Why 3 out of 4 businesses fail
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Mistakes you should avoid while building your business
Written by Travis Fox on May. 3rd 2019
Building a business can be the most rewarding experience. You add value to the lives of numerous people and the market recognizes your efforts and pays you back. 

It can be fulfilling, fascinating and empowering for the business owner. Now businesses can go from Disneyland to outright daunting in a very short period of time. 

It doesn’t matter if you’re a blue chip corporate giant or a newly founded startup, once you step inside the market space it gets all mad max fury road in there. 

A lot of businesses run out of gas and end up on the curb. According to the Small Business Association (SBA), 30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10. 

The SBA goes on to state that only 25% make it to 15 years or more. The statistics are grim. While there are myriads of reasons why small businesses often fail, most of them make similar mistakes.

Here are the top reasons why businesses fail and more importantly, how you can avoid them...
Lack of unique value proposition
At the core of any business, there is a transaction of values. You add value to your consumers by solving their problems and get monetary benefits in return. It’s that simple. 

The key differentiator between you and your market competitors is going to be your value proposition. Most businesses that lack uniqueness end up being lost in the sea of companies.

The first order of business is to figure out what sets your business apart from the multitude of similar companies. What are your competitors doing better than you are? 

Develop a customized approach or service package that no one else in your industry is using so you can present it as a strong value proposition that attracts attention and interest.
Inability to connect with the target audience
It’s elementary that you know your audience like an open book. Businesses fail because they can’t effectively connect with their audience. 

If you fail in this aspect, you’re no longer in tune with the problems of your customers, the essential pain points that your products or services will solve. 

If you don’t connect strongly with your audience, it won’t be long before you are swept away by competition. Know the demographics of the customers you appeal to and which market segment you need to tap into. 

Research how and what your audience responds to. Use focus groups, market surveys, email ask-campaigns, or straight-up phone calls, social media interactionto understand and connect with your target audience better. 

Discover who they are rightdown to the most minute detail. This will not only help you tap into the pain points but will significantly build an emotional connect with the customer and business as we knowbanks on emotions more than anything.
Money Management
Let’s be honest here. We’re not talking about nonprofit charitable trusts here. Not to discredit the credibility of the well-intentioned charitable trusts, we ideally want to be raking in profits from our businesses. 

Improper money management can be severely detrimental for businesses. As a matter of fact, a minor indiscretion can spiral into the cobweb of financial bankruptcy. 

SmallBizTrends.com, a business news resource, in its survey lists 40% of small businesses making a profit, 30% coming out even, and the remaining 30% losing money. 

You must know, down to the last dime all about the cash inflow and outflow. You should have a contingency funding plan, a reserve of money you can call upon in the event of a financial crisis. 

You should also have an acute sense of budgeting, where to cut expenses and necessarily go over the line for a bigger benefits. 

Sometimes people start businesseswith a dream of making money but don’t have the skill or interest to manage cash flow, taxes, expenses, and other financial issues. 

Poor accounting practice puts a business on apath straight to failure...
Ineffective leadership
A team is as good as its leader. The fastest way down the hill for a business is the lack of effective and strategic leadership. 

As a business owner you need to have an utmost clarity of your vision for your business and the strategies you need to deploy to get there. 

You need to be astute in decision making, management and effective leadership to steer the ship in the direction of success. 

Obscurity at the top of the ladder can trickledown real fast and affect employee morale and once it gets there productivity and motivation drops manifold and failure looms large at the horizon.

There’s no quick fix to managerial discipline and strategic thinking. You have to figure things out along the way and to be honest, if you strip this learning curve is what is mostexciting about startups. 

The only real advice here is to keep moving forward and learning. Learning from the mistakes of others and your own. 

Educate yourself about theins and outs of the business and management. If suitable, find mentors who have been through the same road.
Improper Work Culture
This is one of the most neglected yet among the top reasons why businesses fail in the grand scheme of things. 

The business culture should more or less be resonant with the business owner. Having established the core values, it is sacrosanct that the employees are appraised and taken care of. 

If neglected, a downward spiral begins to take effect. This might not be the immediate or visual change but eventually will look to jump ship when the time arrives. 

As a business owner or executive, it is imperative to understand and put this into perspective that your employees don’t work for you, rather you work for your employees. 

To contextualize this seemingly unusual concept, think of your employees as your responsibility. 

You need to pander to their needs and motivate them constantly. Know what they really want. 

Make them feel appreciated and above all practice gratitude for all the amazing stuff they do for you.
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What comments and questions do you have, lets chat in the comments below!  

Travis Fox

Founder and CEO of Architect Of BEing®

Travis Fox is one of the most sought after speakers and personal coaches in his field. With over 25 years experience, over 6,400 hosted events, and more than 500 corporate/personal workshops across the country.

Helping You Lead From The Bottom Up.

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