7 Reasons

How To Overcome The 7 Major Reasons Businesses Fail
As Published in Home Business Journal
by Bill Dueease

Your Personal "Coach" to Business Success

This year, over 800,000 of the approximately 2,000,000 start up businesses will fail! Nearly 1,000,000 of those remaining will fail within 3 years. Why do so many businesses fail? Many studies show that approximately 98% of all failures occur because of the owners. The other 2% are a result of acts of God. Here are the key reasons and actions owners can take to avoid and overcome business failure:

Reason #1: The owner is not mentally prepared or motivated to run a business.

There are three different methods to use your energy, and physical and mental efforts to earn money. I call them the three "Games of Work.," And they define the types of relationships between people and their work. The rules of thinking players have to play by to succeed for each "Game" are shown below.

1. Bureaucrats: Do what it takes to protect or expand their position; Will divert responsibility whenever possible, but will take credit for desirable results of others; The success of the organization is secondary to kissing up to those who make decisions about promotions, salaries and job security; Have little, if any, control over their job and its security; And are compensated for basically showing up.

2. Partial Entrepreneurs: Choose to be responsible for work performed or results achieved in their specialized field, but do not want responsibility for the total business. Have more control over their job and its security; And are paid for the specific results they produce; Examples of Partial Entrepreneurs include; commissioned salesmen, multilevel marketing members, and real estate agents.

3. Business Owners: Take full responsibility for their business; Are in full control over their job and its security (whether they know it or not); Have no one in the organization to kiss up to; Learn to pass on as much credit as possible; Constantly focus on the success of the business; And are compensated only from the profits of the business.

As you can see, the rules of thinking of a Bureaucrat and a Business Owner are completely opposite in all categories, and the Partial Entrepreneur is basically in the middle. The mental effort it takes to convert from Bureaucrat or Partial Entrepreneur to Business Owner is much greater than most people realize. Many business owners never fully make the transition.

Action:

Before becoming a business owner in the first place, determine if you truly want and will operate under the Business Owner "Game Rules." If you choose to, do so IMMEDIATELY, and COMPLETELY! To survive, let alone succeed, you must commit to operate under the Business Owner Rules 100%. Otherwise, you should seriously consider playing one of the other "Games of Work" that best suits your desires.

Reason #2: The business owner is unable to operate a business.

The success or failure of a business depends the owner. As the head goes, so goes the body. Running a business is completely different than any other "Game of Work," but, believe it or not, are the same for all types of businesses. Far too many owners fail to take the time and energy to improve their own ability to run their business, because they aren't aware of what they don't know but should know.

Action:

You will greatly enhance your chances for success by finding methods of self-improvement in all aspects of running a business, and continue the process throughout your entire business-ownership career. Obviously, as you become better at running your business, the success of your business will also get better. Many resources are available to you, including respected advisors, mentors, partners, "Godfathers, " and coaches.

Reason #3: The business owner thinks he knows what it takes to run a successful business and is convinced he is fully prepared to jump in.

This is rarely true. The fundamentals of owning and operating a business sometimes referred to as the "rules of the game" are rarely taught in the US school system. (See Global Entrepreneurship Monitor, published by Babson College and Kauffman Center for Entrepreneurial Leadership, July, 1999.)

We are led to believe that an education fully prepares us for running a business. In truth, the US school system only prepares us to get a job, not create jobs. The fundamentals of successfully owning and operating a business are very different from getting and keeping a job. Unfortunately, most business owners are left to learn these fundamentals through the age-old process of "Trial and Error" with an emphasis on error. This "Trial and Error" dependence causes far too many serious and fatal errors, and leads to stress, financial damage, and eventual failure.

Action:

Learn the rules of the game of business, other than through the "Trial and Error" method. The very best way is to find and use trusted mentors, advisors, and/or coaches to guide you through the process of learning how to improve your capability to run your business to avoid the many errors others make. Frankly, the rules are simple, easy to learn, and are based upon common sense, and high integrity.

Reason #4: The business owner does not have the three basic skills necessary to succeed at running a business.

