I read this list today of ten reasons a small business will fail. I really wanted to share it with you as I think this is rather important information if you are considering starting a home business, or if you are already running one, but wondering just how much longer you can keep it going:
10 Reasons That Small Businesses Fail:
1. Overexpansion. Misjudging market – growth before ready.
2. Poor capital structure. Take on too much debt without sufficient reserve funds.
3. Overspending. No tracking of spending, especially at startup and at expansion. Not enough research done into how much would be required.
4. Lack of Reserve Funds. Failure to plan for volatile markets, loss of key
clients, cost increases etc. Create 6-month financial reserve.
5. Poor internal controls. Must have & follow plan, be consistent in marketing
Strive for impeccable Customer Service. Track sales. Know who your best clients are. Be across it all!
6. Inadequate business planning. Essential to have a Business Plan – without it you are lost, with no direction.
7. Failure to change with the times. Make sure you spend enough
time working on your business, not in it. Develop new areas of interest and
streams of income in your business.
8. Ineffective marketing and self-promotion. You can be the best in the world at what you do, and if no one knows about you, then you'll be the poorest person in the world doing what you do. Get good at marketing and sales, or you might as well shut up shop right now.
9. Underestimating the competition. Customer loyalty, repeat business
and reputation can make or break your business, and if you are not
serving your customers well, someone else will.
10. Exhaustion and disillusionment. You can only give everything for so
long. Entrepreneurs have so much heart; they try so hard. But there's only
so long that you can keep going and believing in something that's not
paying off. Get your systems in place so that your hard effort pays off and
you can start to enjoy the results!
Ok…that seems pretty straight forward, sound business practices and having a plan to work too.
Well, I have something I want to add to that list – it has become very clear to me that another big reason why so many entrepreneurs will fail in their chosen business and that is the ‘Instant Gratification Trap!’
The Instant Gratification Trap
Do you have a friend…or family member, let’s call him Bob - you know the one – one day Bob calls you, so excited that he’s found a home business he’s just got started in. Yeah, he loves the products and he’s gonna make a ton of money! For example, it may be selling Amway (and I am in no way putting down Amway or any other company here – don’t get me wrong! There are a lot of fantastic companies and products out there). Bob says he will drop a catalogue off for you and when he does, he get’s out the charts and explains just how fantastic the compensation plan is. He’s so focused and excited. You just know he’s gonna succeed right?
Well, it seemed obvious that he would – Bob is such a people person, a really good salesman, and he really seemed passionate about the products. He has already made sales from the first catalogue. Surely he would be the next big Amway rep getting a car and a badge and maybe an overseas holiday! You would have put money down that Bob would succeed in this business.
But then 6 months later you hear from Bob again….but instead of bringing an Amway catalogue with him, he tells you he’s really found something this time that he can believe in and get passionate about – Herbalife!
Whaaat?? - you say. Heyyyyy Bob – I thought you were passionate about the other thing. What happened???
Wellllll, the Amway thing…yeah really great products, but I had to keep all this stock at my house, and I wasn’t really making that much of a profit, and with the Global Financial Crisis no-one was buying anything much. I really didn’t think it was working out for me, so I was looking around and that’s when I found Herbalife – did I tell you how great it is and how passionate I am about the products?
Hmmm, you shake your head and think oh well, the other must just not have been the right fit for Bob. But then another 6 months go by, and you catch up with Bob for a coffee and ask him how the Herbalife business is going. He says: Wellllll I’m not doing Herbalife any more – I just joined another company that sells their product online – I really think that’s the way to go now, keeping up with technology. AND – they have a really great compensation plan – I KNOW I’m gonna get rich from this one!!!
And there you have it! Bob has fallen for the ‘Instant Gratification Trap!’. He found something he was passionate about, told everyone he was going to make it big…and then, after such a short time he just gave up on it – it wasn’t ‘instantly’ paying off, so he moved on to the next one to see if that did it for him. It’s the trap of wanting it now. But is that really how it works?
Let me put it simply here people: There is No Such Thing as a Get Rich Quick Scheme!!! Building a truly successful business requires dedication, effort, consistency and …..time! In the word’s of Robert T Kiyosaki: ‘There are only two things you can invest: TIME and MONEY. Since most people do not invest much time, they lose their money’.
Many times you see people give up far too quickly when they fail to see quick results. They want to be rich & they want it now! I’ve seen so many people lose focus and jump from one opportunity to another, just like Bob, only to fail, or have minimal success and then quit because ‘it wasn’t working out for them’.
How many times do you see people quit…just before they would have succeeded? What happened to putting in the hard yards? If only they had kept at it - just that little bit longer, built up that momentum – been consistent, then they would have seen reward for their efforts.
You have a passion for a goal, you go after it and if it’s something you truly want – you don’t stop – ever - until you get it.
Bob just didn’t get the concept of putting in the time and effort to really build momentum. If Bob had kept going in any of these businesses he likely would have been a great success.
Now, sometimes there is an exception, when a business is not truly a right fit for someone – it doesn’t really gel with them. It can be virtually impossible to ‘sell’ a business or product you really have no passion for. This is where you really need to do your ‘due diligence’ – your research about the company, the products, the compensation plan, the company’s ethics, etc right at the start. These are all really important things to consider – you need to feel comfortable with what the company is all about. If this is done correctly and thoroughly before you get started, then there really should be no reason to ‘jump ships’ to other opportunities. When you have found the right fit - put the blinkers on! Don’t let yourself lose focus by looking around at other businesses, or what other people are doing, even if you think you are only doing that ‘out of interest’. Keep focused on your passion, keep being consistent, keep being open to learning different ways of approaching your business, keep reading, researching, improving yourself…and just ‘keep on’. Persistance is the way out of the Instant Gratification Trap!
I will leave you with some wisdom from a very successful millionaire I heard speak on one of our training calls recently. She said her point of view is that she will do something ‘until’. What does that mean – Until? She went on to explain that she may have a goal and it may have a time frame of say…5 years (for a big goal). She is so focused on that goal - she really wants it and is actively working towards it. So what happens if the 5 yrs comes and she hasn’t fully achieved that particular goal? Does she then just give up on that goal? Well, no! She really wants that goal, so she keeps going…..Until! She keeps going until she achieves that goal! She may just achieve that goal in 5 years and 1 day! But I can tell you something….with an attitude like that – she WILL achieve it…no matter what!
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