Why Businesses Fail - And What You Can Do About It!

Have you unintentionally set your business up for failure?

No one sets out to fail! Most business owners read all the statistics (maybe more than once) before they open their doors. Many know the reasons why businesses fail. But some businesses operate under this paradigm: "failure can never happen to me because I know better." Is that you?

What most business owners miss is looking at the reasons for business failure and turning them into action steps to help overcome the odds of failure. How do I know? I once thought I knew better, too!

Bear in mind that even "adolescent" businesses fail. According to the SBA statistics, 90% of small businesses fail within the first five years. Many businesses aren't producing enough income because the business owners aren't "business wise." They may be excellent at a specific task -consulting, programming, massage therapy, web site design, copywriting, etc. Or they have a great product. But wise about the "business" of business, they are not!

In the past five years of my business, not one client (including those who have been in business for more than 10 years) provided me with a business plan to review. Not one! Two of 100 clients have had marketing plans, but marketing plans don't work without a business plan and other focus type tools, too. The other common (95%!) mistake I see (and help my clients correct) is pricing their services very low as a way to gain market share and new clients. So low, in fact, that a potential buyer will perceive the service or product as being cheap and of low quality, even when the provider offers years of expertise. NO ONE wants to hire a business that is cheap! Inexpensive - yes; affordable - yes; cheap - no, no, no!

The most common problems business owners experience stem from simple functions like streamlining, organizing, information resourcing, marketing, planning, visioning, languaging, communication, technology and ecommerce. Example: If you know that most businesses fail because they don't have a usable business plan, develop your own business and marketing plans and use them daily; don't create one that gathers dust on a shelf. I use the One Page Business Plan Book or Interactive CD by Jim Horan. It helps business owners create very realistic, focused, and well thought-out business and marketing plans, including scorecards to help you anticipate and avoid business problems.

Example 1: Recently, a client turned down an opportunity to teach computer classes on a subject she could easily teach. Using teaching to market her business is on her marketing plan. So why not? Well, the proposed classes weren't going to help her get business for her primary business, they weren't going to attract her ideal client, and the pay was much lower than her usual hourly rate. She felt confident about declining the offer. Of course, that same week, other new business - the type she really wanted - came her way!

Example 2: New client knows she wants to create a business plan. She also has a strategy of increasing her income by joining four organizations with networking opportunities for her to meet her ideal clients. She joins the first two groups - total cost: $400.

As she starts her business foundation work, which includes the One Page Business Plan, she realizes that her ideal client isn't whom she originally thought it was! Some clients might be found in the two groups she's already joined, but not her ideal clients. As a new business owner, she wants to spend her time around her ideal clients, first and foremost. Planning just a little more for her business would have saved her $400 in membership fees.

What other simple things can you do to build a solid business foundation?

? Use a one-page plan daily to create your to-do list and monitor your business.

? Create an Ideal Client Profile and Elevator Speech and define a niche for your business.

? Read one of the "E-myth Revisited" books by Michael Gerber.

? Go with your strengths. Hire individuals whose strengths ARE your weaknesses to "fill in the gaps."

? Remember that there is no need to repeat the SAME mistakes others have made.

? Know what your business exit strategy will be.

Most business owners don't know what they don't know. Get assistance by hiring non-biased professionals who help you realign with your vision, create plans and financial scorecards to monitor your business. Look for someone who can suggest resources to help you and your business grow. Someone who's been in your shoes and succeeded. Start looking at how having a partner - a business consultant, coach, counselor, strategist, organizer or planner - can help you grow your business.

Ready to learn more about business success? Take a look at the articles I found on business failure that are posted below, ( http://www.coachmaria.com/articles/succeed.html ). Learn to overcome the costly (both in money and your time) errors that other business owners have already made. Give your business a fighting chance to continue to succeed.