(See The E Myth Revisited by Michael Gerber). Once owners learn the fundamentals of business (rules of the game), they become knowledgeable spectators; But, to actually play the game and win, owners must develop the three specific business skills required.

Michael Jordan, one of the best basketball players of all time, could not translate his huge basketball skills into a successful baseball career. He proved that the skills needed to succeed at the game of baseball are much different from the skills needed to succeed at the game of basketball. And when he returned to basketball, he had to work extra hard to re-sharpen his basketball skills to his previous levels. Likewise, the skills of owning and operating a business are specific and very different than the other two "Games of Work."

Action:

The three skills necessary to win in the business game are: Technical Skills of the business; Managerial Skills to manage yourself, time, things, concepts, and people; and Visionary Skills to set future goals and organize the business so that current activities will contribute to them (See The E Myth Revisited by Michael Gerber).

You probably bring Technical Skills to the table, but to succeed, you will also want to master the Managerial and Visionary Skills. You are not born with these skills; you learn them. You are born with natural talents towards certain skills, but you have to work to perfect them. Michael Jordan, and Tiger Woods were obviously born with unbelievable talents, but they became successful only because they worked very hard at developing the skills they needed to win. Likewise, you will want to work to develop your Management and Visionary Skills (from the Business Owners Perspective) and continue the process throughout your business ownership career.

Reason #5: The owner starts a business for the wrong reason:

"No one can boss me around;" Or; "I will create my own job;" "If he/she can be successful, so can I;" "I will buy a business and enjoy the fruits of ownership;" "I want to pursue my passion for serving others." And so on. The stresses and problems resulting from running a business for the wrong reasons can become overwhelming, especially when you generate little or no profits.

Action:

"The only reason to have your own business is to Make a Profit." Though this may sound cold and greedy, you will realize rewards and compensation only from your business profits. If your business doesn't make a profit, you get nothing. You might even discover you have been working for nothing, or worse, working to increase your debt.

This does not mean you have to avoid meaningful, and emotional reasons for living. Not at all. The profits and personal time gained from the business will provide you the resources to pursue your life goals. Even religious institutions require profits and time to pursue their passion of serving others.

Reason #6: Business owners do not completely consider the perspective and motivations of potential customers.

Customers' perspective must be addressed so owners can entice enough customers to buy their products or services at a price over their costs to produce the desired profits. From the very beginning, owners should be focused on enticing customers to buy. Owners who do not know, understand, or appreciate their potential customers' perspectives will most likely see their business fail.

Action:

Learn as much as possible about your potential customers. Design and provide products or services, delivery methods, pricing, and ways to communicate with them around their perspective. This might require that you get help stepping out of your own perspective and into someone else's.

Reason #7: Business owners insist on going it alone without asking or accepting outside help.

The sole business owner has one of the loneliest positions in the world. Many owners have difficulty confiding in their employees, vendors, customers, lenders, or competitors, for fear that any one of them will take advantage of revealed weaknesses. Most owners try to go it alone by working IN their business, and not near enough time working ON the business. Consequently, they are not aware of what they are doing, where they are going, or why! (the "Trial and Error" method).

Action:

Find and use Advisors, Mentors, Coaches, and/or Trusted Partners who have the knowledge and desire to educate and guide you, with your best interests at heart. All professional athletes have one, if not several, coaches, advisors, mentors, who help them become much more successful than they ever could be on their own. Coaches evaluate your ability to run your business. They will bring you outside the stress, money, and time pressures you feel from working IN the business, to help you make the changes to result in improving your profits and reducing your pressures. You will become much more successful with advisors. Asking for help is not a sign of weakness, but a sign of your desire to improve. Learning from the trials and errors of others is an enjoyable and profitable experience. Once you find the right advisors, you learn to prevent and correct mistakes you might otherwise make.

Bill Dueease is a business owner coach who specializes in educating owners to increase profits, reduce stress, and gain time from and control over their business to reach their life goals. This article and others are provided as an educational service by Aspen Business Group. If you have questions, comments, or requests, you're invited to contact: