Understanding, Overcoming and Preventing Business Failure
The first few years of business are perpetually the riskiest. From building up profit, creating lasting, stable client relationships and building a team who can bring a business strategy to fruition are important building blocks to a fortunate future for an organization. While creating a solid business strategy, it is beneficial to understand common business failures while also being able to navigate and avoid them.
Common Reasons Businesses Fail and How To Address Them
Beyond financial difficulties from business startup costs, money mismanagement to economic breakdowns, there are other substantial reasons a business can fail. Though financial worries are not always in the organization’s control the following are examples of possible business failures that can be addressed and resolved.
Failure To Connect to Target Audience
Connecting with a target demographic is vital to keeping a business growing. Reaching them while considering their wants and needs are what will keep customers coming back and help bring in more in the future. Failure to connect to your target audience can go beyond limited marketing strategies, it can also mean an organization is unaware of consumer demands and how to aid them. Lack of understanding of the customer creates a weak working relationship from the start. A strong comprehension of your market includes knowing what your audience looks for such as: how much (and how often) they are willing to spend, what their overall concerns are, how will the organization solve those concerns, and how a service will foster customer loyalty.
Inadequate Management Team/Leadership Breakdown
Creating a strong leadership team with members in roles that fit them is key to providing structure throughout the whole organization. Though business owners are pivotal to an organization, they cannot possibly meet all senior-level needs such as finances, hiring and marketing. Filling high level roles with experienced leaders who can deliver on strong strategies will result in higher morale and productivity. Motivated, knowledgeable leaders can help meet employee needs, client expectations and keep an organization running smoothly. It is critical when choosing team members that their experience and education match the position to create solid, clear leadership.
Lacking a Proper Business Model
At the core of any organization is a proper business model which is the design for a thriving operation that helps identify revenue sources, customer base, and focuses on marketing and financing. Having a personalized, long-standing, efficient business strategies are going to be the difference between a long term or a short term future for an organization. A comprehensible business model will account for a thorough description of the organization, the target audience, investing in the right technologies, establishing best business practices, how to meet marketing demands, creating a stable platform for products or services, and tracking needed business resources all while leaving room for growth and innovation.
Lack of Transparency, Authenticity or Trust
A strong organization/client relationship goes beyond pleasing consumers and making a profit. For a business to grow they need loyal customers who are willing to testify for their product or service. If a business pushes consumer needs out of sight or spends their efforts focusing on the wrong aspects, it can create a lack of transparency and trust which leads to crumbling partnerships. Consumers expect the product or service an organization offers to meet, if not exceed, expectations the first time and it is what keeps them coming back for more. Regardless of size or client difficulty, their needs should be met head on, and customer service and communication should remain a top priority. This process starts at the top of the leadership team, into the employees and finally ends with the consumers.
Failure to Adapt and Compete
Creating a successful business plan to build an organization is critical in the beginning. On the other hand, if a business solely follows this plan without studying the market and adapting accordingly, they can easily be left behind especially if they cannot compete with bigger more agile competitors. Leaders of organizations should have the knowledge how their industry works and be willing to meet and welcome new connections. These connections could be for either counsel or for hire. Hiring the right professionals that can meet the quickly evolving business needs is sure fire way to give a business the competitive edge while being on the same level as local competitors.
Key Takeaways for Success
Though it seems that there are many ways for a business to fail, there are also an infinite number of ways for a business to thrive. When creating or modernizing a business, it is vital to keep the following aspects in mind:
- Pinpoint and understand target audience.
- Create a strong, adaptable marketing plan to reach target audience.
- Build a comprehensive and personalized business strategy (revisit and revamp this strategy as industry needs change).
- Hire the right management team.
- Build online and real life presence.
- Manage and pinpoint financial loss and gain.
- Grow and adapt with everyday business needs and technologies.
- Maintain great customer service and relationships with past, present, and future clients.
- Stay competitive, focused, and consistent.
- Supervise cash flow and manage/analyze all debts.
- Being willing to learn from business competitors and other industry leaders.
- Tend and maintain all aspects of your business: Products/Services, Consumers, Employees, Marketing, Design, Branding, Technology, Legal Aid
All in all, the main objective of any business is to thrive and successfully have longevity which can form even the smallest start up into an industry pioneer. When every aspect of a business is analyzed and met with well suited professionals and employees, it is given a strong foundation to continuously build and evolve from. If a business is solely concerned about the bottom line and ignores all the other essential aspects of a growing organization, failure is inevitable.