? 2004 Maria Marsala, is a business builder who helps women-owned service businesses increase their bottom line in less time. A former Wall Street trader and manager, she used her business expertise to create 6 S.I.M.P.L.E. Business Steps, a program developed to help her clients succeed in less time. Learn more at http://www.ElevatingYourBusiness.com

Why Small Businesses Fail (or Fail to Thrive)

Tammy, a skilled and gifted horticulturist, called me to discuss what she needed to know to start her own florist and landscaping business. She had been in the horticulture industry for 10 years and was incredibly skilled at working with flowers and plants - one of the best. She also had great design skills, as well as good customer service skills. But she had little business management experience and less self-employment experience.

Discovering why small businesses fail was a smart research project for her, as it helped her uncover her own weaknesses and begin to build up some strengths before she invested in becoming self-employed. It's no secret that a large majority of small businesses fail in the first five years. The question is: Why do they fail and what can I do to prevent problems in my own business?

As we talked, we reviewed some of the common reasons why small businesses fail. Here are 14 top reasons, which might help you to determine why your business isn't growing and thriving. Some of them are related to learnable business skills; others relate to personal attitudes, habits, or self-sabotaging belief, which are not so easy to change, except through coaching or other self-development work.

1. Mistaking a business for a hobby: Just because you love something doesn't mean you should convert it into a business. Too often businesses fail because the owner feels their passion is shared by others. Research your business idea and make sure it's viable.

2. Poor planning: Yes, you must have a business plan. It can be a simple three-page plan or a huge 40-page plan. The point is that you've looked at all the aspects of your business and are prepared to handle problems when they arise. Your business plan helps you to focus on your goals and your vision, as well as setting out plans to accomplishing them. And don't get mellow - revisit and revise your business plan annually.

3. Entrepreneurial excitement: Entrepreneurs often get excited about new ideas, but are unable to determine if they're "true opportunities" and/or put them into practice. Test every new idea against your business plan and mission statement before deciding whether to undertake it or not, and ask yourself, Do I have the time and skill to implement this?

4. Putting all your eggs in one basket: Too often, small business owners will have just one product, one service or one big client. They cling tight to this one thing because it brings in good revenue. But what if the one thing disappears? Variety and diversification will cushion you against the ebb and flow of business tides.

5. Poor record keeping and financial controls: Yes, you have to keep financial and business records, you have to review your revenue and expense report each month, and you have to file taxes and other business-related filings. If you don't know how to do these, or don't want to, get help from someone who does.

6. Lack of experience in running a business or in the industry you're entering: There are so many hats you have to wear, from marketing and selling in order to run a business effectively. On top of that, you have to understand your industry, the skills required to offer your products and services, and the trends in the industry. If you don't know about these basic skills, educate yourself. Talk to others who are successfully running their own businesses, talk to industry leaders, get a book, find a website, get a coach, do your homework. And keep increasing your business and industry skills by attending classes or reading new books every year.

7. Poor money management: You need to be able to live for one to two years without income when getting started; often businesses are very slow to get off the ground. Also, you have to create and use a realistic business budget, and not constantly drain the business income on personal spending.

8. Wrong location: If your business runs out of commercial space, you need to make sure that you are convenient to your customers, and near to your suppliers and your employees.

9. Competition: Customers will go where they can find the best products and services. It's important for you to know who your competition is, what they have to offer, and what makes your own products or services better.

10. Procrastination and poor time management: Putting off tasks that you don't enjoy will sink your business faster than anything else. You can't afford to waste time on unimportant tasks while critical tasks pile up. All tasks need to be done; if you don't like to do them (or don't want to spend your time doing them), hire someone to do them for you. If your time management and prioritizing skills are rusty, hire a small business coach or take a class to help you.

11. Ineffective marketing: Learn the basics of marketing and make sure that you track the success or failure of each marketing technique you use, then dump those that aren't working.

12. Ineffective sales techniques: Once you have a potential client, you have to know how to lead them down the sales path. If you don't understand the basics of selling, get some education on it immediately. If a selling technique doesn't work, try another one.

13. Poor customer service: Once you have a customer, you have to keep them. There are two key points here - make sure you pay attention to what the customer wants (and how these wants can change over time), and make sure you provide quick return of phone calls and emails, proper billing, win-win problem solving and an overall pleasant demeanor.

