Sorting Through the Sea of Information
May 4th, 2020
If you search the internet for business advice, then you’ll quickly get billions of results. How can anyone ever expect to figure out how to make any sense of this overload of information? For the most part, the information out there is generally all good; some of the information out there is altruistically just trying to help you out through journal articles, blogs, videos, etc., but most are trying to make a buck selling you their format. Not that I think selling a good format that can provide an entrepreneur with value is a bad idea. It’s just hard to sift through all the information to find the right tool.
Some information is clear and factual. 50% of small to medium businesses that start in Canada fail within five years. This is evidence-based information and hard to argue against. Why these businesses fail becomes more speculative as academics and business executives attempt to find the golden ticket to business failure and success. Unfortunately, I don’t believe a simple answer exists. Each business has its own set of problems, opportunities, and strengths. However, there are some relatively simple ideas that certainly help to clarify what business owners should consider when building their businesses.
If you type “why do businesses fail” into Google, then you’ll get far fewer results—only 235 million. That’s still a lot of information to sort through. If I read ten articles that show the top ten reasons why businesses fail, then I might only get three to four reoccurring reasons, so, in the end, I will not have ten simple reasons why businesses fail; instead, I will end up with 60-70 reasons. How can you possibly plan for 60-70 eventualities?
Please don’t despair though. After nearly two and a half decades of reading, writing, teaching, and starting several businesses, I have seen some consistent elements emerge that I am going to share with you today.
It is my opinion, through academic reading, personal experience and observing others, that businesses fail because of two reasons. One, the person/people who started the business did not effectively think out the entire concept. And two, these people took on too much, far more than they could effectively manage. So how does one avoid these pitfalls? This is where all those millions and billions of webpages can help. And after twenty-five years of study, I feel that business success boils down to two simple factors.
Factor One: You Need to Know You
This sounds like a silly statement (of course, I know myself!), but do you really? Do you know what strengths you possess and which you do not? What activities do you need to do to make your business successful? The problem here is that very few people are confident in this area. This is mostly because there is just too much information out there. How can anyone be confident that they are doing the right things when they can’t possibly follow all the advice out there?
Tony Robbins, the self-help business guru, has a relatively insightful notion that a successful business requires three critical elements. He calls these elements “gifts of service.” He suggests that every business requires three types of people. The artist, the manager, and the entrepreneur. I have a hard time arguing against this ideology, so I have adopted it. In some cases, each of these business identities can resonate in one individual, but, most often, it would be a smart choice to find three people, each with a natural inclination towards one of these gifts.
Let’s explore these business identity archetypes a little more:
The artist is someone who loves creating a product and takes immense pride in the process of serving a customer’s needs. Artists love the product and design so much that they fear risk and want to protect the business and identity that they have created. In this way, artists are very mission-driven and focus on continually improving the product and its effect on the customer.
By contrast, the entrepreneur is the risk taker. They spend the least time thinking about the product design and creation and instead spend the most time on the product’s market fit and overall business value with the goal of selling it, then moving on to the next venture. The entrepreneur is fueled by the scary rush of building a startup, managing investments, and looking for any opportunity to innovate and grow.
The manager, sitting squarely in between the other two, is proficient at optimizing business systems and making sure everything runs efficiently. Very detail-oriented, the manager is fueled by overseeing and organizing the needs of both the processes within a business as well as the people in charge of those processes. A manager is one who does not pay as much attention to the product design and creation but still wants to mitigate risk as much as possible to ensure the business’ sustainability.
Most business owners are forced to take on each of these roles, yet I believe that deep-down inside we know which gift is our most natural fit. I would encourage you to explore your inner business archetype. This will give you a better idea of where you can excel and where you have deficits. From there, you can either work on developing the skills of the other two or you can find people who can fill those roles. Either way works, so you will have to sort out the pros and cons for yourself. It is my belief that more heads are better than one, if you can create a strong working relationship. Sharing the workload can be quite liberating and can allow you to focus on your personal gift.
Factor Two: Actual Problems with Your Business
Many things can happen that will affect your business. Some of these things can be expected but many cannot. We live at the whim of fortune. In many cases, it does not matter how much planning and orchestrating you undertake, problems will come out of nowhere. Take COVID-19 for example. Very few business leaders plan for a worldwide pandemic. Despite the fact that we cannot possibly foresee every eventuality that will change our business’ success, there are some guiding principles that can be followed to create a flexible and effective organization.
To reference Tony Robbins again, he details eight common business problems that can lead to business failure.
