10 Reasons why Businesses Fail
- Insufficient Financial Resources. Companies are undercapitalized and run out of available funding before driving positive cash flow.
- Poor Management/Leadership Skills.
- Lack of a documented Strategy and Plan. In some cases a plan is created but never followed nor updated.
- High Fixed Costs and Overhead. Companies over estimate revenue potential and allow cost structure to get ahead of incoming cash. Additionally, companies unable to respond to unanticipated business declines.
- Company not managing for cash. Cash flow is king and many companies have failed despite having some level of profits. Problems include overextended credit obligations, investments in underutilized capital and not managing assets such as Inventories and accounts receivables.
- Over Dependency on one or very few customers. A loss of a key customer is usually the fastest road to failure
- Lack of a management performance system. This does not mean costly and complex systems. It does mean that companies that fail often have limited ability to monitor and manage their business. At a minimum it should include
- Clear Goals
- A few but key measures
- Internal controls
- A monitoring system
- Process to ensure quality and consistency of products and services
- Over Extended Credit. Owners unable to meet payment terms. Then to compound the crisis, the business often avoids communications with lenders, leading to serious work out conditions and often bankruptcy filings.
- Poor Customer Service and Support. Once a company gains a reputation as non-responsive to customer problems and needs, it’s a long hard road back to success.
- Lack of managing poor performing managers and employees. This is often overlooked. All companies, but especially small ones cannot afford to have employees who under perform or are disruptive to the business.
10 Key Strategies for Business Growth
- Develop a Company Strategy that includes a clear and focused Marketing Plan. Be Realistic and clear. Establish;
- Goals, Objectives, dates, timelines and responsibilities
- Execute to your plan. Don’t just develop it. Follow it!
- Include employees in the process and communicate effectively with everyone.
- Plan for contingencies and unexpected events or risks.
- Know your Customers and Competitors Well.
- Understand and Market your advantages
- Make sure you know how to close deals. What will make a customer decide to spend their money with you?
- Teach your sales team well.
- Do everything to retain good customers. Communicate and make sure that your team provides good service and support
- Manage For Cash.
- Establish Management Controls and Reporting Tools to monitor the effectiveness of your company
- Spend time focusing on several key marketing objectives.
- How to penetrate your existing market deeper. This comes by creating new customers for your products and taking market share from competitors.
- Determine how you can expand current products to new markets. Either new applications or new geographic locations.
- Develop new or improved products that will lead to significant growth
- Build Alliances and Partnerships with others who can help co-market your products and services, and who gain from their relationship with your company. This is especially important in Professional Services Firms. (Attorneys, CPAs, Financial advisors, Management Consultants etc.)
- Find Strategic Acquisitions that add key capabilities, market access and complementary products.
- Utilize Social Media Marketing Effectively.
- Develop your managers and employees to focus on winning.
- Do not let costs ride ahead of your ability to grow revenue and cash. Companies that grow most often avoid constant accelerating and sudden braking of the business. This destroys momentum; employee morale and causes missed opportunities.