14. Entrepreneurial burnout: owning your own business requires a huge investment of time, money, energy and emotion. It's easy to work long days and forget to take time off. But in the end, this only causes burnout where your motivation and creativity will suffer, and a pessimistic attitude prevails. You'll find yourself unable to balance your business and personal life, and both will suffer. Schedule self-care time into your work week and be religious about taking time off from your business.

Dunn and Bradstreet recently did a study and determined that "90% of small businesses that fail do so because of a lack of skills and knowledge on the part of the owner." However, D&B also did a study that showed that over 90% of small businesses were still in business after five years IF they had the help of a Small Business Development Center (SBDC) or other expert assistance. You can find a list of the SBDC in your area here:

http://www.passionforbusiness.com/web-resources.htm

As Tammy and I concluded our coaching session, she made a list of the areas where she needed to grow, and created a task plan to get the help she needed. Today she has a thriving business and is happily self-employed. You can do it, too. It just takes a little planning and a close look at both the reasons for your success and where you might need to get a little help.

Karyn Greenstreet is a Self Employment expert and small business coach. She helps you increase sales and profits, and learn practical small business skills.

Get the free audio and ebook, "The Art of Networking and Referrals" by visiting http://www.PassionForBusiness.com

Related articles

• Ad-ology Forecast: U.S. Small Business Plans for Online Video, Mobile Marketing Up Sharply for 2011 (prweb.com)
• Want to survive? Then its time for an annual small business plan (usatoday.com)
• Local Market Lists Power Sales for Small Businesses (prweb.com)

Top 4 Legitimate Home-Based Businesses Available Online

It wasn't always as easy to start a legitimate home-based business as it is now with the advent of internet. There are numerous home-based businesses out there but the sad part is that there are even more scams. If you can weed out those scams, the possibilities of legitimate home-based businesses are limitless. I am sure that you know several such success stories where people started their home-based business and went on to become successful millionaires.

In this article I am going to list top 4 legitimate home-based business opportunities available on the internet that can be started with little or no capital.

Information Product Promotion

People are hungry for information. There are thousands of paid information products available on the internet and marketers promote them every day as their full time business. If you are an expert on a topic, you can create your own product or you can promote other people's products as an affiliate. Many websites provide affiliate programs where you can promote products created by other people and earn 30% to even 90% commission. ClickBank is one such website that provides a variety of good quality product that sometimes can also be very easy to sell because all the work from developing a product to creating a sales page has already been done by experts and all you have to do is send visitors to the sales page through your affiliate link. This is probably one of the most profitable legitimate home-based businesses.

Services

There is a huge market on the internet for service providers and freelancers. If you have skills you can leverage on your entrepreneurial drive such as graphic designing, copywriting, web development or maybe you are a research expert - you will always be able to find a huge demand for your services.

Consultation

If you are an expert, having a legitimate home-based business should be no problem for you - you can provide your expert advice through consultation services. For instance if you are a child psychology expert or a business reputation management expert, you'll find that there are plenty of people out there who need your expert advice and are very willing to pay for it. Usually social networks like LinkedIn, Facebook and Twitter are great places to build credibility and find clients who need your help. Having a business website and writing for different publishing networks as an expert is a great way to promote your consultation business.

Blogging for Money

The best thing about making money with blogging is that you do not have to be an expert on your topics. Some bloggers would disagree with this but the fact is that there are many well monetized blogs that are not maintained by experts. You can monetize a blog by contextual and banner advertising using programs like Google AdSense. Lead based CPA offers - provided by sites like NeverBlueADS are also great for monetizing a blog. Another great way to monetize a blog is by posting paid reviews for other websites. There are different websites that can help you find clients who want to buy reviews on your blog. SponsoredReviews is one such service but there are many more out there. Last but not the least, you can promote affiliate products from your blog by posting reviews with your affiliate links. These are some of the reasons why blogging has gained so much popularity as one of the legitimate home-based businesses today.

Ses Peroy manages several websites on different topics such as Legitimate Home-Based Business and many others. She is passionate in helping others through community service and building educational sites for others to learn from.