary service, but if you can’t communicate that correctly and to the right people, your business is doomed to obscurity. Developing the right marketing strategy is the key to success, even for small businesses. And these days, with the abundance, accessibility and low cost of social media marketing, there is simply no excuse not to spread the word. A professional, well-designed and frequently updated website is absolutely crucial, but too many businesses still treat what is effectively their shop window to the world as an afterthought, or allow things like slow loading times, difficult navigation and other poor user design to be use barriers to potential customers. Getting matters like SEO, properly optimised web pages and great, shareable social content sorted should be top of the priority list, as well as consistent and well-manned social media profiles for the channels that your target customers use. Skip them, and you’re missing a vital chance to connect and to understand what the people you serve really want.