A year ago, ActionCOACH Solent celebrated being in business for 10 years. This is no mean feat, given the statistics for business failures! Although figures do vary, and businesses will disappear for reasons other than failure (e.g merger), the statistics for business closures make pretty grim reading. Within 3 years of being set up, more than 30% will have failed. By 5 years, the figure is 60%. And by year 10, it is estimated that as many as 90% of businesses will no longer be trading.
Interestingly, statistics show that by age, the proportion of businesses that fail is consistent at around 5% every 6 months e.g. 5% of 3 year old businesses will fail in the next 6 months, as will 5% of 9 year old businesses. So what does this mean? Well, it seems that in many cases, the experience of the business owner counts for little. Businesses are not learning how survive, let alone how to grow, prosper and thrive!
The main reasons that businesses fail (and the lessons we need to learn from these failures) are:
- Poor cash flow – not being able to pay your liabilities as they fall due is the number one reason that businesses fail. This is a particular issue in rapidly growing businesses. So the first lesson to learn is – keep a close eye on your cash flow and get the money in as quickly as possible from your debtors, because Cash is King!
- No demand – people don’t want what you’re selling, are not prepared to pay for it, or to pay what you think it’s worth. This is particularly relevant where it’s something you’ve developed, e.g. software or apps. So the lesson here is – before you launch your product or service, make sure there’s a demand for it – do the market research!
- Inadequate marketing – businesses that can’t attract paying customers in a cost effective way are not going to succeed, it’s as simple as that. Lesson number three is you need a great marketing plan, and don’t forget the mantra – Target, Offer, Copy!
- An under performing team – in order to grow and sustain a successful business you need a great team around you. Lesson four is therefore to make your business a great place to work so you can recruit, motivate and retain great people!
- No systems – without reliable systems in place, your business will be chaotic, your service delivery will be inconsistent, and you as a business owner will keep being drawn in to the day to day problems. So lesson number 5 is, for stability and growth, you must systemise your business processes.
- A lack of skills and no interest in learning – business owners are not born with the knowledge and skills to build a successful business, they need to learn them, but the “What can you teach me about my business?” attitude is very prevalent. It is not a weakness to admit that you don’t know everything and to ask for help. So lesson 6 is that, in order to succeed and grow, you have to be willing to learn and develop.
- Failure to adapt to change – the only thing that is constant is change, and what has worked in the past for your business may not work today or tomorrow. This is true of products, marketing, customer service, sources of finance etc. If you don’t keep up, your competitors will. Lesson 7 therefore is keep an eye on what is happening in the market, take advantage of the opportunities and adapt accordingly, or pay the price.
- No plan for success – many business owners just coast along with no clear idea of what they are doing and what they want to achieve, like a rudderless boat drifting on the tide, unable to avoid the rocks and with no destination in sight. So the final lesson is to work on your business – have a clear vision for the future, a plan of how to get there and goals along the way, review your plan regularly and revise as necessary, but always keep the end game in mind.
So now you know how, take ACTION to Thrive, not just Survive! I hope you find this useful and as ever, if we can help you with any of these challenges, please contact the office and arrange to come in for a complimentary business review with one of the coaches!