Five reasons why 9 out of 10 businesses fail
9 out of 10 new businesses fail. Let's face it, this is a hard, bleak truth. Such cold statistics are usual for entrepreneurs and business owners to read every other day. Knowing how most startups fail, knowing points of failure prepares and encourages entrepreneur to work harder and smarter. It is imperative for you to keep in check the points that lead to failure. Let's get straight to them
1. Having a mediocre team
Teams that have the ability to innovate, adapt and execute well are foundation of a great business. Having such a team is one of the most important factors that can make or break a business. Apart from skills, team members should be well connected, committed and aligned with the company goals. Without such a team, businesses waste time and money or simply dwindle.
But here is the thing. How can you build such a team?
If you master the art of building great teams, you are way ahead of your competitors. This does requires time to learn and internalize this art. There is more help on this topic in this article.
2. Not understanding the customers
My first suggestion here will be to not start a company if you are not willing to really listen to your customers. You will have to believe that your life’s mission is to help people around and make their life easier in any way you can. The best strategy in long term is to direct your plan towards a problem that you deeply care about. Many new business owners think that their idea is so brilliant that the only thing they need to do is to build the product, launch it for the world and then wait for the money to come in. This is the most common delusion which is a major business killer. Tough times in business tempt the entrepreneur to keep the "value for customer" at the back-seat.
You will have to understand your customers and really see their problems. Only if you promise to solve their painful problems that nobody else is trying to solve, only then they will try your product.
To learn more about how to do this, you need to read this article.
3. Not have a proper planning
Failing to plan is planning to fail
Whenever you are going on holiday or exploring an unknown place, you should have the roadmap before leaving for the new destination. This will make the journey convenient and will take you to the destination easily with fewer problems. Same goes with businesses. It’s important to have an actionable strategy so that it allows you to create alignment, engagement and ownership of your business.
You have a good idea, and you have discussed it with all of your friends but getting their approval and applause won’t take you to the lead. Instead, you need to have that strategy and proper planning which will take you ahead.
4. Preeminent stages
There are a few key stages that the Business goes through before coming to execution:
II. Basic Planning
III. Details & learning
If you take a look at the most failed business owners, then you will find that most of them stop planning at the concept stage only. Therefore, it’s a good tip here for you that go through all the three stages and keep moving ahead as per your plan.
There are other vital elements needed while making the business plan; you must ask these questions:
• Why are you in business?
• What needs are you satisfying?
• How can you increase customer satisfaction?
• Why has it not been done before?
• How to bring out better results than your competition?
The answers to such questions will automatically force you to seriously think about all areas of your business and not just ‘sales’ and ‘profit’.
5. Lack of clear leadership, vision and direction
Your team will work effectively only if the leader takes the full responsibility. Even if you have hired world’s best engineers but if the leadership skills are not there in the one who is leading, the team cannot work well. In fact, not just for tech teams, but for any project to work, it should have a strong leadership.
Leadership is the key ingredient of the corporate culture. Poor leadership has a high impact on every area of a business, be it low employees’ performance and morale, decreased engagement, retention issues etc. It has its own ramifications from whichever level it might be coming: from the front manager to all the way to the top level executives.
Let’s see how poor leadership affect employees:
- Misunderstanding and errors
- Low standards
- Upsurge of mediocrity
- Attrition of reliability, work ethics etc.
- Erratic business performance
- Employee dissatisfaction
Needless to say, leadership should be strong and stout enough. Your tech team’s leadership will need excellence in 3 major areas: business, people and technology. If the leadership doesn’t have any one of these, then you are ruined. A direction is always needed. If the team members are not shown the direction they are moving in or how they are helping the business individually; they will become directionless, disheartened and annoyed. Hence, a highly productive team needs strong leadership, vision and direction.
You must have often heard that a business which has failed either lacked in creating the vision or couldn’t take the right direction to drive that vision into reality. Now, you will not be much astounded if I say that a good leader is the one who creates vision and direction for the business and subsequently delivers that to their team.
Apparently, most businesses don't know the true impact of a tech failure. Hence you must be able to identify and measure failure issues so that you can truly fix them. When you respond to the concerns of your team and retort to the pitfalls, you can achieve a team that will take your business to incredible heights.