1. Know Your Purpose:
Most creators intrinsically understand the reason behind their business idea. They understand their purpose. However, it is sometimes quite challenging to convey that purpose to the other members of your business and to your employees. A manager or front-line worker may never know the purpose of the organization; on occasion, even entrepreneurs are seeking a payout without a purpose. Your purpose gives you passion, drive and certainty. It gives you and your business the ability to overcome towering obstacles. This factor may not necessarily lead you to business success, but it certainly can provide direction when times are challenging and can ensure decisions are made in a consistent and productive manner.
2. Have a Strong Brand Identity:
Your brand identity is what drives the emotional connection with your customer and ultimately creates customer loyalty. Without a strong brand identity, you don’t know who you are or what direction you should all be rowing in. Your identity epitomizes what your company stands for—your core values, mission and goals. It deeply affects your company culture, which in turn affects whether you can hire and retain the best employees for the job.
3. Provide Value:
When you don’t provide what customers desire, you’re not providing them with value. If the market shifts, it’s for a reason. If customers are going to your competitor because your competitor offers a service or feature that you don’t, that is because those customers deem that service or feature to be valuable to them. To be successful in business, you must practise constant strategic innovation. Determine what sets you apart from the competition and how you will bring more value to your customers. What makes your company obviously different? You must know what sets your business apart and why your customers choose you over the competition.
Okay, so earlier we talked about not being able to plan for everything, but that does not mean that you should throw planning into the wind and rely upon flying by the seat of your pants. It can be easy to get caught up in the details and day-to-day operations of your company. Before you know it, years have passed and you haven’t found a way to make your business obviously different or turn your customers into raving fans. Though strategic planning may not be your strong suit, it’s something you must do as a leader. By focusing on where you want your company to be in one, five or ten years, you can determine which milestones will help you identify when you get off-track or when tweaks need to be made if you’re not achieving your goals. Creating an action plan leads to increased buy-in from your team and a renewed sense of energy for you.
5. Have an Exit Strategy:
One of the primary goals of your business should be for you to eventually leave. This could come in the form of arranging a leveraged buy-out, leaving the business to your children or selling the business to key employees. The point is, knowing what the preferred end of your company will look like helps you develop the best path to get there. Forty-five percent of business owners spend over forty hours per week in the office and never find a way to extricate themselves so they can pursue other passions. If this sounds like you, then it’s time to start working on your exit strategy.
6. Ask for Help:
One of the most difficult business challenges you can face is your own inability to reach out to available resources. Being a great leader doesn’t mean that you have all of the solutions, but it does mean that you use everything at your disposal to get the job done. Know when to ask for help and make sure you do your homework to find the best resources to help you overcome your current challenges.
7. There Is Nothing to Fear but Fear Itself:
Nothing in life is ever guaranteed, but new business owners often allow the fear of uncertainty to affect how they run their organizations. Fear of failure, fear of not being a good enough leader and fear of the economy’s future can put you in a scared mindset and negatively affect your decisions and behaviours. By becoming hyper-focused on these fears, you set your business up for failure instead of taking the steps necessary to achieve success.
If you have these fears, then identify if they are based on limiting beliefs. Change those limiting beliefs to empowering beliefs that help you thrive as a leader. Instead of letting fear ruin your business, use that fear to push you to greater heights. When you decide that success will happen no matter what, many of your business issues will resolve themselves along the way.
8. The Power of Technology:
New entrepreneurs often make the mistake of thinking they don’t need technology. Some think this way because they have an old-school mindset and don’t realize all the powerful pieces of tech that are available. Others think that they are in a type of business that doesn’t need technology to succeed. In today’s economy, harnessing the power of technology is a requirement if you want to avoid being disrupted by competitors. From artificial intelligence to automation, emerging tech has a place in every business no matter how large or small. Address these common business problems by having strategic innovation meetings with your team to discuss new technology and how it can be incorporated into your business to beat your competition.
In this article we have identified two primary areas where business owners struggle. These are the most common reasons that lead to 50% of new businesses failing within five short years of opening their doors. There are many other reasons that can lead to a struggling business but if you address and overcome the issues as explained in this article, then you will have a much better chance of being able to overcome the unforeseen and adapt to the changes that are constantly assaulting your business.
I don’t want you to believe that the billions of other articles available online are of no use to you. However, if you can master yourself and use these eight common failures of businesses to help guide your new enterprise, then you will have the time to read through additional online articles, which will only allow you to be better informed and more able to adjust to the challenges that you and your business will face.